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Nike could start selling directly on Amazon

Nike could start selling directly on Amazon
Posted at 6:40 PM, Jun 21, 2017
and last updated 2017-06-21 18:40:08-04

Nike could be ready to cut out the middleman and start selling directly on Amazon.com, according to a Goldman Sachs analyst report.

The sportswear brand's products can already be found on Amazon via unlicensed and licensed third-party vendors. But Nike is now reportedly nearing a deal to open up its own shop on the e-commerce giant's website.

Goldman analysts expect the move could benefit Nike by giving it direct control over "how its brand is presented' on Amazon and expand its "access to Millennial shoppers" who favor the site.

The report also estimates a possible deal could boost Nike's wholesale revenue by $300 million to $500 million annually.

It would be a welcome sales hike for Nike, which has suffered a rough few months. The company said on June 15 that it's laying off more than 1,000 workers, and its stock has shed 3% of its value over the past three months.

Nike declined to comment on the Goldman report.

To explain how the deal could improve Nike's brand presentation on Amazon, Goldman pointed to Nike competitor Under Armour, which already has a direct-sales deal with the site.

The analyst report says Under Armor clearly has an edge over Nike on the site because it has a uniquely designed landing page, is able to include its own marketing tools and provide better pictures of its products.

Nike's top rival Adidas also appears to have a unique landing page with Amazon. Adidas did not immediately respond to a request to confirm its relationship with Amazon.

Goldman analysts expect a deal between Nike and Amazon could inspire other brands who do not yet have partnerships to follow suit.

"While many major wholesale brands do not sell directly to Amazon, should Nike begin selling directly, it would only further validate these scale benefits and drive more brands to work directly with the platform," the Goldman analyst report says.

A potential Nike deal could prove to be a boon for Amazon, as well. If Nike and other major retailers begin seeking similar partnerships, it could mean a huge boost for Amazon's apparel sales, according to the report.

Amazon has been putting plenty of effort into growing its fashion business.

On Tuesday, the company announced a new test program called Prime Wardrobe that allows shoppers to try on a shipment of clothing and only pay for what they decide to keep. And back in April, Amazon introduced Echo Look, which essentially allows Alexa to judge your outfit.

Some retail experts predict Amazon will become the largest apparel retailer in the country sometime in 2017.

Amazon's dominance has sent shockwaves through the fashion retail industry. Its massive growth in recent years has been seen as a key factor in the decline of brick-and-mortar retailers and the death of the American mall.

A Nike/Amazon partnership could mean bad news for retailers like Dick's Sporting Goods and Hibbett Sports. The Goldman report predicted that a deal could "offset" market share gains those companies expected to see after Sports Authority went out of business last year. For example, it could mean that Nike may choose to debut new products on Amazon -- rather than exclusively at Dick's.

And it appears investors are concerned. After Goldman released its report Wednesday morning, shares of Dick's, Hibbett and Foot Locker each plunged around 5%.