Even the world's largest sportswear maker can't deny the power of the world's largest ecommerce platform.
Nike will begin selling some products on Amazon next month, but the deal isn't necessarily about growing volume. Instead, Nike's goal is to work more closely with Amazon to crack down on third-party sellers, according to The Wall Street Journal's Laura Stevens and Sara Germano.
Nike is already the number 1 clothing brand on Amazon even though it does not sell directly on the website, according to Morgan Stanley research. Nike products are instead sold by unauthorized third party resellers, which Amazon still profits from by taking fees for facilitating the sale. Cottage industries have sprung up, with entrepreneurs buying up large stocks of Nike product to unload on the website.
“That’s how I make my money. Amazon is the No. 1 marketplace. Nike is the No. 1 brand,” said one such Amazon seller told The Journal. “If they’re not in bed together, that’s my opportunity."
As part of the deal between Amazon and Nike, Amazon will monitor its website and no longer allow third parties to sell Nike merchandise, the Journal reports. According to the WSJ, the initial amount of product it will actually offer on Amazon is small.
Still, cutting off the flow of reselling on Amazon will likely lead would-be Nike buyers to Nike's own website or retailers like Foot Locker if they can't find what they're looking for on Amazon. This helps Nike better control its product and how it appears on Amazon — a marketplace with large exposure to potential customers and usually the first place customers search when looking to shop.
This fits with Nike's broader plan to tighten its grip on brand and image as it focuses more on direct-to-consumer and moves away from wholesale.