Nike China online sales shift: Key takeaways
- Nike will move online sales in China to its own branded storefronts from January, restricting wholesale partners to in-store sales
- The move is intended to reduce discounting and rebuild consumer trust, but risks depriving retailers of meaningful revenue
- It comes as Nike’s Greater China sales continue to fall and local rivals Anta and Li Ning gain ground
Nike is looking to gain back control on how Chinese consumers buy its products online. Their answer is to cut back hard on online third-party sales. With a steep sales decline in the Chinese market – one of the brand’s most important – it can’t have been an easy decision to make, but Nike has an image problem and discounted sales on sites it can’t control contribute to that.
Nike’s Greater China GM says the aim is to provide a more premium, trustworthy experience across online and offline channels
And so, from January, key sportswear retailers will stop selling Nike shoes and clothing online. Instead, digital sales will be concentrated in new Nike-branded stores on Tmall, JD.com and Douyin. The company’s own website and app will also play host to shopping options, and wholesale partners will continue to operate physical stores.
Retail partners will be understandably disappointed. Even in a sales slump, Nike is still Nike. Topsports said Nike products sold online account for 22% of its revenue, while Pou Sheng put the figure at around 15%. Shares in both companies fell sharply following the news. There’s little better testament to the value of Nike in this industry than the fact Topsports lost around HK$3 billion (US $383 million) in market value following the news.
Digital sales will be concentrated in new Nike-branded stores on Tmall, JD.com and Douyin
They’re not the only numbers in decline. Nike’s Greater China sales fell 17% year-on-year on a constant-currency basis in its latest quarter, worsening from a 10% decline in the previous three months. Domestic competitors including Anta and Li Ning have continued to win share, while On and Hoka have also grown quickly.
Nike says it is also focusing on more locally relevant products. That includes a newly created Greater China product-creation role. The question is whether sharper distribution can solve what some analysts see as a deeper issue: consumers may simply want more compelling Nike products.
The Dao view: Nike is trying to solve a trust issue
Nike’s Greater China GM says the aim is to provide a more premium, trustworthy experience across online and offline channels. Nike has struggled with the wide network of third-party sellers in China. There have been worries that an overuse of discounts on the retail end is creating an image problem.
Cutting back on online sales is also a notable break from the usual China playbook. Most international sportswear brands seek to expand their online presence. This happens through multiple retail partners much like Nike has now and is key for reach and growth. But Nike is choosing control over scale. It wants a cleaner digital presence, and the hope is that will restore brand value.
