Sure, a lot of you out there probably go to sporting goods stores for you or your kids' gear, and then when it comes time to buy go to Amazon. And, sure, you can already buy Nike products through third-party sites on Amazon.
But still, reports out June 21 saying Nike is expected to begin directly selling its products on Amazon -- and the online shopping behemoth's introduction of a service that lets its Prime members try on clothes before buying them -- is a much more direct blow to the sporting goods retailing industry, which has in the last few years seen chains die and trends in youth participation that portend a shaky future for any store not looking for new revenue streams. Here are details from The Associated Press:
Shares in several major sports chains hit 52-week lows on word that Nike may soon be selling its gear directly on Amazon. ...
Nike goods can already be found on Amazon subsidiary Zappos.com, and its shoes and gear can be found through third-party sellers on Amazon. Goldman [Sachs said it] believes the deal would give Nike better control of its brand's presentation on the site.
But investors saw mostly the gravitational pull of Amazon, sending shares of Dick's Sporting Goods, Hibbett Sports, Big 5 Sporting Goods, Finish Line and Foot Locker plummeting between 4 percent and 5 percent in Wednesday trading.
The AP noted the shock waves Amazon's recent announced acquisition of Whole Foods is having on the store-centered grocery industry, even though Amazon hasn't said what grand plans it has yet, and on retail clothing companies with the introduction of Amazon Wardrobe: "Wardrobe essentially creates a dressing room at home, allowing customers to order clothes with no money up front, keep them for a week and send whatever they don't want back in a resealable, postage-paid box." That would apply to sporting apparel, as well, presumably creating more ease in nervous online clothes-buyers (and Prime members) like myself who insist on trying everything on before buying it.
Not everyone is in a panic yet about Amazon killing the stores that once killed your local mom-and-pop sports shop. For example, Cristiano Bellavitis, a portfolio manager of Integer Investments, who holds long positions on Nike, Amazon and Foot Locker. He wrote a piece posted to Seeking Alpha that said Amazon isn't an immediate threat to sporting goods retailers. In part, that's because you already can buy Nike products on Amazon, but it's also because Nike isn't going to throw brick-and-mortar retailers overboard just yet:
Nike is very important for Foot Locker. ... Foot Locker('s) 2016 annual report ... shows that Nike products represent 68% of all FL sales. This is a huge proportion and therefore it is not surprising that the market is reacting badly to the news that Nike might be moving to Amazon. ...
However, the opposite is also true. If we consider that FL generated almost $8B in revenues, 68% of that would be $5.44B, or 16% of total Nike sales worldwide. This is a rough calculation and figures might be lower since Nike discloses in its annual report that no customer represents more than 10% of overall sales. Regardless of the exact figure, FL is a significant portion of Nike's revenues and this is reflected on the ongoing special relationship between Foot Locker and Nike.
Well, the United States and the United Kingdom have long touted a special relationship, and now Queen Elizabeth II is freezing President Trump out of her speeches. OK, maybe not really comparable, but the point is: things can change. And Bellavitis himself notes that "Amazon is a disruptor and that it will be a dominant player 10 years from now more than today."
If Amazon is disrupting, retailers won't get to see it only in their store traffic, or lack thereof. On June 22, the Sports & Fitness Industry Association, whose members include more than 1,000 sporting goods brands, manufacturers, marketers and retailers, announced it had added Fouzan Mansuri, director and category leader for sports & fitness at Amazon, to its board of directors. (Mansuri in 2016 headlined the SFIA's Industry Leaders Summit.) It appears from this quote that a reason for Mansuri's addition is so he can show SFIA's members how to not die:
“As our industry navigates unprecedented disruption of business models, the SFIA Board of Directors is excited to welcome Amazon. We look forward to Amazon’s insight into how SFIA can be attuned to the changing needs and expectations of customers, SFIA member companies, and industry partners,” said Chris Clawson, SFIA Chairman of the Board.
