After striking a deal to sell their products on Amazon in 2017, Nike is ending their relationship and has announced that they will be reshaping their sales strategy with more direct to consumer sales.
Some say Nike’s move is part of a growing trend. Tim Armstrong, former CEO of AOL and ex-Google ad chief says Nike’s decision to stop selling merchandise through Amazon is just the “tip of the iceberg” of brands opting to go directly to consumers and that brands are often fearful that by partnering with Amazon they will lose control over how they’re represented on the site.
And this might be true. The 2017 Nike/Amazon deal was made under the understanding that Amazon would introduce stricter policing of counterfeits and unsanctioned sales. Amazon said it invested more than $400 million last year to police its website and blocked more than 3 billion suspected bad listings before they were published to the site. The trouble is, they seem to put most of the onus on the brands to report bad listings. And despite their efforts, complaints of fakes and gray market sellers have persisted.
The loss of Nike is definitely blow to Amazon. Not only were they one of the biggest sellers on Amazon, but they were a big name executives could cite when trying to woo other big names.
But will the loss of Nike signal a reckoning for Amazon in policing fakes and unauthorized resellers? I’m not so sure it’s in the everything store’s interest. As the Washington Post puts it, “The continued abundance of counterfeit goods on the site is the result of Amazon’s decisions to prioritize a broad selection of products and cheaper prices over the deployment of aggressive technologies and policies that could further stem the problem.”
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