Nike‘s shares increased by 2 percent when the multinational finance company, Goldman Sachs, stated that the sportswear business will begin selling its products directly on Amazon. This would in turn raise the market competition between sporting goods retailers.
Even though its sportswear products are already being sold on Amazon by third-party unlicensed dealers, Nike could still additionally augment as much as $500 million of revenue in the United States. This also means that Nike could increase 1 percent of its global sales through its enlargement as a wholesale dealer on Amazon.
Through this partnership, Nike could eliminate excess, discounted inventory sold by third-party retailers and sell more of its products full-priced through the online channel, resulting in more brand visibility and massive monetary gains. Not only would this be a great financial move by Nike, but also it would be a smart one as it would essentially takeover all rights of selling its own products on Amazon.
Due to recent bankruptcies of The Sports Authority and other small, regional chains, Nike and Amazon’s potential partnership would send a huge, competitive statement to other sporting goods retailers, underlying that they mean serious business.
Dick’s Sporting Goods Inc, Hibbett Sports Inc, Finish Line Inc, and Foot Locker Inc have already suffered major losses in their shares due to Nike’s increased competition. This move could further worsen their financial losses and could put them in a tough financial situation. However, depending on their response, the competitive environment between these powerhouses could still remain. When pressures arise in the business world, only those who remain innovative and gutsy will prevail, demonstrating the concept of survival of the fittest.