Nike is overhauling its online sales strategy in China by restricting wholesale distributors from selling its products through e-commerce platforms, as the world’s largest sportswear company seeks to regain ground lost to domestic competitors and revive sales in one of its most important markets.
Beginning in January, major sportswear retailers in China will stop selling Nike clothing and footwear online and instead focus on in-store sales, Cathy Sparks, Nike’s Vice President and General Manager for Greater China, told Reuters. Online sales will be redirected to Nike-branded digital storefronts on Tmall, JD.com and Douyin, as well as the company’s official website and mobile application.
Nike said the move is intended to improve the customer experience by directing shoppers to official sales channels and reducing fragmentation across online marketplaces. Sparks said the company wants consumers to receive a premium and trustworthy brand experience that is consistent across both digital and physical retail platforms.
“Our marketplace has become so fragmented and cluttered,” Sparks said. “What consumers want is an experience that’s premium, true to the brand, trustworthy, and certainly connected between digital and physical.”
The strategy forms part of Nike’s broader effort to revive growth in China, its third-largest market. The company reported last month that sales in Greater China declined 17 per cent on a constant-currency basis during the fourth quarter, compared with a 10 per cent decline in the previous quarter. Domestic sportswear companies Anta and Li Ning have continued to gain market share, while international brands including On and Hoka have also expanded their presence in the market.
Nike’s performance in China remains a key concern for investors as Chief Executive Officer Elliott Hill pursues a broader turnaround strategy focused on strengthening wholesale relationships, expanding its sports-focused product portfolio and introducing new merchandise. Hill has led the company for nearly two years.
A Nike spokesperson said the majority of the company’s 16 retail partners in China, which collectively operate thousands of Nike stores, will stop selling the brand’s products online under the new arrangement.
Among those affected is Chinese sportswear retailer Topsports, which generates 22 per cent of its revenue from online sales of Nike products. In a filing to the Hong Kong Stock Exchange on Wednesday, Topsports said the changes are expected to have a significant short-term negative impact on its business. The company said it nevertheless remains committed to working closely with Nike on offline sales arrangements.
The strategy has drawn mixed reactions from market analysts. Following reports of the proposed changes in June, BNP Paribas senior analyst Laurent Vasilescu described the move as a “strategic misstep”, arguing that it could create additional opportunities for competing brands.
Vasilescu said Nike’s challenge in China was not its distribution network but the competitiveness of its products. Sparks said the company is also focusing on developing products better suited to Chinese consumers and has appointed a Vice President of Local Product Creation for Greater China as part of that effort.
