The world’s largest sportswear maker and the world’s largest online retailer might finally work together.
“Our channel checks indicate [Nike] could be close to commencing a direct relationship selling product on Amazon.com,” the Goldman Sachs analyst note reads.
For Nike, there are tangible benefits from selling directly on Amazon. The company’s shoes, apparel, and accessories are already sold on Amazon, but from third-party sellers and unlicensed dealers that purchased the product wholesale from Nike. Selling directly on the site eliminates a layer between Nike and the consumer, allowing the company to better control pricing and presentation. It’s not quite direct to consumer, but it’s a lot closer.
Goldman sees it as a deal worth potentially up to $US500 million of revenue yearly — an additional 1% of global sales for the Nike.
Nike’s biggest competitors — Adidas and Under Armour — already sell directly on Amazon, and they both have fancy splash pages that highlight the the newest and best product the companies have to offer. Nike currently has no such thing, giving both competitors have an advantage on the site.
Offering directly on Amazon also gives Nike’s direct-to-consumer business even better access to younger consumers — millennials — who shop more often on Amazon than other groups.
Selling on Amazon may also serve to replace physical sports retailers that have gone bankrupt in recent years, like Sports Authority.
Dick’s Sporting Goods and Foot Locker, some of Nike’s biggest retailers, were both down in early market trading on the news of the increasing competition. Dick’s neared an 18 month low, while Foot Locker fell below a three-year-low, according to Reuters.
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