Nike Just Left Amazon to Sell Directly to its Consumers

According to one person, Nike’s decision to sell directly to its consumers and ditch Amazon may be the beginning of other brands choosing to follow this route.

Internet entrepreneur Tim Armstrong, who was the ex-CEO of Aol, has said that the direct-to-consumer movement is “another megatrend starting.”

It was confirmed this week by the athletic apparel retailer that a pilot program to sell a limited product assortment to Amazon in exchange for better brand protections on the site will be discontinued.

“The direct-to-consumer movement will be the replacement for the retail issues and commerce issues that are going on because of the platforms,” said Armstrong, who has founded the dtx company, which aims to disrupt online shopping.

“If they have the option to go direct, they are going to go direct,” said Armstrong.

Nike confirmed to CNBC this Wednesday that a pilot program, launched in 2017, to sell a limited product assortment to Amazon, in exchange for stricter policing of the Nike brand on the platform, will end.

Direct-to-consumer business accounts for about 30% of annual sales for Nike. In its last fiscal year, Nike’s direct-to-consumer sales totaled $11.8 billion.

“The move shows us that strong brands realize that traffic driven to their own site (e.g. NIKE.com) is self-sustaining, more profitable, and actually brand enhancing, while traffic and incremental revenue from Amazon.com is less profitable but also less brand enhancing,” remaked Jefferies analyst Randy Konik.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.