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Nov 14, 2019

Nike retail chief on Amazon split: We want 'premium experiences'

A customer carries boxes of Nike Inc. shoes outside of the NikeTown Los Angeles retail store in Beverly Hills, California, U.S., on Sunday, March 20, 2016.

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Nike Inc.’s decision to stop selling directly through Inc. is part of its ongoing push to give customers a more “premium” buying experience, according to the executive in charge of the athletic brand’s retail strategy.

“We want to have great partners as part of that ecosystem, but we want to make sure that those experiences are the most premium experiences that we can possibly provide,” Heidi O’Neill, the Nike president in charge of retail and its direct-to-consumer operations, said on the Bloomberg Business of Sports podcast.

Premium doesn’t necessarily mean luxury. Nike holds up Foot Locker Inc. as the kind of retail partner that does a better job selling its products. The footwear chain has tested out technology that lets customers check inventory, reserve products and scan bar codes -- all through the Nike app.

Amazon doesn’t typically work that way. Nike lacked control over how its products were presented on Amazon, how much information was available about them, and what else to recommend based on a shopper’s preferences.

That’s why Nike plans to stop selling directly on Amazon by January and focus on using its technology to reach consumers.

“We’re able through our knowledge of their purchase history -- and maybe their running history and training history -- to make sure we’re a coaching partner, a community partner, and can really build a relationship over time to serve them better,” O’Neill said. “That’s the kind of future we see for our consumers.”

That sentiment gets at the main point of friction between Amazon, a giant in e-commerce, and the many brands that feel like their products get short shrift on the site. Big brands see their wares on Amazon being sold by third parties at a discount, and sometimes the products are counterfeit.

Placement Problem

That’s why some some big names in fashion shun Amazon’s platform: They don’t want to see their products alongside cheaper versions sold by others. In Nike’s case, some of the third-party products got better placement than the ones it sold directly.

When Nike announced the pilot program with Amazon in 2017, it was viewed as a major win for the e-commerce giant. Now, the deal’s reversal threatens to reinforce retailers’ unease, and has some wondering if others may defect as well.

Nike isn’t eliminating wholesale all together, though it is in the process of drastically reducing the number of retailers it works with. That list was 30,000 partners as of a few years ago; executives want to focus primarily on about 40.

Earlier this year, one of Foot Locker’s New York City locations unveiled a new Nike experience, which centers on letting customers use the app. It was the first time Nike has lent its own digital capabilities to a retail partner.

“We were able to make that connectivity into a great digital and physical shopping experience for consumers,” O’Neill said. “That’s a great example of how we’ll continue to have partners be a really important part of our ecosystem.”