In November 2019, Nike stopped selling its goods wholesale to Amazon. It didn’t need Amazon at the time, and it needs them even less today - accelerated by the COVID-19 outbreak, direct e-commerce jumped to 30% of Nike’s sales, a mark it had previously expected to hit only in 2023.
Amazon, on the other hand, does need Nike. After the split, the possible scenarios were that Amazon would find a different way to source Nike goods wholesale, the third-party marketplace would source the full catalog, or that Nike would reverse its decision. None happened. Shoppers instead bought other brands.
According to Marketplace Pulse analysis of best-selling products in relevant categories, Nike products mostly lost their position. For example, in the Men’s Running Shoes category, Nike was one of the best-sellers for years. Amazon sold out by the end of 2019, and since then, the best selling Nike product has been averaging #15 place.
“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,” said the company last year. Nike only agreed to the pilot in 2017 in exchange for Amazon policing counterfeit and third-party sales.
“For years, Nike had refused to sell directly to Amazon, fearing it would undermine its brand. Nike executives were unhappy with how unauthorized sellers continued to be widely available on Amazon,” wrote Khadeeja Safdar at the Wall Street Journal. The pilot didn’t work - “Nike officials were disappointed the deal with Amazon didn’t eliminate counterfeits and give the brand more control over gray-market goods.” Nike thus never brought its full catalog to Amazon.
Shoppers didn’t stop looking for Nike on Amazon - searches for its products have remained in the top 1,000 most-searched terms. The third-party marketplace continues to provide some, though limited, selection. “Nike shoes for men,” one of the brand’s most searched terms, most often lead to shoppers buying the Nike Men’s Revolution 5 Running Shoe. It costs more on Amazon than elsewhere and has a subpar product page compared to category-leading products.
Nike is likely okay with being presented poorly on Amazon. That makes shoppers go to Nike.com or download its app instead. The strategy is working because Nike is averaging 100 million visits to its website and is one of the top 10 most-downloaded shopping apps. As a result, Nike’s online sales were up 83% in the second quarter, adding $900 million to its total sales. “The accelerated consumer shift toward digital is here to stay,” said John Donahoe, CEO at Nike, discussing the quarter’s results.
Nike’s departure from Amazon sent waves through the brands’ ecosystem. However, Nike is an exception. Meaning, Nike looks for channels that can create new growth. For it, Amazon could sell - Nike would argue poorly - to its existing audience. That audience is increasingly taking the extra steps to transact directly with Nike. It doesn’t need to accept the tradeoffs of selling on Amazon at the expense of maximizing revenue.
Nike realized that it doesn’t need to fix its issues with Amazon. It could instead build a channel without those issues. Nike is focusing on what it can control and ignoring what it can’t.
