Nike ended a two year pilot in 2019 and moved away from Amazon, to sell directly to consumers. This is not about Amazon or third party distributors at large, its about Nike.
One of the Nike’s Maxim states: “Nike is a Brand”.
Nike is where is it today because it insists on total involvement. That little checkmark that Nike calls the ‘swoosh’, is a symbol of global leadership. An iconic brand that was built to serve one purpose – to bring inspiration and innovation to every athlete in the world.
Bill Bowerman, athletics coach, who joined Phil Knight as a co-founder defined the athlete: “if you have a body, you are an athlete”. That has inspired generations to just do it, inspired them to scratch that itch and then surprise themselves with what they were capable of achieving.
Amazon is a very large market place. The weekly market, the daily market with awesome deals, the best deals that you can find and also deals that vanish from your cart in a few minutes if not purchased. With a long tail of products it is an ever growing ‘one-stop-shop’ for everyone’s every need and likewise commands a lion’s share in the online distribution model. This is where the paths begin to diverge between Nike and Amazon.
Online marketplace that do not serve a niche market have a very different set of metrics to achieve. There business needs are different. These metrics may not always be consistent with the needs of certain brands.
Take Alibaba, they just clocked over USD38Billion in one day! They were on a GMV run and broke all previous records. A great achievement from the top line perspective indeed. Such numbers become possible on the backbone of offers and deep discounts across products, brands and suppliers.
From the perspective of brands that are hyper concerned about authentic brand experiences some of the key characteristics that define large marketplaces are usually not suited. Some of these characteristics that the brands must grapple with, include the following.
Deal Driven: Nike is in constant pursuit of its mission to ‘further human potential’. A primarily deal driven environment does not align well with that mission. Technologically advanced products come at a price and a perception of discounts has the potential to erode value for such brands
Company matters: Brands are known by the company they keep. In a brick and mortar world the merchandisers juxtaposition similar brands together to maintain coherence and consistency of presentation. This is not always the case in an online world where algorithms are choosing what the last few users choose to surf and choose to buy. Recommendation engines running in the background may not throw up like-brands. A cogent presentation is very important to present a consistent brand image.
Fake reality! This monster refuses to go away for the online marketplaces. With hundreds and thousands of suppliers with equal number of brands this is an ongoing battle.
From a brand perspective it is a non-negotiable if a fake is available at discounted prices on the same platform. This negatively impacts a brand like non other.
In the differing needs of online markets places and brands like Nike the agency problem gets amplified to another level. Either is right in what they do individually but possibly wrong if they do it together. The disservice that brand can do to itself is decidedly higher in this case. Amazon has put in ‘Project Zero’ to tackle the problem of counterfeits. The battle will continue.
Nike has strong partnerships with Foot locker, Nordstrom, Dick’s sporting goods and will leverage these more as it continues to strengthen its own digital suite to engage more customers and deliver a superior brand experience.
Nike wins when Nike is of the game, not just in the game.
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