Following the news that Nike will no longer be selling its products on Amazon, CNBC is reporting that other major brands may soon be jumping ship, as well.
Per the article, Nike pulled its products as part of an effort to boost its direct-to-consumer business, which, according to Tim Armstrong, the former CEO of AOL and ad chief at Google, could be the start of a new “megatrend.”
“Nike’s decision to stop selling merchandise to Amazon is the start of brands opting to go directly to consumers,” he says. And “the direct-to-consumer movement will be the replacement for the retail issues and commerce issues that are going on because of the platforms.”
Other retail analysts agree, apparently, saying that more “retailers will follow suit after Nike’s announcement.”
From an economics standpoint, it’s not a bad business move. An MSRP is an MSRP, regardless of marketplace — the only thing that changes are margins, and those margins are basically doubled when a product is sold DTC.
As one analyst put it, “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.”
You can read more about it at CNBC.
