By restricting wholesale distributors' online sales, the company aims to rebuild trust with Chinese shoppers and sell its products at full price, said Cathy Sparks, vice president and general manager of Greater China.
Starting in January, key sportswear retailers in China will stop selling Nike's clothing and shoes online and will instead pivot to in-store sales, Sparks told Reuters. Online, the company's products will be sold through new Nike-branded digital storefronts on the popular Chinese e-commerce platforms Tmall, JD.com and Douyin, and Nike's website and app.
"Our marketplace has become so fragmented and cluttered," said Sparks, a 25-year company veteran who was appointed to oversee Chinese operations earlier this year. "What consumers want is an experience that's premium, true to the brand, trustworthy, and certainly connected between digital and physical."
CHINA SALES DECLINE PERSISTS
China, Nike's third-largest market, remains a key source of concern for the world's biggest sportswear brand. The e-commerce shift is part of a broader effort to revive growth.
Sales in Greater China fell 17% on a constant-currency basis in the fourth quarter, the company reported last month, steepening from a 10% decline in the previous quarter. Fast-rising domestic rivals Anta (2020.HK) and Li Ning (2331.HK) have chipped away at Nike's market share, while foreign brands like On and Hoka have also surged.
Nike's China woes have reinforced for investors that CEO Elliott Hill's turnaround strategy still faces significant obstacles. In his nearly two years at the helm of the company, Hill has pushed to refocus on sports, rebuild wholesale relationships in North America and introduce new products.
The majority of Nike's 16 store partners in China, which own and manage thousands of Nike stores, will stop selling online, a Nike spokesperson said.
Following local news reports about the potential e-commerce change in June, BNP Paribas senior analyst Laurent Vasilescu said the move would be a "strategic misstep" and would hand opportunities to competitors.
"Nike doesn't have a distribution problem in China and elsewhere. It has a product problem," Vasilescu said in a research note.
Releasing products that are more relevant to Chinese consumers is also among Nike's priorities, Sparks said. The company has appointed a vice president of local product creation in Greater China, she added.
