Nike Makes It Official: It Will Sell on Amazon and Instagram
Nike (NKE) confirmed on Thursday it will finally start selling its products directly on Amazon.com (AMZN), betting that the extra sales will outweigh any loss of control in how its merchandise is presented.
The partnership with Amazon is in its early stages and involves only a “limited” section of Nike products for now, Nikes CEO Mark Parker told investors on a conference call Thursday afternoon to discuss quarterly results, confirming recent media reports.
“We are looking to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling,” Parker said, noting that the company is exploring changes in how it sells online.
While Nike is one of the top selling brands on Amazon, until now the athletic wear maker’s products have only been available via third-party vendors on its market places. The proliferation of third-party sellers on the site has weakened many top brands’ control of pricing and distribution, prompting them to take a risk and sell directly on Amazon. The Wall Street Journal this week reported that in exchange for selling directly on Amazon.com, Nike won concessions from the online retailer to more strictly police counterfeits and restrict unsanctioned sales. Nike is the top selling brand on Amazon, according to Morgan Stanley.
Nike’s revenue could rise by $300 million to $500 million in the United States, if the pilot turns into a more meaningful partnership, Goldman Sachs analyst Lindsay Drucker Mann has estimated in a client note.
Adding to the pressure to beef up Nike’s e-commerce has been a a slew of recent retail bankruptcies including those of The Sports Authority and Gander Mountain. What’s more, with the weakening traffic at major stores like Macy’s (M), J.C. Penney (JCP) and Kohl’s (KSS), Nike has been looking at ways to sell directly to consumers in an initiative called “Consumer Direct Offense.” As part of that, Nike also announced on Thursday a project to sell through on Facebook’s (FB) Instagram, an initiative first reported by Bloomberg News.
In its most recent quarter, revenue rose 5.3% to $8.68 billion, beating analysts’ average estimate of $8.63 billion, according to Thomson Reuters I/B/E/S. Excluding certain items Nike earned 60 cents per share, well ahead of analysts’ average estimate of 50 cents.