In late 2019, Nike announced that it will no longer be selling any of its products on Amazon as a first-party seller. In attempt to minimize rogue and counterfeit sellers, Nike had originally planned to work as a direct wholesaler for Amazon. This plan would allow Nike to have a massive influence on the online market and significantly control these fraudulent sales.
However, despite the promising results of this deal, Nike pulled out of the deal after just six months. Nike was unable to control the Amazon marketplace and although third-party sales had decreased, Nike's first-party sales did not significantly increase, indicating that the online market will typically regulate itself almost consistently. It is important for us at ZILGER Brands to educate our partners about such issues with the Amazon marketplace and how it is manipulated. Over 50% of products sold on Amazon are sold by independent sellers who pay their brands a commission on each sale. What people don't know, is that the market has what is called a "gray area", which is composed of gray market goods and products that are produced by the brand but sold via unofficial sellers. These sellers are known as the independent, third-party sellers that greatly influence the marketplace. In Nike's case, these were the independent third-party sellers who sold unlicensed Nike goods. Despite efforts to reduce the presence of these unofficial and unlicensed sales, Nike was still unable to redirect sales to their market after these unlicensed sellers were removed from Amazon. Additionally, Nike did not have a designated brand store on Amazon and were losing sales to competition. Overall Nike product sales declined and first-party sellers did not recover. So, what happened? What went wrong? ZILGER Brands experts can detect these issues because there are many gaps in the marketplace. These unlicensed, unregulated sellers are difficult to permanently eliminate, as they come back under different accounts and names, making them hard to track. These accounts have many existing ratings and reviews. In this case, Nike did not surpass the amount of ratings on their account, making their official products more difficult to find for Amazon customers. Our team is aware of these issues with potential brands and work to build sustainable and impermeable accounts that are guaranteed to overrule the grey market. The future of retailers needs to recognize these third-party retailers, as they are likely not going anywhere, and work to overcome them, as ZILGER Brands does with our partners. Amazon is now partnering with about 40 retail partners in an effort to enhance "direct to consumer" sales efforts. It is vital to work with and around Amazon's platform to maximize control, sales, and exposure to truly benefit from the market. Almost 90% of customers are more likely to buy from Amazon over any other marketplace and about 74% of consumers say they visit Amazon when they are prepared to make a purchase. Taking advantage of each and every consumer is vital for ZILGER Brands to work with our partners strategically and holistically to both control their brand as well as increase exposure.
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