What do the recently announced partnerships with Amazon and Instagram mean for Nike? Hear directly from Kevin Hua, Co-founder of AtlasTrend, in this third interview by Christopher Hall of Arrow Securities Group.
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Nike is looking to capture in-app purchase success by selling directly through Instagram and Amazon. Kevin Hua, co-founder of AtlasTrend, unpacks the announcement and analyses what Nike needs to do to bounce back against competitors.
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- Nike shares rallied after announcing plans to sell products directly on Amazon and Instagram
- Is this enough to regain its losing market share against Under Armour and Adidas in the U.S. market?
Nike + Amazon: How big is this deal for Nike?
- A more symbolic partnership and likely only result in incremental sales initially
- Nike remains the global leader in athletic apparel and footwear, showing strong growth in international markets despite losing market share in the U.S. to Under Armour and Adidas
- This deal reflects NIKE’s focus to pursue a direct to consumer distribution approach (which it calls its “Consumer Direct Offense”) to be closer to end customers and reduce counterfeits being sold by third parties on sites such as Amazon and Alibaba
- It will negatively impact 3rd party distributors such as Foot Locker, Dicks Sporting Goods and locally, Rebel (owned by Super Group)
Nike + Instagram: Will this experiment take off?
- Nike will be one of the first brands to sell through photo sharing apps
- Extension of buying online and gaming phenomenon of in-app purchases
- Instagram has a high level of user engagement, with 20% of teenagers say it is the most important social media app they use – a key target demographic for Nike
Nike, an innovator of ‘key new products’: Is this strategy sustainable?
- Nike’s successfully swimming with the tide – the structural trend towards investing and living a healthier lifestyle
- By continually introducing new styles and technology such as Nike React and self tying laces, Nike is simply meeting these consumer needs for practical sportswear that doubles as a fashion statement and to date have been willing to pay for such innovation
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