Nike exec explains why the company broke up with Amazon

Reggie Wade

It’s been almost a year since Heidi O’Neill assumed the role of president of Nike’s (NKE) direct-to-consumer business. The 20-year Nike veteran joined Yahoo Finance’s YFi AM to talk about the swoosh brand’s continued push into digital and the unique approach the company is taking to build “unbreakable relationships” with consumers.

Nike, a company founded by athletes, looks at many aspects of its business as a coach might look at a playbook, especially when it comes to its direct-to-consumer model, which it refers to as “consumer direct offense.” In the first quarter of the fiscal year, Nike’s digital sales grew 42%.

“We’re on an incredible journey of digital transformation, and we’re making things happen,” O’Neill said. “We love the fact that we’re breaking down the walls between stores and digital and tech and bringing amazing consumer experiences to life.”

Nike s23NYC digital studio — NIKE
Nike s23NYC digital studio — NIKE

New s23NYC digital studio

Nike has been breaking down walls both figuratively and literally. It just unveiled its new s23NYC digital studio at Pier 17 in Manhattan. The 24,000-square-foot space will be the new campus for Nike’s digital team, which includes engineers, data scientists, and designers. The team will not only use the space to track the latest trends in the sneakers and apparel game, but also to collaborate with Nike fans and customers in the local community.

This type of consumer-centered approach is embedded in the company’s DNA, according to O’Neill. “Not every brand has the 1972, Phil Knight, Bill Bowerman brand that we have. We founded this brand on serving consumers one-to-one. We founded this brand on a flywheel of community and coaching and amazing product. We’ve built a vision for our brand, to make sport a daily habit. Nike, believes that people’s lives are better [with sports]. You’re healthier, and you’re happier with sport in your life. And when you have that as your compass, when you have that as your North Star for transformation.”

Ending its relationship with Amazon

Nike’s digital transformation comes with new beginnings and a few endings. In 2017, Nike started a pilot program to sell its products on Amazon (AMZN). Recently, however, Nike announced that it would no longer sell its sneakers and apparel directly on the platform. O’Neill tells Yahoo Finance that the decision is rooted in creating a more direct relationship with its customers and building what Nike calls an “unbreakable relationship.”

“We have ended our pilot with Amazon — It comes back to being incredibly committed to amazing experiences for our consumers, direct relationships, and building unbreakable relationships. We want to move forward and make sure we continue to innovate on our own platform. And we also want to make sure that we build an ecosystem of partners … [and] have those direct and amazing experiences with our consumers.”

One way Nike plans to better connect with customers is by featuring them rather than models on the company’s popular SNKRS app. Nike VP Ron Faris heads up the app, which got its inspiration from its consumer base.

“In learning those experiences, we didn’t just learn how to make experiences more emotionally tailored to the member,” he said. “We were able also to learn how to tailor stories and content, and even products made a product based on what was inspired by those members.”

Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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