Nike has confirmed that it will begin selling its products directly on Amazon, bringing another one of retailing's best-known brands into a relationship with the online giant.
Nike’s partnership with Amazon is a pilot deal to sell shoes, clothing and accessories on the site straight from the source. Previously, Nike products were sold through third-party vendors and challenged the company's earnings. For now, the famous footwear and apparel company will only sell a limited selection of its merchandise on Amazon.
“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,” Nike CEO Mark Parker said Thursday in the call with investors. “We’re in the early stages, but we look forward to evaluating the results of the pilot.”
Despite having lacked a direct partnership, Nike is one of the top-selling brands on Amazon through third-party sellers. Experts say the decision to officially partner with Amazon comes as the third-parties weaken control of the brands pricing and distribution, and Nike wants to take back control of its products on the site.
The Wall Street Journal this week reported that in exchange for selling directly, Amazon agreed to crackdown on counterfeits and restrict unofficial sales.
The deal also comes as Nike has been looking at ways to sell directly to consumers through various channels including social media and e-commerce sites like Amazon. The initiative is called "consumer direct offense," and as part of it, Nike also announced on Thursday’s call a venture to sell through the Instagram smartphone app.
“Clearly, we are boosting our ability to create new ways to serve consumers,” Parker said.
Nike's announcement about Amazon didn't come as a complete surprise. Goldman Sachs analyst Lindsay Drucker Mann hinted to it in a note to clients on June 21. The report said Nike’s revenue could rise by $300 million to $500 million in the U.S. with the deal if the pilot turns into a larger partnership.
“Taking this step would give Nike direct economic exposure to a large and fast growing distribution channel, while improving the brand presentation and expanding access to Millennial shoppers,” Goldman Sachs stated.
The report also stated the deal will allow Nike better access to Millennials “who call out Amazon.com as their preferred shopping platform for fashion products, including apparel, shoes, and athletic gear.”
Nike announced the deal on the same day as disclosing its fourth-quarter results, ended May 31. Revenue was $8.7 billion, up 5% compared to the same quarter a year ago. Nike's net income was $1 billion, a 19% increase. Earnings per share increased 22% to 60 cents per share.
Amazon and Nike could not immediately be reached for comment.