Nike and Amazon.com, Inc. (NASDAQ:AMZN) part ways

Nike and Amazon.com, Inc. (NASDAQ:AMZN) part ways

Nike and Amazon.com, Inc. (NASDAQ:AMZN) part ways

In retrospect, it was more of an experiment than a relationship. Nike began legitimately listing some of its merchandise on Amazon.com in 2017, largely to stave off consumer frustration of finding out their Nike-branded goods purchases via Amazon weren’t actually made by Nike. At least by working together, counterfeiting might be contained. The sports apparel giant might make a few additional bucks in the process, too.

The arrangement never fulfilled its potential, however.

Rather, during the experiment, Nike found it could do as much (if not more) by expanding its own store network and offering more direct-to-consumer options. And it has. For the three-month stretch ending in August, the company’s online sales soared 42%. That’s impressive, though not as impressive as the fact that it was Nike’s mobile app that somehow induced such strong sales of footwear and clothing. Now, with former Service Now and eBay CEO John Donahoe at the helm, an even more concerted e-commerce effort seems likely.

Not the first, and likely not the last

Nike isn’t the only name to part ways with Amazon.com due to frustration with the company’s inability or unwillingness to keep counterfeit competition in check. Birkenstock gave up in 2016. Birkenstock-branded shoes are still available at the site, but they’re not provided by the manufacturer, and may or may not be an actual Birkenstock product. Ikea has also ended its relationship with Amazon.

Nike is the kind of name that turns heads, however, prompting some analysts to wonder if this is the beginning of a revolt other vendors may join.

“The move shows us that strong brands realize that traffic driven to their own site (e.g. NIKE.com) 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,” notes Jefferies analyst Randy Konik. He adds, “We believe many strong apparel (and even non-apparel) brands will continue to avoid or curb their relationships with Amazon in the future.”

Tim Armstrong, former chief of AOL and now a developer of a new DTC company, agrees. He told CNBC that if companies “have the option to go direct, they are going to go direct.” His conclusion? Nike’s move is the “tip of the iceberg,” signaling to more companies that it’s OK to do the same.

Cause for concern

To what extent Amazon’s vendors are frustrated isn’t clear, but it’s obviously more than a little. And that risk is expanding.

It’s not just limited to the loss of big-name partners, either. Smaller consumer-facing companies are also empowered in a way they never quite have been before. E-commerce service provider Shopify (NYSE: SHOP), for instance, was largely built from the ground up to be the un-Amazon, capitalizing on the support smaller sellers felt they deserved but weren’t getting. Meanwhile, bigger players like Nike don’t need that support, as they’re able to build their own DTC solutions.

Perhaps Amazon is unconcerned that it may have been alienating its credible partners of all sizes, who are now willing to say sayonara. The e-commerce giant has gone all-in on its private-label programs — including athletic apparel — as a means of filling in inventory holes and improving margins. Though only a tiny piece of total revenue right now, TJI Research believes the company’s in-house brands could drive $25 billion in annual revenue for Amazon by 2022, threatening the very vendors that make the site a destination. If the company has to learn the hard way that third-party brands are a key part of the reason shoppers come to the website, though, a mass exodus of partners could exacerbate a “peak Amazon” problem that’s already brewing.

Only time will tell if this is the beginning of a trend. Regardless, Nike’s decision should have Amazon’s top brass asking some tough questions right now.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1,786.34.

The projected upper bound is: 1,824.22.

The projected lower bound is: 1,722.10.

The projected closing price is: 1,773.16.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 61.9552. This is not an overbought or oversold reading. The last signal was a buy 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 53.04. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 77 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 23. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 9 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed up 28.120 at 1,773.840. Volume was 9% above average (neutral) and Bollinger Bands were 43% narrower than normal.

Open     High      Low     Close     Volume___
1,753.2501,777.4201,753.2401,773.840 3,489,467
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1,753.03 1,762.51 1,810.83
Volatility: 16 18 24
Volume: 2,770,806 2,997,383 3,644,275

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

AMAZON COM gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
AMAZON COM is currently 2.0% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AMZN.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AMZN.O and have had this outlook for the last 2 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH