Why Amazon Losing Nike Highlights a Major Risk

The decision Nike (NYSE: NKE) made to sever its official sales relationship with e-commerce giant Amazon.com (NASDAQ: AMZN) was jarring, but not necessarily surprising. It's the world's biggest online-selling platform, yet this partnership was often seen as strained and unfruitful. Amazon never fully quelled competition from counterfeiters, and the cooperation never appeared to be a game-changing revenue driver for Nike. Nike's new technology-minded CEO all but assured the athletic apparel brand was ready to move in a new direction with its own direct-to-consumer (DTC) efforts.

If Nike's call was a one-off among Amazon's partners, then so be it. Amazon can get by without the brand. Indeed, it's got its own athletic apparel brand to cultivate. Nike's decision may reflect a sentiment other Amazon partners are quietly entertaining, though. If those other vendors and suppliers follow Nike's lead -- which some say is inevitable -- Amazon shareholders have good reason for concern.

In retrospect, it was more of an experiment than a relationship. Nike began legitimately listing some of its merchandise on Amazon.com in 2017, largely to stave off consumer frustration of finding out their Nike-branded goods purchases via Amazon weren't actually made by Nike. At least by working together, counterfeiting might be contained. The sports apparel giant might make a few additional bucks in the process, too.

Source Fool.com