Reports have emerged of a potential deal for Nike (NYSE:NKE) to begin selling its sneakers directly through Amazon.com (NASDAQ:AMZN). Nike would potentially also be selling its athletic gear directly on Amazon’s e-commerce site. Nike saw its stock increase 2 percent after the news emerged.
Nike previously did not sell its sneakers, sports bras and hoodies directly on Amazon. Even so, there are about 72,000 listings for Nike products on Amazon.com. Some of those listings are from unlicensed vendors or for items that are counterfeit. A Nike deal with Amazon would probably require Amazon to crack down on those third-party vendors.
Competing sports businesses lost over $1 billion in market value in just one day after the reports emerged. Many brick-and-mortar retailers depend on big brands like Nike to drive sales. J.C. Penney and Foot Locker saw the biggest single-day declines. J.C. Penney saw its shares decline about 6 percent, while Foot Locker saw a 5 percent drop.
Nike’s sales growth has slowed in North America as traffic at Nike’s key wholesale partners continues to slow. Hundreds of department stores and specialty sports retailers have announced that they are shutting down this year. Sports Authority recently filed for bankruptcy, while other retailers have announced that they are closing dozens of stores.
Younger shoppers are increasingly going online for their shopping needs. In response, Nike is working to boost its direct-to-consumer channels. The company wants its branded stores and shopping-enabled mobile apps to generate $16 billion in revenue by the end of fiscal year 2020. Nike is expected to report fourth-quarter earnings on June 29.
Some industry experts say that it is unlikely that Nike would sell its premium products to Amazon. Zappos.com, which is owned by Amazon, doesn’t sell Jordan, Air Max or Nike signature basketball products. Other brands are also pulling back from third-party retailers. Coach Inc. and Michael Kors Holdings Ltd. have both announced that they’re reducing their presence in department stores.
This is not the only announcement about Amazon to make waves in recent weeks. Amazon’s announcement last week of plans to acquire Whole Foods sent shock waves through the values of supermarket rivals, which have sustained a combined market loss of over $21 billion since the announcement. Since last week, Amazon has gained $18 billion in market value.