Nike Inc. (NYSE:NKE) and Amazon.com Inc. (NASDAQ:AMZN) are ending their business relationship, as the clothing and shoes company announced last week that it will no longer sell its merchandise on the Amazon platform. This comes after two years of Nike and Amazon participating in a test pilot which was in part intended to curb counterfeit sales.
Nike released a statement to Bloomberg about the separation. "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." Nike added, "We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally."
Strengthening its marketplace online and refocusing its approach in marketing directly to customers are both parts of Nike's new plan looking ahead, according to Business Insider.
Based on what Nike has done, other brands may stop selling directly to Amazon, so there may be a cascade effect ahead. This restructuring could mean a new direction for e-commerce, how Amazon supports brands moving forward, and how large-scale brands focus their efforts when it comes to engaging with their consumer base.
According to Randy Konik, Jeffries analyst, "The move shows us that strong brands realize that traffic driven to their own site (e.g. NIKE.com) is self-sustaining, more profitable, and actually brand enhancing, while traffic and incremental revenue from Amazon.com is less profitable but also less brand enhancing," says Konik. "We believe many strong apparel (and even non-apparel) brands will continue to avoid or curb their relationships with Amazon in the future."
The announcement of Nike to end their test pilot with Amazon occurred in light of a recent decision that Nike CEO Mark Parker will step down as CEO next year so that John Donahue, current board member and former eBay CEO, can step in to lead the company forward.