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The deal — which is expected to help Nike Inc <NKE.N> weed out
counterfeit products sold through unlicensed dealers online and
give it more control over its distribution — lifted the
company's shares to a more than three-month high on Friday.
Nike's move confirmed a June 21 report from Goldman Sachs that
said the company would launch its products on the world's
largest online retailer.
Since then shares of sporting goods retailer have fallen — Foot
Locker Inc <FL.N> by nearly 2 percent, Hibbett Sports Inc
<HIBB.O> by 6.8 percent and Big 5 Sporting Goods Inc <BGFV.O> by
5.3 percent.
"They're all scrambling right now," Judge Graham, chief
marketing officer of market research firm Ansira told Reuters.
"The decision of Nike considering to sell directly to the
consumer and that too with Amazon, they're all getting nervous."
Sporting goods retailers, which rely on Nike for a substantial
part of their wholesale revenue, would be hit further in case
Nike's partnership with Amazon expands beyond the current pilot
program.
The sporting goods market is already in deep trouble, with
several retailers such as Sports Authority already filing for
bankruptcy, and Nike's deal could push existing retailers to
shut more stores, analysts said.
Nike, whose products are already sold on Amazon through
third-party and unlicensed dealers, could build an additional
$300 million to $500 million of revenue in the United States or
1 percent of its global sales through its expansion as a dealer
on Amazon, Goldman Sachs said in a client note.
But Nike still depends on the wholesale channel for two-thirds
of its revenue and will be cautious about making any drastic
shift to selling directly on Amazon, said John Zolidis, analyst
at Quo Vadis Capital Inc.
To strike a balance, Nike may unload more of its non-premium
products on Amazon, while it will still launch exclusive deals
with its brick-and-mortar partners, analysts said.
"The limited-edition market is store-driven," said Maya
Mikhailov, cofounder of mobile retail app developer GPShopper.
"What makes limited edition so exciting is finding out about the
deals that stores have through their apps ... going to the
store, and the consumer being a part of that whole in-store
experience."
(Additional reporting by Siddharth Cavale in Bengaluru; Editing
by Shounak Dasgupta)
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