Nike announced that as part of the company’s focus on elevating consumer experiences through more direct, personal relationships, it will stop selling its merchandise directly to Amazon.com. Here’s why Nike made the right decision.
Partnering with Amazon undoubtedly has benefits — namely, a built-in audience and speedy delivery options. However, it’s crucial to consider what you’re jeopardizing in exchange. You're losing control of how your brand is presented. Even if you're lucky enough to benefit from Amazon's search algorithm — another thing brands have no control over — you essentially have no say in how your brand experience is delivered.
Last year, Nike partnered with Jet.com, and given what Jet’s chief customer officer said, I’m not surprised. David Echegoyen told Footwear News, “the way in which people find, discover and use your product is as much part of the experience as the fact that you buy them and use them.” Echegoyen explained that Jet’s focus would be on delivering an experience that would allow both brands to utilize customer insights to enhance their experience. And because Nike products would only be sold direct from the brand on the Jet site, the confusion and brand dilution that shoppers often experience on marketplace platforms would effectively be eliminated.
What every brand should seek in its retail partners — and, really, all partners, to the extent that it’s possible — is recognition of the importance of delivering a cohesive brand experience at every touchpoint, and the desire and capabilities to do so. The advantages of owning your brand experience are abundant.
Control Your Customer Journey
By limiting the channels where your products are available, you’re better able to deliver the best experience to your customers. This includes everything from product recommendations to delivery preferences, the physical unboxing experience, and more. This controlled approach also serves as a preventive measure against counterfeiting issues that could otherwise tarnish your brand’s reputation.
Own Your Data
Amazon traces every shopper’s step, utilizing that data to make product suggestions based upon its own algorithm. These are insights that would be incredibly valuable to brands, arming them with information that can help to deliver a better experience across all platforms, ultimately earning loyal customers. The problem is Amazon owns that data and doesn't share it with brands. Now, selling direct to consumer on your own channels provides you with 100 percent of your data, the benefits of which warrant its own article. With a compatible, focused retail partner, there may be more room for a discussion about data sharing.
Secure Better Profit Margins
It’s difficult to predict revenues when the sales process is out of your hands. Going direct to consumer gives brands the most control over profit margins. However, as a new or emerging brand, third-party channels are commonly part of the mix. Profit margins are dependent upon the type of partner and the value they bring to the table — or in this case, the cart. Amazon controls the market, so the terms of merchant agreements are almost certainly dictated. However, when you have a like-minded partner dedicated to delivering an experience, the terms may be subject to negotiation.
Shatter the Delivery Myth
Thanks to the "Amazon Effect," brands and retailers have had to figure out how to meet delivery expectations. My company conducted a 2019 study that revealed online shoppers weigh shipping costs and delivery speed more heavily in their purchasing decisions than ever. Consider that 58 percent of respondents said shipping costs greatly impact their decision to make an online purchase, and 62 percent said free shipping was the most influential factor in their decision to make future purchases. By utilizing sales and transportation data from your fulfillment team, you can map your customers’ journeys and customize shipping pricing and delivery speed to meet their unique expectations.
Selling through partners can be a huge asset, but it means there will always be an intermediary between you and your customer. If your sales channels include third-party retailers, make sure you’re all on the same page. Amazon can bolster brands in the short term, but to build a sustainable business, you must control how customers experience your brand, wherever they are.
Maria Haggerty is CEO and one of the original founders of Dotcom Distribution, a premier provider of B2C and B2B fulfillment and distribution services.
Maria Haggerty is CEO and one of the original founders of Dotcom Distribution, a premier provider of B2C and B2B fulfillment and distribution services. She received her Bachelor of Business Administration from University of Houston, C.T. Bauer College of Business with a concentration in Accounting. Maria plays an integral role in developing and defining all aspects of the business, including sales and marketing, operations, finance and IT. As CEO, she is responsible for providing strategic leadership, establishing long range goals, and developing strategies for the senior leadership team. Maria has developed the systemic and procedural infrastructure necessary to provide timely and accurate analysis of budgets, financial reports and financial trends in order to assist the Board, senior executives and clients in performing their responsibilities while achieving favorable results. She works closely with the leadership team to enhance, develop, and enforce procedures that will improve the overall operation and effectiveness of the corporation. During her tenure at the Dotcom, Maria has developed an environment of continual improvement by supporting the Senior Leadership Team and their department managers on continuous process, space labor, automation, and financial best practices. Prior to founding Dotcom, Maria was a CPA at Arthur Andersen and was later the CFO of GoodTimes Home Video where she helped grow the company’s distribution business. When Maria is not in the office, she enjoys traveling around the world and practicing her photography skills.