Nike is moving cautiously toward selling on the Internet, and it wants to make sure its retailers are just as cautious.
The shoe and apparel giant announced a trial launch of an online store, showcasing a few products from the new Alpha Project line.
Nike is waiting to see how consumers react to the site before they move forward, but the company does plan to launch a full-blown store in the next few months, said Mary Kate Buckley, director of new ventures at Nike and general manager of Nike.com.
Nike has had a Web presence since 1996, but "the number of requests for us to sell directly has been increasing," she said.
Finding it
"We'll get e-mail saying 'I went to 17 different stores, looking for this shoe, please help me find it,'" Buckley added.
The company specifically decided to wait until after the holidays to launch the store, and to start off with a limited selection, she said.
"We are rolling this out in phased approach. We've defined learning objectives for each phase," she said. "The other benefit is we'll learn a lot about our consumers and be able to pass that on to retailers. We'll keep them in the loop, and share some of our promotional events and merchandising promotions with them in advance."
And in return, Nike expects those retailers to keep the company in the loop.
Tight controls
Nike's official policy does not allow retailers to sell its products online. If a retailer does want to go online, they must get "express written approval" from the company and are subject to stringent requirements, Buckley said.
"They cannot sell outside the US, we also have to review the plans for customer service, presentation and distribution online," she said.
Nike has approved a few retailers for online sales, including the Venator Group, owners of the Foot Locker chain.
More than control
The tight policy is not that unusual for a major retail brand. But the issue involves more than just controlling the image of the brand.
Soon after launching it's own online store, Levi Strauss & Co told its retailers that they could not sell Levi's or Dockers brands on their sites.
By contrast, Estee Lauder allows Macys.com to sell its products, and even ensures that it doesn't undercut the department stores prices online.
Buckley said pricing is, in fact, a major issue in its decision to limit online sales of Nike products.
Discounts this way
"What the retailer brings to the party is location and customer service skills. But all of those competencies are stripped away on the Web, and ultimately it will come down discounting [to get the customer]. We don't want that," she said. "We recognize that people will discount Nike to lure people online and that's not something we want happening."
Analysts who have been watching the ongoing direct vs. indirect battle in the PC industry are not surprised that retailers in other areas are having the same problems online.
"It's a means of keeping very tight control on distribution," said Scott Smith, director of Internet commerce at Current Analysis. "[Nike and Levi's] are also a couple of brands that are bootlegged worldwide, and sometimes inside the US are black-marketed. It's yet another display of the changes in dynamics that have occurred because of changes in the marketplace. And also in some way indicates the disparities between marketing plans and general e-commerce strategies among companies worldwide."
