In what has been a bit of a shotgun wedding, Nike has finally agreed to sell its products directly to Amazon. With hordes of third party sellers offering up Nike footwear and apparel on the giant e-commerce site, Nike was losing control of pricing, and leaving itself open to fake goods. Laura Stevens and Sara Germano write:
One reason for their capitulation is the collapse of a retail distribution network they could better control, as malls flounder and chains like Sports Authority Holdings Inc. shutter.
A company’s power to dictate who could sell its products and how, penalizing retailers that step out of line by withholding inventory or other measures, has been a critical tool to preventing unwanted discounting, which damages the ability to sell at full price.
Controlling their distribution “eliminated the exposure and much of the risk of having excess inventory in the market,” said Ken Seiff, a venture capitalist at Beanstalk Ventures and a former retail executive.
Amazon, on the other hand, often gives third parties wide leeway on products sold on its site. Its goal is to offer the widest possible assortment of goods and bring down prices.
Read that last part again. “Its goal is to offer the widest possible assortment of goods and bring down prices.” That’s my Bezos Law. Nike could be flirting with disaster, as Jeff Bezos seems to be more focused on lowering prices for anything he sells than on providing a brand building platform for sellers. Time will tell.