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The deal between Nike and Amazon could harm retailers of sporting goods

Nike is going to launch a pilot program for the selling of certain products on Amazon and Instagram, which can affect sales in the retail sporting goods stores such as Foot Locker Inc.

01.Jul.17 8:15 AM
By Daria Zaytseva


The deal between Nike and Amazon could harm retailers of sporting goods

Nike expected that this deal would help to displace counterfeit products sold through unlicensed dealers online, and give it more control over its distribution. Shares of the company rose to 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. by nearly 2 percent, Hibbett Sports Inc. by 6.8 percent and Big 5 Sporting Goods Inc. by 5.3 percent.

If the Nike partnership with Amazon expands beyond the current pilot program, the sporting goods retailers will strike again. According to analysts, the sporting goods market is already in deep trouble: several retailers, such as Sports Authority, already apply for bankruptcy and Nike deal may force existing retailers to close more stores.

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.

But Nike still depends on the wholesale channel for two-thirds of its revenue and will be cautious about making any decisive shift to selling directly on Amazon.

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