For a long time, Nike’s resistance to selling on Amazon was common knowledge in retail. It was only two years ago, driven by the proliferation of grey-market goods and a desire for more control over its brand, Nike agreed to finally start selling its products wholesale to Amazon.
The move was part of a broader agreement between the two brands, wherein Nike would sell directly to Amazon and Amazon would remove counterfeit items and stop unauthorized third-party sellers of Nike products. At the time, it was interpreted as a sign that even the biggest brands couldn’t resist the pull of Amazon, and that selling through the eCommerce giant was a necessary evil.
Fast forward to last week, Bloomberg has reported that Nike will stop selling its products to Amazon. Amazon will no longer be able to sell Nike products directly, but a massive selection of Nike products will still be available via its marketplace’s third-party sellers. The true cause of Nike’s decision? Amazon failed as an eCommerce marketplace operator.
Every business, whether it’s a giant like Amazon or a niche retailer, has two core responsibilities when launching and operating an online marketplace:
- Build a network of the best sellers in its category, and give them opportunities to sell.
- Develop their customer base by continuing to deliver the best products at the right prices.
As Nike’s departure shows, Amazon is failing at both. Following the agreement, Amazon continued to list Nike’s own products side-by-side with cheaper counterfeits from non-curated third-party sellers. As a result, it was impossible for Nike customers shopping on Amazon to be confident that they were getting the real deal, and Nike wasn’t happy about it.
Amazon’s problems with customer and brand trust go far past grey-market offerings. It has repeatedly been flagged for offering counterfeit products that, in some cases, are actually dangerous to consumers. And on top of that, it’s a well-known fact that Amazon’s product reviews are often faked and can’t be trusted, either. This is a clear risk faced by unregulated marketplaces that stop focusing on curation and don’t leverage the right technology to control sellers.
The news of Nike’s split from Amazon also confirms Nike is continuously doubling down on eCommerce. This is unlikely to change under John Donahue’s new leadership.
What remains to be seen is whether Nike will make the mistake of moving away from marketplace sales entirely. The right marketplace opportunity can actually reconcile a brand’s desire for control on customer experience, quality and price, while still leveraging the third-party sales channels that are the ticket to sustainable, scalable growth. The problem is that Amazon isn’t committed to – or is no longer capable of – curating its seller base to ensure quality, leading to a bad experience for customers and brands alike.
The solution that the market actually demands is curated marketplaces, with operators that truly partner with brands and create a win-win relationship. Companies that operate curated marketplaces have the correct technology and systems in place to ensure a quality experience for customers and sellers – avoiding the grey-market products, counterfeit sellers, and fake reviews that proliferate on Amazon.
Mirakl customers like Afound (H&M Group), J. Crew and Urban Outfitters are taking that approach by partnering closely with big-name brands to deliver the experience that the market demands. With the automated quality control and curation capabilities on the Mirakl Marketplace Platform, they’re able to maintain a marketplace that meets the expectations of every brand and every customer. With Mirakl Catalog Manager, they take it a step further by offering a collaborative solution for sellers and the marketplace management team to manage product information.
With UO MRKT, Urban Outfitters offer a curated assortment from name brands like Moleskine alongside its owned inventory
Whether you are a marketplace operator or a brand, a successful marketplace strategy means building partnerships – and investing in the tools that give customers and sellers alike the best experience. It remains to be seen if Nike will recognize the opportunity that’s waiting for them in the curated marketplace model, but every brand should take their departure from Amazon as a lesson. In the long run it is clear that the path to growth isn’t through Amazon. It’s with curated marketplaces.
Written by Adrien Nussenbaum
Adrien is co-founder and U.S. CEO of Mirakl, the global leader in online marketplace solutions. Since graduating from HEC Paris in 2001, Adrien's career has been focused on innovation, entrepreneurship and disruption. His background in corporate finance and management consulting has allowed him to support top Fortune 1000 companies in their strategic growth and transformation initiatives, including creating and leading FNAC's marketplace from 2008 to 2011. A serial digital entrepreneur, Adrien has always been driven by the desire to invent tomorrow's economy: All Instant, a NY based Instant Messaging platform sold in 2003 and SplitGames an online video games marketplace sold to FNAC in 2008. Along with co-founder Philippe Corrot, Adrien has built and led winning teams across the globe, created hundred of jobs, and generated billions in sales for customers. Outside of the office, Adrien enjoys spending time with his wife and two daughters exploring their new home town of Cambridge, MA. But don't think you'll catch him trading Bouillabaisse for New England clam chowder any time soon.