What happens when a top athleticwear brand and a giant in e-commerce come together? We might soon find out, according to a Goldman Sachs analysts’ note obtained by the Financial Times.
The analysts said Wednesday that Nike “could be close to commencing a direct relationship” to sell its products on Amazon, the Financial Times reported. By adding Nike to its sellers list, Amazon will continue to expand its offerings after having recently debuted its new ‘Try Before You Buy’ program for Prime Members, as well as its recent purchase of Whole Foods in a foray into groceries.
The news sent sporting retailers like Dicks Sporting Goods and Foot Locker’s shares down as people considered the effects of such a partnership.
Research advising company, Gordon Haskett discussed the idea of Nike selling direct through Amazon, compared to its current model of selling through third parties and department stores.
“While competition is competition, should Nike form a strategic alliance with Amazon, one of the big national brand traffic drivers today for both KSS/JCP would be impaired to some degree,” said Gordon Haskett analyst Chuck Grom.
A big detractor for Nike has been the number of its products that appear on Amazon Marketplace, a party for third party sellers, as well as the fact that Nike sells products to Amazon subsidiary, Zappos.
According to the Financial Times report, Goldman Sachs relayed many advantages Nike would have if the company signed on with Amazon, including direct exposure to Amazon’s huge and quickly evolving e-commerce platform. Nike would also have more control over how its products are shown and sold via the website. Not to mention, Nike would get a more direct line to millennials and Gen Z, who both shop heavily on Amazon.
“We expect Amazon to remain focused on the apparel category and see additional direct relationships with major brands only furthering its momentum in apparel as the category continues to move online,” Goldman analysts wrote in the note.