Fast Five Shorts | Pro Or Con: Nike Selling On Amazon?
Takeaways:
- Nike's decision to resume sales on Amazon marks a significant shift in their strategy, emphasizing direct consumer engagement.
- The brand's previous focus on maintaining a direct relationship with consumers is now seemingly compromised through this partnership.
- Concerns arise regarding the potential dilution of Nike's brand equity with the mass availability of their products on Amazon.
- Experts believe that this move could lead to increased competition and a loss of exclusivity for Nike's product offerings.
- The discussion highlights the tension between utility and lifestyle branding, with potential implications for consumer perception.
- There are apprehensions regarding counterfeit products on Amazon, which could undermine consumer trust in Nike's brand integrity.
- Thanks to Alvarez & Marsal Consumer & Retail Group, Simbe, Mirakl, Ocampo Capital, ClearDemand and Infios for making this episode possible. For the full episode, head here: https://youtu.be/Ujbv_kIGzUk
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Transcript
Nike reportedly plans to start selling on Amazon again, according to Chain Storage.
Speaker A: ts directly on Amazon in late: Speaker A: ended a pilot it launched in: Speaker A:A Nike spokesperson confirmed to CNBC that it will resume selling goods via Amazon in the US as part of a broader digital commerce effort.
Speaker A:The spokesperson said in the statement, quote, this includes expanding to new digital accounts including Amazon in the US New physical partners like Printom, elevating retail experiences across the marketplace and launching Nike's AI powered conversational search to improve our online services, end quote.
Speaker A:In addition, Amazon confirmed via an email to CNBC that it will start sourcing a quote, much wider range of Nike products, end quote from for U.S.
Speaker A:shoppers.
Speaker A:And as part of the relaunch, Amazon, as reported by wwd, has also told select third party merchants that they can no longer sell certain Nike items on Amazon starting July 19th.
Speaker A:Chris, a lot in Nike's digital plan here.
Speaker A:Are you pro or con Nike coming back to Amazon?
Speaker B:Oh, and resolutely hate this move?
Speaker B:Yeah, I don't, I don't like it at all.
Speaker A:Okay.
Speaker B:I'm curious if you're, I'm curious if you feel the same way.
Speaker B:Yeah, tell us after our discussion on Saks Fifth Avenue a couple of weeks ago.
Speaker B:Because I think Nike's a brand that should stand on its own.
Speaker B:And you know, all these talks of the new partnerships with Urban Outfitters, they're just, to me, they're just silly.
Speaker B:They're just marketing vehicles to try to enliven the brand and they're just a waste of time because they're not going to add any discernible real revenue to the top line.
Speaker B:And they're just a lot of effort.
Speaker B:So I think, you know, I think when I step back and look at this from 30,000ft, I think the previous regime had the right strategy, which is create a more direct one to one relationship with your consumers, which is what omnichannel retailing is all about.
Speaker B:But it just seemingly didn't have the right execution.
Speaker B:So going on Amazon just makes Nike like everything else on Amazon.
Speaker B:And the other part about this, which you alluded to in previous headlines today was you lose the first party data relationship with your customer too.
Speaker B:And so I don't know why you would do that in any way, shape or form.
Speaker B:So to me this move is emblematic of a company that finds itself in a really tough spot The Jordan brand is clearly post peak now at this point.
Speaker B:I mean Jordan's got to be, you know, in his 60s now if I'm not mistaken they've had trouble making their marking athleisure.
Speaker B:They haven't been able to crack the code on that.
Speaker B:They've also been losing ground in running.
Speaker B:So going on Amazon it may be a boost to short term sales but the long, in the long term it's a losing proposition at companies like Lululemon and on running who are going to keep that one to one relationship with their customers.
Speaker B:They're going to hold it dear and they're going to hold it close to their heart because they understand that's what makes them special.
Speaker B:And Nike going on Amazon is no longer special to me.
Speaker A:Yeah, I actually agree completely.
Speaker A:I feel like this is a very short sighted approach and in my mind really moves Nike to more of a utility purchase than a lifestyle purchase.
Speaker A:Like it used to be a cachet thing that you'd have, you know, these limited edition drops and stuff.
Speaker A:But if you, if you're able to get this product in mass it loses its, its uniqueness and I think it also damages brand equity that they've built with JD Sports or DSG and Foot Locker like we talked about last week, like what unique product are they really going to have when the majority of consumers are going to be like, but I can get these similar Nikes on Amazon for you know, this price, price and get them delivered in an hour, whatever it is.
Speaker A:So I, I think that to me causes alarm also.
Speaker A:I wonder if this doesn't open up Nike to more fraudulent product too.
Speaker A:Like when you're on the Amazon, you know, you're on Amazon now like do are you opening it up?
Speaker A:Because people are going to just search Nike or Air Force ones like are they more susceptible to getting a product that isn't an original, you know, Nike product?
Speaker A:And how does Nike kind of control that part of it?
Speaker A:Because that to me is another area where you don't always know what you're getting.
Speaker A:And Amazon's not as, as I guess closely watching that as some of your other larger partners.
Speaker B:But yeah, I'm not as worried about that because I think the subcontext to the headline you read is I actually think Amazon has made a deal with Nike to try to police that to a larger degree than they probably have in the past as well.
Speaker B:That was what I took from that.
Speaker B:But it probably could potentially still be an issue.
Speaker B:But you know, Amazon today, in today's day and age with technology should be able to tell when somebody's trying to, you know, put out a counterfeit pair of Nikes as a third party seller and get them off the site.
Speaker B:Because the only people that should be selling Nikes on their site are Nike.
Speaker B:In theory, yes.
Speaker B:You know, in theory that's the way.
Speaker B:But I think the other, the other point you made me think of too here and is like the drops, I used to go on the drops all the time.
Speaker B:I've stopped looking at it because the product sucks.
Speaker B:It's.
Speaker B:Yeah, it's not interesting.
Speaker B:It's just really lame.
Speaker B:And they've got to re enliven their product strategy too.
Speaker B:To your point, like how are you going to re enliven your product strategy and then how are you going to decide who gets what product?
Speaker B:And going on Amazon just makes that such a complicated effort.
Speaker A:Yeah, yeah, it's just, it doesn't, doesn't seem like the right move.
Speaker A:It, it's, it feels like it's just 100% utility.
Speaker A:Like I need a new pair of shoes for my kid.
Speaker A:I'm going to get the cheapest Nikes I can know on Amazon, have them delivered same day, which is, is good in the short term.
Speaker A:It'll probably boost sales a little bit.
Speaker A:But.
Speaker A:But is that the lasting impression you want to leave with, with your consumer?
Speaker A:I don't think so.
Speaker B:I thought, I thought you're coming about utility.
Speaker B:What'd you say?
Speaker B:Utility Ver versus versus lifestyle.
Speaker B:Lifestyle.
Speaker B:Yeah, I think that that, that nails it.
