Nike, Inc. (NYSE: NKE) being one of the world’s largest sportswear maker might collaborate with the world’s largest online retailer Amazon to increase profits as well as benefits all over.
Nike’s shoes, apparel, and accessories are already sold on Amazon but are purchased by third-party sellers and unlicensed dealers. If sold directly on the site, it can eliminate the distance between Nike and the customer which allows the company to better the direct to consumer aspect especially millennials who shop more often on Amazon than other groups. Pricing and presentation can also be better controlled which can increase revenue and customer retention.
Goldman Sachs visions that the deal can be worth potentially up to $500 million of revenue yearly which is an additional 1 percent of global sales for Nike.
Being that Adidas and Under Armour are Nike’s top competitors, they already sell directly on Amazon highlighting the newest and best products the companies have to offer. Whereas Nike does not have anything similar to that selling channel giving Adidas and Under Armour a competitive advantage.
By selling on Amazon, it can serve as a replacement for physical sports retailers such as Sports Authority who have gone bankrupt in recent years. Dick’s Sporting Goods as well as Foot Locker were also down in early market trading due to the rise of competition. Even being some of Nike’s biggest retailers, Dick’s has reached an 18-month low while Foot Locker reached a 3-year low.