Amazon Wholesale Partnership With Nike: Why This Is Bad News For Retailers
Amazon has been making major moves lately. The retailer just purchased Whole Foods for $3.7 billion. This report came around the same time that Walmart purchased menswear retailer Bonobos and women’s indie fashion chain Modcloth. Amazon is looking to sell Nike merchandise on its website. While you can probably buy some Nike from third-party sellers, Amazon wants to become the place where you purchase official Nike clothing and accessories.
This deal could generate between $300 million and $500 million for the athletic company. While this is great news for both Amazon and Nike, it will be bad news for retailers that currently carry the brand. This news comes just a day after Amazon announced that they would let Prime members try on clothes at home for free before charging them. Goldman Sachs told clients that Amazon is close to striking a deal with Nike, reports Racked.
Competitors Adidas and Under Armour directly sell to Amazon, but Nike is one of the brands that have not collaborated with the retailer. It’s probably because of Amazon’s obvious counterfeit issue. Goldman Sachs told Racked that Nike is finally “close to commencing a direct relationship selling product on Amazon.com.” This wholesale partnership may hit other retailers very hard in the pockets. But, it could help Nike as its retail stores have been closing down in recent months.
If Nike strikes a deal with Amazon, that means J.C. Penney and Kohl’s will no longer offer the line. Other retailers that offer Nike merchandise include Dick’s Sporting Goods and Foot Locker. While Amazon has a deal with Under Armour, their merchandise is still offered at Dick’s Sporting Goods. Foot Locker won’t be able to compete since it’s already struggling. Businesses that carry the Nike name may see a bigger impact.
Amazon and Nike’s collaboration could cause other retailers to shut down by the hundreds. The retail industry has been taking a massive hit as it is lately. Hundreds of stores are closing on a weekly basis. People who work in retail are at risk of losing their jobs. It’s also unlikely that third-party sellers will survive if Nike accepts the Amazon deal. Customers would much rather buy directly from Nike than someone who’s offering a knock-off.
Amazon is trying to attract millennial shoppers who purchase clothes from the site more than any other online retailer. The data, revealed by research firm Slice Intelligence, is expected to increase with the popularity of Nike’s Air Force Ones and Converse’s Chuck Taylors, both of which are available on Amazon Prime.
On Tuesday, Amazon announced its “Prime Wardrobe” service, and the company will include a return label in the box that makes it easier for customers to send back returns. The ease of trying on clothes at home and returning them will make customers purchase items of clothing in different sizes because they know the ones that don’t fit can be returned with ease and without paying for anything, reports the Business Insider. With Prime Wardrobe in full swing, Nike’s agreement could prove a major boost for the online retailer.
[Featured Image by David Ryder/Getty Images]
