Is Nike about to sell directly on Amazon?
In the past, global sporting apparel and footwear market leader Nike has resisted the urge to sell its goods directly on Amazon. But that may be about to change. On Wednesday, analysts at Goldman Sachs issued a research note that speculated whether the footwear giant – which is facing stiffer competition from rivals Adidas and others than it is used to – may look to work through Amazon.
The benefits would be clear: to reengage with younger customers, who are overwhelmingly Ecommerce-centric and who patronize Amazon as the ‘everything shop’ Jeff Bezos intends it to one day become. They already watch their favourite TV shows there – why not buy their trainers there too?
Earlier this year, Nike’s CEO Mark Parker explained lackluster sales as a result of shifting consumer sentiment towards Ecommerce. He said:
“Consumer demand remains quite strong but expectations remain high in terms of product, the innovation, and the style. They want is fast, easy, and they want personal service. [The consumer] has decided digital isn’t just part of the shopping experience. Digital is the foundation of it.”
As footfall to Nike’s traditional brick-and-mortar retail partners slows, the company has looked to increase relationships direct to customer. By 2020, Nike hopes to have a fleet of its own branded stores and a handful of shopping-related mobile apps that could generate $16 billion in revenue. But getting there will take years, no weeks.
As Nike invests in the development of this infrastructure, there is one Ecommerce company that dominates the landscape: Amazon. The online retail giant sells billions through its Amazon Apparel offering – a part of the business that has increasingly come into focus. Could Amazon provide a platform for Nike to drive up sales while its own platforms are being built? At present, this is just speculation (although it is not idle speculation – some of Nike’s longstanding retail partners saw their share price drop by as much as 5% after Goldman’s note hit the public).
What is not just speculation is this: today’s consumers want to buy their running shoes from the couch. Accommodating that slightly contradictory desire will be crucial to success in the industry.
Dominion holds Nike in its Global Trends range of Funds.
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