AMZN Amazon.com Inc

By Khadeeja Safdar and Dana Mattioli 

Nike Inc. said it would stop selling its clothes and sneakers directly to Amazon.com Inc., an about-face for the sportswear brand.

The sneaker giant agreed in 2017 to sell products to Amazon in exchange for stricter policing of counterfeits and restrictions on unsanctioned sales. It was part of Amazon's effort to court big fashion brands to sell their products through its website.

In a statement Tuesday, Nike said it has decided to focus on its direct business, though it will continue to seek partnerships with other retailers and platforms. Bloomberg News earlier reported on Nike's move.

Although Nike is one of the top-selling brands on Amazon, Nike itself only sold a relatively small amount of goods on the site and mostly offered down-market items, according to people familiar with the matter. Nike executives referred to it as a pilot test.

Nike has been saving its highest-profile products and limited releases for its own SNKRS app or specialty stores that typically avoid heavy discounting.

Nike officials were disappointed the deal with Amazon didn't eliminate counterfeits and give the brand more control over gray-market goods that account for many of the Amazon listings, these people said. Such items are typically legitimate merchandise purchased from distributors or retailers, and resold on the site.

A search on Amazon's website Wednesday for "Nike sneakers" found more than 10,000 results that qualified for free shipping with Amazon Prime. A search for "Nike shirt" found more than 5,000 such results.

While rivals such as Adidas AG and Under Armour Inc. sell directly to Amazon, many big fashion brands have resisted. A few have reversed course. The owner of Birkenstock pulled its products in 2016, saying Amazon wasn't doing enough to police the gray market and counterfeit sellers.

Amazon seeks out long-term and mutually beneficial partnerships, an Amazon spokeswoman said, and negotiating terms is a regular part of any retail business. When Amazon negotiates with sellers, it seeks to bring customers the widest selection of products and the lowest prices, she said.

Nike had refused to sell directly to Amazon for years, fearing it would undermine its brand. The company has focused on bulking up sales from its own stores, apps and website. It has pared back the number of retailers it uses and now gets more than 30% of its annual sales from its direct-to-consumer business.

At the same time, Amazon's website has come under greater scrutiny as the volume of products sold by third-party sellers has exploded. They accounted for 60% of physical merchandise sales on the site in 2018, up from 30% a decade ago. Amazon has made the process to list products so simple that counterfeiters have been exploiting the marketplace.

Amazon says it prohibits the sale of counterfeits. Earlier this year, it started letting brand owners delete listings on its site for products they deem fake. At the time, Amazon said its engineers were working to better train the algorithms that automatically scan, block and scrub the site of suspect listings.

Amazon said it invested more than $400 million last year to police its website. The company said in 2018 it stopped more than 1 million suspected bad actors from opening seller accounts and blocked more than 3 billion suspected bad listings before they were published to the site.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

November 13, 2019 13:25 ET (18:25 GMT)

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