Nike is severing ties with Amazon. The sportswear company on Wednesday said that it will no longer sell its products through the e-commerce giant. This brings an end to a two-year long association between two of the biggest companies in the world in their respective space.
Nike's decision to discontinue sales of its merchandise through Amazon is in a bid to re-strategize it marketing and retail plans. That said, Nike will continue to use Amazon Web Services to manage its website and a few mobile apps, like SNKRS.
Also, Nike's decision to end ties with Amazon follows the appointment of John Danahoe as its next CEO. Danahoe was earlier with eBay and is chairman of the board at PayPal. A possible reason behind the decision could be the Danahoe, who is focusing more on building and managing its e-commerce platform.
The sportswear giant in a statement on Wednesday said: "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."
Moreover, Nike doesn't want to sell products through Amazon anymore in a bid to push its sales directly to consumers. The sudden decision to discontinue ties with Amazon, will end a pilot test between the companies that was launched in 2017.
Till 2017, Nike had refrained from entering into a deal with Amazon, as it preferred to focus more on its own online marketplace and store. However, in the pilot test in 2017, Nike agreed to sell a limited number of products against a few conditions.
The bigger picture behind the divorce
During the pilot test, Amazon used to purchase sneakers, apparels and other merchandise directly from the company instead of going through third parties.
The primary condition of the pilot test was that Amazon would ease concerns among other companies about third party resellers that were sullying with their brands with fake merchandise.
Nike's counterfeit goods are spread across the market that has been biting into the company's profits. Nike took the pilot test as an opportunity to try and eliminate fake Nike products.
However, before entering the deal, Nike too like many other companies had fears that it would lose control over how its products were being represented on Amazon's website. Nike's direct-to-consumer business accounts for 30% of its annual sales. Some of its most prominent business partners include Foot Locker, Nordstrom and Dick's Sporting. Although Nike continues to maintain these relationships, it has also been focusing on its website and building more Nike stores.
A possible reason behind the decision could be the company's new CEO John Danahoe, who is focusing more on building and managing its e-commerce platform.