A buyer rummaging through Amazon.
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Nike breaks with Amazon.
The sneaker retailer announced that it would no longer sell goods through the ecommerce giant's website to focus on Nike's own direct customer business. The news triggers retail alarm bells, and some speculate that other brands may follow Nike's example. And some say they are smart to do this.
"Brands do not need Amazon," said Jefferies analyst Randy Konik. "Amazon had an advantage in terms of delivery speed, but that advantage has been thickened, and the move from Nike to the Amazon platform reinforces our view that retailers / brands will not be displaced by Amazon."
"The move shows that we are strong brands recognize that traffic that is channeled to their own website (eg NIKE.com) is more self-sustaining, more profitable and actually brand-enhancing, while Amazon's traffic and incremental revenue .com are less profitable, but also less brand-promoting, "Konik continued. "We believe that many strong apparel brands (and even non-apparel brands) will avoid or restrict their relationship with Amazon in the future."
Amazon has been trying to become a bigger name in fashion, but many claim that this is still hard to navigate and, above all, discover new brands. It is also often difficult to determine whether items are being sold by third parties or directly by the brands that produce them.
In recent years, Amazon has courted brands like Nike, PVH's Calvin Klein, Chico's, Sears and J. Crew to sell them there. It has worked with influencers prior to Prime Day to promote fashion contracts. Recently, the company began to send out its first Christmas catalog, focusing on its fashion offerings.
But Konik argues, "Amazon is just a traffic aggregator that reduces friction in consumption … it does not build communities."
I do not immediately respond to CNBC's request for comment.
"The Amazon threat has now proved exaggerated," Wells Fargo analyst Tom Nikic said in a note. He added that pressure on Foot Locker, one of Nike's key wholesale partners, to which it is still dependent, should be "alleviated".
Omar Saad, ISC analyst at Evercore, wonders if other brands will follow Nike's example.
Nike stock gained 1
– CNBCs Michael Bloom contributed to this coverage.