Nike is targeting resellers and users of automated bots that scoop up new sneaker drops and leaving consumers out in the cold.
The Oregon giant added new terms for U.S. online sales this month to prevent resellers from purchasing its products and reselling them on the secondary market using automated technology or software.
Nike’s amended Agreement Services page specifically states a “no purchase for resale” policy.
“If Nike determines that a purchase or order is intended for resale, Nike reserves the right, in its sole discretion, and as it relates to such purchase or order, to (1) suspend the application of any NIKE policy that provides a right or benefit intended for direct to consumer purchases; and (2) take any action to hinder such purchase or order (and deter future purchases or orders), including without limitation, to restrict sales to any consumer, consumer account, or member account, cancel orders, charge restocking fees, impose purchase quantity limits, decline to issue refunds or take returns, deny access to any Nike Store, and/or suspend or close any account,” the company said.
Nike did not immediately respond to Sourcing Journal’s request for comment.
Previous versions of Nike’s terms already prohibited buying products for resale, but the new rules give the athleticwear giant reign to cancel orders placed using bots or if an account returns too many products or exceeds purchase limits.
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In the terms on the Agreement Services page, the company says:
“Sale of products and fulfillment of all orders at a Nike store is subject to availability and our discretion in managing inventory. We explicitly reserve the right to limit, decline or reject any sales and orders for any reason, without being liable for any damage or costs other than repayment of any amount received from you in relation to such sale or order.”
Currently, some of the other reasons Nike can decline the sale include: the address, billing information or form of payment being incorrect or unverifiable; an order being flagged by its security systems as potentially fraudulent, or an order placed with automated ordering software or technology; evidence that the order was purchased for the purpose of resale, tax evasion or other fraudulent purpose.
Nike also has policies that prohibit reselling in Europe and South Korea, but they don’t specifically state any repercussions. Nike’s recent efforts to address bots include hiring cybersecurity experts and giving exclusive access to its most loyal consumers on releases.
The global sneaker resale market is estimated at roughly $6 billion a year and could grow to up to $30 billion by the end of the decade, according to an analysis by Cowen. The growth in this sector, and the players that rose up out of it like StockX, Stadium Goods and Goat, gives plenty of incentive to would-be sellers who want to jump in front of buyers whenever a hot new sneaker drops.
There are two sides to Nike’s relationship with these resale businesses. The company has benefited from the brand awareness fueled by entrepreneurs and sneaker enthusiasts pouncing on limited-edition products. On social media, resellers share their success using bots to acquire sneakers through digital platforms such as Nike’s SNKRS app. In theory, Nike products also gain a wider reach simply by being sold on more platforms.
At the same time, shoppers get frustrated when they can’t secure products at retail prices from Nike’s direct operations, forcing them to sometimes settle for higher markups sold on the resale platforms. Resellers can also walk away with larger profits than what Nike earns per sneaker depending on the product, further disincentivizing the business from encouraging resale.
In general, Nike has sought to take more control of its retail channels, reducing its wholesale accounts by 50 percent over a four-year stretch. It also introduced its own resale platform last year.
Nike shares widespread concerns about counterfeiting and theft, which have gained traction amid the rise of e-commerce sales, particularly throughout the Covid-19 pandemic. Earlier this year, Nike took legal action against StockX for allegedly allowing sales of counterfeit versions of its sneakers. Nike said in May that it bought four pairs of counterfeit footwear from StockX, despite that company’s claim it authenticates the shoes sold on its site.
The bots problem even impacted Nike’s executive suite, with a former vice president Ann Hebert resigning from the company in 2021 after her son used bots to buy 600 pairs of Adidas’ Yeezy Boost 350 Zyon sneakers for $132,000, before selling them off at a $20,000 profit.
Air Jordan 37 shoe breaks in NBA game
Aside from Nike’s resale concerns, the company is once again under attention for an exploding shoe on a basketball court. During an NBA game last week, Boston Celtics forward Grant Williams was wearing Air Jordan 37 sneakers when his right shoe broke while he was running on the court.
Unlike a prior incident from four years ago, when then-college basketball star Zion Williamson had one of his Nike PG 2.5 sneakers break on the court when he quickly changed direction, the recent instance occurred as Williams was running in a straight line.
After the game, ESPN feature writer and creative director Nick DePaula tweeted a picture from last week’s pre-season game versus the Toronto Raptors, showing where Williams had laced up his sneakers improperly, resulting in the tongue bunching and slipping down. He seemed to suggest that Williams’ lacing approach might have caused the malfunction.
The Air Jordan 37 features a minimalist design with a lightweight upper made from layers of leno-weave fabric and strong plastic ribbon. It was designed to mimic the support given by a taped-up ankle.