Nike Splits From Amazon

We normally celebrate when two of our recommended stocks collaborate. Unfortunately today I am reporting a breakup between Nike and Amazon. Remember in 2017 Nike started a pilot page on Amazon after years of resistance. Nike was always worried that they would lose control of the retail experience, client data and most importantly, product quality (many counterfeit items get sold online).

A Nike spokesperson said the following earlier this week. "As part of Nike's focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail."

Remember too that the new incoming CEO, John Donahoe, was the CEO of Ebay. He is an online retail expert. Nike is clearly backing themselves to manage the online experience on their own. They do have the size and scale to be able to do that successfully. In fact, nearly a third of their sales now come from direct to consumer. That is either online or through Nike stores. Nike is aiming to make this more than 50% of their business. A relationship with Amazon was a step backwards for this initiative.

They may have broken up, but both companies will be just fine without each other. This is far more significant for Nike than Amazon. Nike was up 2% on the news. Nike will continue to use AWS for their web hosting and online retail.