Amazon and Nike, partnership or war?
The dominance of the fashion distribution
Why is Nike selling on Amazon? Nike already has an excellent web site and physical stores in all major cities of the world. To be in Amazon means to give a cut to them and also lose some control over sales, but also brand. Nike is well known and influential, why does it accept to be under brand like Amazon?
Amazon is growing in many areas. Fashion is one of the latest, and Nike probably could be qualified in that area. The dominance of the distribution channel for only one player can have grave consequences for all of us as users, and also for small companies.
Brand. Cut intermediaries
Nike has a section in Amazon dedicated to their brand. Before that, you could already buy Nike products but only through third-party resellers. With a direct presence, Nike cuts intermediaries and ensures a better experience for the user. Nike has better control of its brand. Amazon monitors the side and blocks third parties.
Marketing. Personal touch
With a staple section in Amazon, Nike can give a better experience to the user. When there are a lot of different distributors and intermediaries, everything is confusing. In those cases, it's common to find identical products at different prices. Sometimes there are small differences. Many doubts arise, and trust is severely affected.
With a direct presence, Nike can clean the offer and simplify the options to choose. At the same time, they give a personal touch to the product. Amazon experience, in general products, is efficient but a bit depersonalized. With a more direct presence of Nike, everybody wins.
Nike probably limits its presence at the first stage. You will not be able to find all the models online.
That maintains the door open for actual distributors. Nike knows how to segment the market. Perhaps places like Footlocker, for example, can have some high-end models that will not appear on Amazon.
The presence of Nike in Amazon is a test. It all depends on how things evolve and what is the reaction of the consumer.
The deal represents a menace to all sports distributors and especially, the physical ones.
Distribution options for Nike
Remember that Nike also has many physical stores. They have all the products, control the experience, and can experiment with new approaches. The limitation is that they can be only in select locations. This is where nike.com has a significant role. Nike owns the website and controls all the process.
With physical stores in select places and the online store for the rest, why does Nike need Amazon? It could be competency to their proprietary stores. At the same time, they will have to give a cut to Amazon, part of the benefits.
Nike is interested in the deal with Amazon because they can clean the intermediaries that damage the brand experience on Amazon.com. It also gives them access to a segment of Amazon Prime Members (Many Prime Members do not even try other places when they go shopping, that makes them an exclusive and attractive group). Even with all that, it will probably be cannibalization to their stores, Nike online and offline will suffer. That is why they will have to move slowly and with caution.
Adidas, Ander Armour
Adidas already has an Adidas Store inside Amazon.com. That must be another important reason for Nike to be on Amazon's site. They cannot leave that market to one of their biggest competitors.
Other brands have smaller presences on Amazon, but that could change, and Nike needs to position itself in that store that is growing fast and controlling the distribution.
Amazon is the great beneficiary. They will make more money, they will offer a better experience to their users, and they will increase the traffic to their website. After buying a Nike product, many consumers will browse the site and buy other things as well.
The rest of the Nike distributors are in trouble. In the short term, Nike could give them some segments, a line of products for a certain kind of public. In the mid and long term, Amazon can grow and eat more and more of their cake. The third-party distributors are the great losers in that deal Nike-Amazon.
Amazon Echo Look and Prime Wardrobe
Amazon Echo Look is a voice assistant with a camera. It can take full-length photos and short videos using only the voice. This is perfect for fashion. The Amazon consumer can try clothes and shoes, share opinions with friends and family in other locations, and buy. All that only with the voice.
On the other side, Amazon Prime Wardrobe lets you try on clothes before you buy. They send you the clothes you select, and you only keep what you want.
Both initiatives remove all the friction, making the buying experience fast and easy.
The deal with Nike is another significant step to control the fashion distribution.
Amazon and Whole Foods
Amazon bought Whole Foods only a few days before the deal with Nike. Whole Foods is a supermarket chain in the USA specializing in natural products. Most of their stores are in the USA. Amazon is fighting to dominate all of the distribution channels. They began with books. Now food and fashion seem to be the next big chapters.
What happens to the small ones
Even the big, big companies like Adidas and Nike have to be on Amazon. It doesn't matter if they like it or not. It seems that Amazon will control all the distribution channels. Now food and fashion. Tomorrow it could be you.
I think there is space for the small ones. There are specific marketing strategies you can apply in your distribution. I will talk about that in another post.
I have several posts related to Amazon and their role in the marketing distribution:
I have also talked about Amazon Echo and their marketing strategy in front of other voice assistants:
All the posts