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Analysts: Troubles Ahead For Amazon As Nike Departs

(Filed Under Financial and General Interest News). Nike recently decided to stop wholesaling its products to Amazon Retail, prompting a variety of assessments from analysts and the business media, many of them suggesting there are serious problems ahead for the online behemoth.

Following the initial report from Bloomberg in mid-November, the ominous reporting began. Several writers noted that some prominent brands have already stopped selling to Amazon due to concerns about the proliferations of fakes on the platform and the retailer’s inability to rein them in. Others said brands are concerned that Amazon is accumulating a massive trove of consumer sales data related to their products, and then using this data to launch its own, similar private label items.

Under the headline, “Nike Is the Latest Brand to Pull Its Products From Amazon,” an Adweek story said “one analyst likened the Amazon partnership to inviting in a Trojan horse.”

Another likelihood, noted by various sources, is that the threat of fake products on Amazon will now increase as major brands abandon direct selling on the platform, since the retailer will now have even less reason to police its site. Several stories also cited brands’ frustrations that they are unable to control pricing on Amazon.

The widely distributed company statement read, “As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail. We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.” Nike began the program in 2017. And while it will not be selling directly to Amazon, third party sellers will continue to widely offer Nike products on the platform.

In reporting the story, The Wall Street Journal stated Nike’s move is a “blow to Amazon’s effort to court big brands.” The LA Times wrote, “The question now is whether other Amazon partners follow Nike’s lead. Few other brands possess the kind of muscle Nike has, so it may be harder for them to leave.”

Inc. suggested, however, “Nike’s shift could represent the beginning of a much bigger change in the way brands sell online.” And Forbes opined forebodingly: “And this is how it starts. A big national brand says it won’t do business with this retailer anymore. A new research study comes out that reports shoppers are less interested in buying things at this retailer and instead prefer their big competitor [Walmart]. And assorted dings and dents start pinging the reputation and very soul of the company. Welcome to Amazon: The Backlash Years.” — NM

more Financial and General Interest News >>

Published 11-19-2019 by Nick Monjo

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