Written by Audie
In June, Sportswear giant Nike announced a partnership with the eCommerce giant Amazon. The partnership will allow Nike to begin selling their merchandise directly through Amazon. After this news was released, Nike's stock instantly climbed 2%. In an earnings call held recently, Nike CEO Mark Harper reiterated the decision by stating, "As part of our pilot program with Amazon, Nike will begin selling a limited assortment of products."
Mr. Parker also stated that Nike's pilot program will create a new opportunity to help increase their brand awareness through Amazon. As of now, Nike has thousands of available products, but the profits from those sales are for the resellers and not Nike.
Nike had continued to decline an Amazon partnership in the past because Nike wanted to keep a hold on the way they market and sell their products. This allowed them to preserve their stance as a trusted name and brand. This is also due to the fact that Nike has become comfortable using only familiar retailers to sell their products.
As an indication that times are certainly changing in the world of digital marketing due to partnerships like this, eCommerce is increasing as well as the number of customers wanting to buy well-known products from well-known sources.
To get an idea of how well this new partnership will work out, we've listed some great reasons why Nike and Amazon will have a lasting relationship.
Resellers Will Practically Be Eliminated
By Nike holding back on the number of certain products being sold prior to the partnership, they will be able to fully allow consumers to purchase more than they were used to in the past. The consumer will see this "new" supply and will want more than what the resellers offer. This will also have consumers shop at one website to get both the great product that Nike offers and the great customer service that Amazon offers.
With Amazon being the country's number one online retailer with over a million products available, it is looked at as more of a clearinghouse for retail products. It is hands-down, the best place to shop when shopping online. Amazon accounts for 43% of all retail sales from United States online consumers.
The partnership with Nike has made it clear that Amazon will begin to suspend all third-party reseller activity as of July 13th. So, if you think about it, Nike ultimately lost its ability to gain marketing control because of the resellers on Amazon. Now, Nike will be able to regain full control of their products being sold and not having to worry about losing profits in the future.
Having Direct Contact with Customers
Regardless of actually beginning to sell products yet, Nike has remained the number one brand on Amazon.
However, Amazon is not the only partner that Nike has made. In the European market, Nike has set up shop with both of Alibaba's Zalando and TMall for over five years now. Nike was even seen selling shoes on the Zappos website, which Amazon acquired in 2009.
Therefore partnering with Amazon now makes sense. The customer base is strong, their competitors have a presence and they will more than likely increase their overall profits because of it.
Revenue Will Skyrocket
Even though the amount of revenue has slowed for Nike due to the closure of The Sports Authority, the sports retail giant remains strong in their market. Now, because of this partnership with Amazon, Nike's digital marketing capabilities will be able to shine through to produce some fresh revenue. Not only that, but Nike will be able to save on digital advertising by working through Amazon.
By saving millions on digital advertising, Nike will be able to reach their set goal of $50 billion in new revenue by 2020 without having to spend a dime. This will allow Nike to always remain on the plus side.
For now, Nike has expressed that their partnership with Amazon would remain small until management is able to review all information pertaining to the deal and the future of Nike as a whole.