Some Internet sellers acquired NIKE products from other retailers overstocks

Some internet sellers acquired nike products from

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Some Internet sellers acquired NIKE products from other retailers’ overstocks and otherunofficial channels. Once these goods had passed from the hands of NIKE-authorized retailers,NIKE could no longer affect over how they were marketed or priced. Because NIKE handled its34
own international distribution and liquidated inventory through its own outlets, it saw less ofthese after-market re-sales than other manufacturers. NIKE also strictly enforced salesagreements with retailers and policed the web for offenders.Fogdog DealIn September 1999, NIKE signed a deal with Internet sporting goods retailer Fogdog Sports thatallowed Fogdog to sell the entire NIKE product line on its website. It gave Fogdog exclusiveaccess (among Internet-only sellers) to the NIKE product line for six months in return forwarrants to buy up to 12% of Fogdog’s shares at a pre-IPO valuation.Fogdog Sports was founded in early 1998 (as SportSite.com) to sell athletic gear directly toconsumers over the Internet. The company was the evolution of a web design and e-commercecompany that three graduates of Stanford University started in 1994. In 1998 VenRockAssociates and Draper Fisher Jurvetson gave it venture capital financing. In September of 1999,after negotiations with NIKE had begun, Fogdog hired Tim Joyce, formerly VP of Global Salesat NIKE, as its new president.After repeatedly rebuffing Fogdog, Nike was finally attracted to Fogdog’s reputation and itspricing policy of respecting manufacturers' recommended minimum prices. Fogdog was able topoint to three years of consistently executing its pricing policy. Its ownership stake gave NIKEan incentive to make the deal work. It agreed to treat Fogdog like any other major account,giving it preferred prices, joint promotions, and information sharing. Nike also gave Fogdogother special considerations, such as product images for display on the fogdog.com website,product and sales data, and unusual return privileges.3NIKE also agreed not to sell to other virtual retailers for at least six months, including those sitesGlobal Sports, Inc. managed. This promise angered some of NIKE's most important bricks-and-mortar partners, such as The Athlete's Foot, which relied on NIKE for 40% of its footwear sales.As Michael Rubin, the CEO of GSI, commented: "Our six partners are all among NIKE's top 20accounts. NIKE needs to support them, and they need to be on the Internet in order to survive in35
the 21st century."4ConclusionNike is a market leader and provides value products to consumers. However as it competes in thepremium market segment it will continue to operate in a highly competitive market The next fiveyear plan can involve a shift in Nike focus from traditional division in categories like footwear,equipment etc. to individual sports, selling of other assortments like sunglasses, hats and otheraccessories. On the other hand Nike strong financial performance will help it to cash on newinnovation with its robust R&D. Apart from main focus on athletic apparel and footwear Nike

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