Do Brands Need Amazon?

In November, Nike said it would no longer sell its merchandise on Amazon. Instead, the company would focus on its own direct-to-consumer e-commerce sales. The decision is creating uncertainty as to how strongly established brands should rely on the e-commerce giant to boost sales, an article from CNBC states.

Retail analyst Randy Konik says brands do not need Amazon.

“Amazon had a delivery speed advantage, but that advantage has compressed,” he says. “With Nike leaving the Amazon platform … it strengthens our view that retailers and brands won’t be displaced by Amazon.”

Konik says that by focusing on sales directly to consumers, brands like Nike prove directing online traffic to their own websites is “self-sustaining, more profitable and actually brand enhancing, while traffic and incremental revenue from Amazon.com is less profitable but also less brand enhancing.”

Konik goes on to say he believes other brands will limit their relationships with Amazon in the future.

“Amazon is just a traffic aggregator that reduces friction in consumption,” Konik says. “It doesn’t build communities.”

Earlier this year, Amazon announced plans to accept payments through 15,000 brick-and-mortar Western Union locations across the U.S.