A Reluctant Nike Finally Marries Amazon

In what has been a bit of a shotgun wedding, Nike has finally agreed to sell its products directly to Amazon. With hordes of third party sellers offering up Nike footwear and apparel on the giant e-commerce site, Nike was losing control of pricing, and leaving itself open to fake goods. Laura Stevens and Sara Germano write:

One reason for their capitulation is the collapse of a retail distribution network they could better control, as malls flounder and chains like Sports Authority Holdings Inc. shutter.

A company’s power to dictate who could sell its products and how, penalizing retailers that step out of line by withholding inventory or other measures, has been a critical tool to preventing unwanted discounting, which damages the ability to sell at full price.

Controlling their distribution “eliminated the exposure and much of the risk of having excess inventory in the market,” said Ken Seiff, a venture capitalist at Beanstalk Ventures and a former retail executive.

Amazon, on the other hand, often gives third parties wide leeway on products sold on its site. Its goal is to offer the widest possible assortment of goods and bring down prices.

Read that last part again. “Its goal is to offer the widest possible assortment of goods and bring down prices.” That’s my Bezos Law. Nike could be flirting with disaster, as Jeff Bezos seems to be more focused on lowering prices for anything he sells than on providing a brand building platform for sellers. Time will tell.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.