Nike Returns to Amazon and Amazon Launches Temu: E-Commerce Strategies

Nike and Amazon: Back to Square One

In 2019, Nike made a bold decision to end its partnership with Amazon. The objective was to strengthen its direct-to-consumer (DTC) strategy, by having total control over the presentation and distribution of its products. However, this initiative did not bring the expected benefits. Despite renewed dynamism during the COVID-19 pandemic, the post-pandemic reality proved less promising for Nike.

Indeed, the company recently recorded a 20% drop in its share price, a colossal loss of 28 billion dollars, marking the biggest drop in forty years. Financial results for 2024 remained stable, but forecasts for 2025 point to a single-digit loss, signaling a period of uncertainty for the company. This difficult context has prompted Nike to reconsider its absence from Amazon, the world's largest online retailer.

Nike's return to Amazon, expected in the next 18 months, is facilitated by the appointment of Muge Erdirik Dogan, a former Amazon executive, as chief technology officer. This strategic choice should allow Nike to regain global visibility and better control the image of its products on the platform.

In short, this reintegration represents a recognition of the challenges posed by a pure DTC strategy and highlights the importance of a balance between direct selling and partnerships with major platforms such as Amazon.

Amazon and Temu: The Battle for Low Prices

At the same time, Amazon is preparing a new offensive on the American market with the imminent launch of a Temu-type window. This initiative, scheduled for autumn 2024, aims to appeal to price-sensitive consumers, a rapidly expanding market segment. Unlike the traditional Amazon store, orders will be shipped directly from warehouses in China, resulting in longer delivery times (between 9 and 11 days), but with significant discounts.

This project is a direct response to growing competition from platforms like Temu and Shein, which have gained popularity thanks to their attractive prices. By positioning itself in this way, Amazon seeks to diversify its offer and to capture a part of this market of consumers concerned about their budget.

However, there are risks associated with this strategy. The promise of low prices will have to be balanced with the quality and satisfaction of customers, who may be disappointed by extended delivery times. The success of this new window will therefore depend on Amazon's ability to maintain consumer confidence while offering substantial savings.

Cross Analysis: Strategies and Challenges

These two developments at Amazon illustrate the changing dynamics of online commerce. Nike's return to Amazon and the launch of the Temu-type storefront reflect two distinct but complementary approaches to navigating a constantly evolving market.

For Nike, the return to Amazon is an admission of the difficulty of maintaining a pure DTC strategy in a globalized and competitive market. This decision highlights the importance of online sales platforms for major brands seeking to maximize their reach and control their brand image. The lesson here is that even the most powerful businesses may need strategic partnerships to succeed at scale.

On the Amazon side, experimenting with a Temu-type window shows a desire to adapt quickly to market trends and to meet changing consumer expectations. By seeking to compete with Temu and Shein for low prices, Amazon is diversifying its offering and strengthening its position in a growing market segment.

In conclusion, these strategic movements reveal an unavoidable reality of modern commerce: flexibility and adaptability are essential to remain competitive. Businesses need to be ready to adjust their strategies, form new partnerships, and explore new approaches to meet the diverse needs of consumers. Nike and Amazon, each in their own way, show how to navigate this complex and rapidly changing landscape.

‍

Sources:

‍