Nike Inc. is preparing to relist its footwear and apparel directly on Amazon.com, a significant strategic reversal for the sportswear giant, which severed ties with the e-commerce behemoth in 2019 to prioritize its own direct-to-consumer (DTC) channels and cultivate a more premium brand experience. The move, expected to see a selection of Nike products available on Amazon as soon as next week, signals a pragmatic adjustment to current market realities and Nike’s ongoing efforts to invigorate sales growth.

The original decision to depart Amazon, under then-CEO Mark Parker, was rooted in a desire for greater control over brand presentation, pricing, and to more effectively combat the proliferation of counterfeit goods and unauthorized third-party sellers. Nike had aimed to steer customers towards its own website, apps, and physical stores, believing this direct relationship would foster loyalty and higher margins.

However, the landscape has shifted. As reported by The Information and CNBC, Nike’s direct sales have faced headwinds, and the company is now looking to broaden its reach. Analysts suggest the pivot underscores the challenges Nike has encountered in sustaining the robust growth of its DTC segment. Tom Nikic, an analyst at Wedbush, told The Information the decision is “a clear sign that Nike’s own DTC business isn’t growing as fast as they want/need it to.” Similarly, Neil Saunders, managing director of GlobalData, conveyed to CNBC that “this is a pragmatic move from Nike. While it has ideological purity in wanting to sell direct-to-consumer, the reality is that its own DTC channels are not firing on all cylinders.”

Under current Chief Executive John Donahoe, who himself has a background in e-commerce from his time leading eBay, Nike appears to be acknowledging the immense customer base and product discovery potential that Amazon offers. Sources indicate the renewed partnership will involve Amazon sourcing products directly from Nike, a detail highlighted by Modern Retail, which cited an email sent to Amazon sellers stating, “Amazon is working directly with Nike to source their products.” This direct relationship is crucial, as it differs from a scenario where third-party sellers dominate listings.

Initially, the offering will be a “limited product assortment,” according to CNBC, suggesting Nike is treading carefully, perhaps testing the waters or focusing on specific product categories that align with Amazon’s vast marketplace without overly diluting its premium brand image. Yahoo Finance noted that analysts like John Zolidis, president of Quo Vadis Capital, see this as Nike acknowledging “that the DTC strategy, while good for brand and margin, is not enough to drive the growth they want.”

The decision has not been without its critics. Sam Poser of Williams Trading, speaking to The Information, characterized the move as “a sign of desperation.” Nevertheless, for Amazon, attracting Nike back is a significant win, lending further legitimacy to its platform and its efforts to provide authentic goods and better brand controls – concerns that partly led to Nike’s initial departure.

Investors have reacted to the news, with Barron’s reporting on the stock implications as the market digests this strategic recalibration. The return to Amazon is a clear indication that even dominant brands like Nike must continually adapt their distribution strategies in an evolving retail environment, balancing brand control with the undeniable reach of major e-commerce platforms. While the full scope and impact of this renewed alliance will unfold over time, it marks a notable chapter in Nike’s ongoing quest for growth and market penetration.