Executives with Nike confirmed their agreement to sell products directly through Amazon in a pilot program, in one fell swoop – or swoosh – greatly expanding Nike’s reach while also helping address the issue of rampant product counterfeiting.
The news is a direct hit to Nike’s retail partners like Finish Line and Foot Locker, who will undoubtedly lose sales to the ecommerce giant. Industry observers expect other major brands to follow suit by selling directly on Amazon.com.
Nike also announced on its fourth quarter earnings call with analysts that customers can begin buying its sports apparel products on Instagram, a move designed to reach the younger demographic wherever they shop.
“In the U.S., we’re executing a new pilot with Amazon with a limited Nike product assortment,” said Nike Chairman, President and CEO Mark Parker. “As we do with all of our partners, we’re looking for ways to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling.”
Parker said the pilot program is in the early stages, adding “we really look forward to evaluating the results.” He also said pilot covers a limited assortment across footwear, apparel and accessories. Executives would not say if that included the hugely popular Jordan line, a $3 billion business for Nike.
“What’s most important to us is that we have the opportunity to elevate how the Nike brand is presented on the Amazon platform, and that includes the quality of the product information, and of course, providing a simple experience for the consumer,” he said. “So we’re really looking forward to seeing how this pilot combines ultimately the convenience that Amazon is well known for with Nike’s brand and product power.”
Parker also said Nike is taking a different approach with each of its online marketplace partners, which also include Tmall in China and Zalando in Europe, a strategy it has been pursuing for the past five years. “Our overall goal is to elevate the consumer experience by better segmenting and differentiating all of our channels,” he said.
Trevor Edwards, president of the Nike brand, said the company’s overall merchandising strategy is to reach as wide a range of consumers as possible, and Amazon is an extension of that approach.
“The Amazon piece is just one element of how we serve the broader market by making sure that we are serving consumers wherever they choose to shop and making sure that that’s through our doors, through our wholesale partners, as well as through platforms,” Edwards said.
Of the Instagram integration, Edwards said, “Clearly, we are boosting our ability to create new ways to serve consumers, making the entire Nike+ ecosystem available to consumers where they already live.”
While officials didn’t provide details, Nike may become part of Instagram’s shopping tags program, launched in 2016. Tapping on a company’s ad produces pop-ups with products descriptions and prices. Some tags can send shoppers directly to a company’s website or app to complete the purchase.
For the quarter, Nike’s revenue increased 6% overall to $8.67 billion. Sales were flat in North America but jumped 17% in China, where it is the number-one sports brand on Tmall. The company’s revenue also rose 14% in emerging markets, where it has particular strength in Asian and Latin American countries.