Back in 2017, Nike struck a deal to directly wholesale its products in a first-party relationship with Amazon in order to receive stronger anti-counterfeiting brand protections on the platform notoriously overrun with fakes and fraudulent sellers. Now, the athletic brand has terminated that arrangement, Bloomberg first reported, in what could be a repositioning of its total retail strategy.
“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”
However, Nike will continue using Amazon Web Services to underpin its e-commerce platform at Nike.com and its suite of apps, including SNKRS, the main Nike App, NTC (Nike Training Club Pro) and NRC (Nike+ Run Club), the brand added.
Nike’s decision to replace longtime CEO Mark Parker with board member John Donahoe, effective Jan. 1, 2020, could signal a renewed effort to grow digital channels and sales without relinquishing quite so much control to external partners. During his 10 years at eBay, Donahoe oversaw more than 40 strategic acquisitions, and the company’s revenues more than doubled to $18 billion, while its market value swelled to north of $80 billion—marking 250 percent growth.
But Nike’s withdrawal from a direct-selling relationship with Amazon could strike a blow to the e-commerce firm’s efforts to stem the rising tide of counterfeits on its platform—a problem that has compelled other apparel firms like Chico’s to forge similar direct partnerships in exchange for better policing of their intellectual property. Birkenstock famously cut ties with Amazon three years ago, frustrated by the e-commerce platform’s lack of action on the fake-fighting front.
And just weeks ago, the American Apparel and Footwear Association called out five of Amazon’s global, country-specific marketplace sites as “bad actors” fueling the sale of brand-damaging knockoff products. Amazon clapped back, however, detailing its anti-counterfeiting Project Zero strategy and pointing the finger at brands that fail to make use of its IP-policing tools like Brand Registry.
In recent years, though, Nike has doubled down on maximizing its brand, opening community-specific local stores starting with the original Melrose outpost and recently expanding the concept to Tokyo and California’s Long Beach enclave. New flagship stores on Fifth Avenue and Shanghai bear the name House of Innovation and usher visitors into immersive Nike experiences, strengthening the brand-first mentality.
And Placer, a location data company offering AI-based traffic insights and analytics, sees this move as paying dividends. Nike, vice president of marketing Ethan Chernofsky wrote in a blog post earlier this week, views “view physical retail spaces as an ideal way to boost [its] overall performance and deepen the relationship with…customers.”
Visits to Nike Factory stores climbed 38.5 percent and 62.6 percent higher than “the baseline in July and August 2019 for the period from July 2017 through September 2019,” he said of the “massive increase.”
Chernofsky sees brands like Nike filling the “new retail vacuum” created by the so-called retail apocalypse and the collapse of thousands of U.S. stores. As brands like the $140-billion sportswear giant pivot “increasingly towards an owned presence offline, expect other brands to follow,” he wrote.