Who has more POWER Nike or the Distributors???

[ayipapi]

Were having a pretty interseting conversation this week about Hype and what makes a great release and what makes a great item and It prompt this question in my head......Who REALLY has the power in the sneaker business???? Is it Nike, Adidas, Reebok, and other manufactures or is it the distributors (i.e Footlocker Inc, Supreme, DQM, Huf, Undefeated Journeys, %@@#%, etc)???? What really prompt this was that Nike 6.0 BTTF Deleorn release...6.0 is pretty exclusive to Journeys and some of the other online Skate Websites (CCS, Zappos Etc)..but if these were an SB..I could see people sleeping in the street...So with that being said...is it really Nike that has the power in putting out great stuff or determining what gets put out?? Or is the distrubution lines that really decide WHAT comes out....


K

 

[ayipapi]

Were having a pretty interseting conversation this week about Hype and what makes a great release and what makes a great item and It prompt this question in my head......Who REALLY has the power in the sneaker business???? Is it Nike, Adidas, Reebok, and other manufactures or is it the distributors (i.e Footlocker Inc, Supreme, DQM, Huf, Undefeated Journeys, %@@#%, etc)???? What really prompt this was that Nike 6.0 BTTF Deleorn release...6.0 is pretty exclusive to Journeys and some of the other online Skate Websites (CCS, Zappos Etc)..but if these were an SB..I could see people sleeping in the street...So with that being said...is it really Nike that has the power in putting out great stuff or determining what gets put out?? Or is the distrubution lines that really decide WHAT comes out....


K

 

[oliverskywalker]

Im gonna say nike has most of the power but distributors got a little. Especially with exclusive/limited releases thats when some of the distributors will have a little power since only a couple stores will have all the supply. Nike = Pablo Escobar, Distibutors= The Corner

 

[oliverskywalker]

Im gonna say nike has most of the power but distributors got a little. Especially with exclusive/limited releases thats when some of the distributors will have a little power since only a couple stores will have all the supply. Nike = Pablo Escobar, Distibutors= The Corner

 

[ayipapi]

I see where your going with it...but I dont think I could say its on the say line as Pablo...his "corner" guys was biting at his names to get the supply...this is different...Footlocker Inc pretty much runs the show when it comes to domestic sneaker releases....If they wanted to im sure they could either green light a sneaker or get its distrubution cut off by Nike....the reason you even have a HoH is to make Footlocker happy...FTL Inc picks up EVERYTHING so in return Nike creates execlusive colorways of alot of there products...So in terms of your comparison...Pablo could put out product to whoevers...Nike HAS to put all ALL its product to make money...exclusives and limited editions etc dont really inflate the bottom line like kicks with no marketing or high paid athletes behind generate...So they kinda have to fall when distributors BUCK or dont want to stock or move an item...

 

[ayipapi]

I see where your going with it...but I dont think I could say its on the say line as Pablo...his "corner" guys was biting at his names to get the supply...this is different...Footlocker Inc pretty much runs the show when it comes to domestic sneaker releases....If they wanted to im sure they could either green light a sneaker or get its distrubution cut off by Nike....the reason you even have a HoH is to make Footlocker happy...FTL Inc picks up EVERYTHING so in return Nike creates execlusive colorways of alot of there products...So in terms of your comparison...Pablo could put out product to whoevers...Nike HAS to put all ALL its product to make money...exclusives and limited editions etc dont really inflate the bottom line like kicks with no marketing or high paid athletes behind generate...So they kinda have to fall when distributors BUCK or dont want to stock or move an item...

 

[johngotty]

Interesting. Two days ago I was thinking about the Footlocker-Nike fallout of several years ago. I can't remember how it all ended up (as in who suffered most) but they both obviously got back together and it didn't last long. 

 

[johngotty]

Interesting. Two days ago I was thinking about the Footlocker-Nike fallout of several years ago. I can't remember how it all ended up (as in who suffered most) but they both obviously got back together and it didn't last long. 

 

[AIR J XIII]

lets just be happy Nike is into athletic apparel and not military weapons, word to the umbrella corporation

 

[AIR J XIII]

lets just be happy Nike is into athletic apparel and not military weapons, word to the umbrella corporation

 

[tokes99]

Originally Posted by Ayipapi

Were having a pretty interseting conversation this week about Hype and what makes a great release and what makes a great item and It prompt this question in my head......Who REALLY has the power in the sneaker business???? Is it Nike, Adidas, Reebok, and other manufactures or is it the distributors (i.e Footlocker Inc, Supreme, DQM, Huf, Undefeated Journeys, *%$%#, etc)???? What really prompt this was that Nike 6.0 BTTF Deleorn release...6.0 is pretty exclusive to Journeys and some of the other online Skate Websites (CCS, Zappos Etc)..but if these were an SB..I could see people sleeping in the street...So with that being said...is it really Nike that has the power in putting out great stuff or determining what gets put out?? Or is the distrubution lines that really decide WHAT comes out....


K

who has the power in the sneaker industry??? it depends on the brand, the product & the segment... i.e. for every brand not named nike (maybe UA because of their potential for growth, and their marketing approach), it is unquestionably the distributors that have the power; you only need to look @ the market share figures...the various other manufacturers as a single player do not bring in business that nike does...the relationship between nike & the various distributors is probably more equitable than it has been in the past where nike was dictating what distributors sold, and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....

 

[tokes99]

Originally Posted by Ayipapi

Were having a pretty interseting conversation this week about Hype and what makes a great release and what makes a great item and It prompt this question in my head......Who REALLY has the power in the sneaker business???? Is it Nike, Adidas, Reebok, and other manufactures or is it the distributors (i.e Footlocker Inc, Supreme, DQM, Huf, Undefeated Journeys, *%$%#, etc)???? What really prompt this was that Nike 6.0 BTTF Deleorn release...6.0 is pretty exclusive to Journeys and some of the other online Skate Websites (CCS, Zappos Etc)..but if these were an SB..I could see people sleeping in the street...So with that being said...is it really Nike that has the power in putting out great stuff or determining what gets put out?? Or is the distrubution lines that really decide WHAT comes out....


K

who has the power in the sneaker industry??? it depends on the brand, the product & the segment... i.e. for every brand not named nike (maybe UA because of their potential for growth, and their marketing approach), it is unquestionably the distributors that have the power; you only need to look @ the market share figures...the various other manufacturers as a single player do not bring in business that nike does...the relationship between nike & the various distributors is probably more equitable than it has been in the past where nike was dictating what distributors sold, and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....

 

[ayipapi]

K[/quote]

and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....[/quote]


I dont know if I could 100% agree with that...Footlocker Inc is Nike largest customer...Its kinda hard to argue with the fact that Footlocker definitely is treated in a much higher regard then Nikes other customers....They have HOH...they have Footlocker exclusives...they get EVERY release...and there return is they place EVERY nike product on there shelves....They say that customers dictate the direction a company goes in...its the customer that makes a brand what it is and what it will be....But the REAL truth is WE are not Nikes customers....Nikes customers are its distrubution lines....The amount of product that Nike sells direct to the public pails in comparison to the amount of product it sells to FTL and other large outlets....So with that being said...and to put it in Skywalkers termonolgy....If your selling weight on the street...and your largest customer starts bucking...for whatever reason...yea you CAN replace him...but based on volume it would take MANY customers to replace your largest....So, that makes you tread lightly...you wont let them walk all over you but...your prepared to fall on your knees if you HAD to...

 

[ayipapi]

K[/quote]

and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....[/quote]


I dont know if I could 100% agree with that...Footlocker Inc is Nike largest customer...Its kinda hard to argue with the fact that Footlocker definitely is treated in a much higher regard then Nikes other customers....They have HOH...they have Footlocker exclusives...they get EVERY release...and there return is they place EVERY nike product on there shelves....They say that customers dictate the direction a company goes in...its the customer that makes a brand what it is and what it will be....But the REAL truth is WE are not Nikes customers....Nikes customers are its distrubution lines....The amount of product that Nike sells direct to the public pails in comparison to the amount of product it sells to FTL and other large outlets....So with that being said...and to put it in Skywalkers termonolgy....If your selling weight on the street...and your largest customer starts bucking...for whatever reason...yea you CAN replace him...but based on volume it would take MANY customers to replace your largest....So, that makes you tread lightly...you wont let them walk all over you but...your prepared to fall on your knees if you HAD to...

 

[tokes99]

Originally Posted by Ayipapi

K

and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....[/quote]


I dont know if I could 100% agree with that...Footlocker Inc is Nike largest customer...Its kinda hard to argue with the fact that Footlocker definitely is treated in a much higher regard then Nikes other customers....They have HOH...they have Footlocker exclusives...they get EVERY release...and there return is they place EVERY nike product on there shelves....They say that customers dictate the direction a company goes in...its the customer that makes a brand what it is and what it will be....But the REAL truth is WE are not Nikes customers....Nikes customers are its distrubution lines....The amount of product that Nike sells direct to the public pails in comparison to the amount of product it sells to FTL and other large outlets....So with that being said...and to put it in Skywalkers termonolgy....If your selling weight on the street...and your largest customer starts bucking...for whatever reason...yea you CAN replace him...but based on volume it would take MANY customers to replace your largest....So, that makes you tread lightly...you wont let them walk all over you but...your prepared to fall on your knees if you HAD to...[/quote]

you could argue that house of hoops helps nike just as much, if not more, than ftl...think about it...it may be "exclusive" product, it still amounts to ftl only buying additional nike BASKETBALL (important to note because, basketball product isn't the biggest money maker these days) product that otherwise would be difficult to place anywhere else...i'm sure there are some underlying details to the whole 'house of hoops' thing, but it definitely seems to favor the swoosh

foot inc. (champs, eastbay, footactions, & ftl) is definitely the biggest player, but flipside is nike is the BIG money maker for them...the whole cartel analogy doesn't really work, but ok; since when can/do "distributors" make any kind of demands on the connect/supplier? it is always about supply & demand, & as long as demand is high or relatively substantial part of the business, whoever controls the supply, i.e. manufacturers, has the power...

 

[tokes99]

Originally Posted by Ayipapi

K

and while there definitely is some give & take depending on the product, make no mistake the swoosh has the cards....[/quote]


I dont know if I could 100% agree with that...Footlocker Inc is Nike largest customer...Its kinda hard to argue with the fact that Footlocker definitely is treated in a much higher regard then Nikes other customers....They have HOH...they have Footlocker exclusives...they get EVERY release...and there return is they place EVERY nike product on there shelves....They say that customers dictate the direction a company goes in...its the customer that makes a brand what it is and what it will be....But the REAL truth is WE are not Nikes customers....Nikes customers are its distrubution lines....The amount of product that Nike sells direct to the public pails in comparison to the amount of product it sells to FTL and other large outlets....So with that being said...and to put it in Skywalkers termonolgy....If your selling weight on the street...and your largest customer starts bucking...for whatever reason...yea you CAN replace him...but based on volume it would take MANY customers to replace your largest....So, that makes you tread lightly...you wont let them walk all over you but...your prepared to fall on your knees if you HAD to...[/quote]

you could argue that house of hoops helps nike just as much, if not more, than ftl...think about it...it may be "exclusive" product, it still amounts to ftl only buying additional nike BASKETBALL (important to note because, basketball product isn't the biggest money maker these days) product that otherwise would be difficult to place anywhere else...i'm sure there are some underlying details to the whole 'house of hoops' thing, but it definitely seems to favor the swoosh

foot inc. (champs, eastbay, footactions, & ftl) is definitely the biggest player, but flipside is nike is the BIG money maker for them...the whole cartel analogy doesn't really work, but ok; since when can/do "distributors" make any kind of demands on the connect/supplier? it is always about supply & demand, & as long as demand is high or relatively substantial part of the business, whoever controls the supply, i.e. manufacturers, has the power...

 

[ayipapi]

I agree with alot of that exception the notion of supply and demand....Demand can and will always be there but you have to have a network to get the product to the consumer or else your supply is simple inventory....In order for the cash flow cycle to revert itself at some point the product has to reach a distrubution point to be sold back to cash...Nike MIGHT have some what of an upper hand in that its cycle is much smaller in that the item is produced and shipped directly to its consumers (distrubutors) then the cycle repeats...They dont have to really worry about marketing, where to retail, how to margin swap....they just need to get it out there....But in terms of distrubutors not having the ability to make demands on the connect...your buggin....If dude is your largest customer...and your making easy money just moving the item from point A to point B (lets not forget Nike owns the molds and the brand but the item is created by a BUNCH of Chinese and Taiwanse factories who sell the product back to Nike who never takes collection of the items..well not most...and the item is dropped shipped direct) Unless the request is unreasonable..there is still money to be made even if margins are smaller....Dont think for ONE second that cats distrubuting product dont go back for larger discounts...exclusive or BETTER quality then "OTHER" customers...and even MORE product to open new markets....Its a bond no doubt..but in understanding how the retail market works...especially in todays economy and also the size and scale of the distrubutors (FTL store account for almost 30% of Nikes bottomline and is in fact it's largest US based customer.. #4 worldwide)...And also the fact that Footlock Marquees Nike product but only as avenue to get you to buy the other crap in the store which is where they REALLY make money....The best example of a consumer controlling the sales process with an Iron fist is Walmart...Walmart is strictly a retail outlet..they dont private lable nor manufacture....They buy for a $1 an sell for $2....the only catch with Walmart (the worlds largest retail and one of the worlds most profitable businesses) is they order in CRAZY bulk to undercut competitors and also force manufactures to sell them product typically 10 to 20% discount from other customers....Generally most wholesalers dont care cause the 10 to 20% discount is off set by the repeated bulk orders....So even if margins are tighter...were selling DOUBLE the product...And you know what...its all good until Walmart start RTVing all this crap and scales down orders...now you have to reduce the price even further because there are expenses that come with DOUBLING production....Expenses (people, gas, water, utilities, space) aint that easy to get rid of so you do it.....

 

[ayipapi]

I agree with alot of that exception the notion of supply and demand....Demand can and will always be there but you have to have a network to get the product to the consumer or else your supply is simple inventory....In order for the cash flow cycle to revert itself at some point the product has to reach a distrubution point to be sold back to cash...Nike MIGHT have some what of an upper hand in that its cycle is much smaller in that the item is produced and shipped directly to its consumers (distrubutors) then the cycle repeats...They dont have to really worry about marketing, where to retail, how to margin swap....they just need to get it out there....But in terms of distrubutors not having the ability to make demands on the connect...your buggin....If dude is your largest customer...and your making easy money just moving the item from point A to point B (lets not forget Nike owns the molds and the brand but the item is created by a BUNCH of Chinese and Taiwanse factories who sell the product back to Nike who never takes collection of the items..well not most...and the item is dropped shipped direct) Unless the request is unreasonable..there is still money to be made even if margins are smaller....Dont think for ONE second that cats distrubuting product dont go back for larger discounts...exclusive or BETTER quality then "OTHER" customers...and even MORE product to open new markets....Its a bond no doubt..but in understanding how the retail market works...especially in todays economy and also the size and scale of the distrubutors (FTL store account for almost 30% of Nikes bottomline and is in fact it's largest US based customer.. #4 worldwide)...And also the fact that Footlock Marquees Nike product but only as avenue to get you to buy the other crap in the store which is where they REALLY make money....The best example of a consumer controlling the sales process with an Iron fist is Walmart...Walmart is strictly a retail outlet..they dont private lable nor manufacture....They buy for a $1 an sell for $2....the only catch with Walmart (the worlds largest retail and one of the worlds most profitable businesses) is they order in CRAZY bulk to undercut competitors and also force manufactures to sell them product typically 10 to 20% discount from other customers....Generally most wholesalers dont care cause the 10 to 20% discount is off set by the repeated bulk orders....So even if margins are tighter...were selling DOUBLE the product...And you know what...its all good until Walmart start RTVing all this crap and scales down orders...now you have to reduce the price even further because there are expenses that come with DOUBLING production....Expenses (people, gas, water, utilities, space) aint that easy to get rid of so you do it.....

 

[johngotty]

I honestly think they have to coexist.

FL Inc. has more retail stores under their umbrella than any other company. If Nike left them, who would they sell to? ****'s

?

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

 

[johngotty]

I honestly think they have to coexist.

FL Inc. has more retail stores under their umbrella than any other company. If Nike left them, who would they sell to? ****'s

?

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

 

[tokes99]

the walmart situation is one i completely forgot about...though not sure that would be the rule, rather it seems it'd be the exception? i think in most cases it is probably pretty equitable, but also consider the type of product that is sold @ a walmart, though they do have some "high-end" labels, its mostly off-brand product where price & convenience is the driver...there are examples on both ends of the spectrum and the balance of power between the individual distributors & a supplier is probably always has some bit of fluctuation depending on the circumstance(s)...

consider this, next time you go to a ftl make a note of how much of the wall/store is nike product & what would take up that space if all nike (this includes jordan remember) product was to be removed? and moreover, what would make up the $$$ that space made? i am not saying that ftl has no power w/nike, in fact i am sure they do plenty of demanding & flexing, just that i would think nike has more power...also note this is probably not the case with ftl and the other brands

in terms of distrubutors not having the ability to make demands on the connect...your buggin....If dude is your largest customer


definitely, in a legit enterprise, it is always a discussion for each side to try to do/get what is best for business, but just running with the drug game = any legal business analogy to say the aren't really all that similar; (not that i am well versed in the ins & outs of drug trade) it really distills the issue to simple supply & demand, of course the "distributors" could make propositions to the "supplier", but it seems to me that ultimately it is up to the supplier to make the decision...

Originally Posted by johngotty

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

OUCH! ftl & reebok also had a split, that has only recently began to mend, as a result of all those "crummy reeboks" that they were pawning off in those bogos & 2 fors...

 

[tokes99]

the walmart situation is one i completely forgot about...though not sure that would be the rule, rather it seems it'd be the exception? i think in most cases it is probably pretty equitable, but also consider the type of product that is sold @ a walmart, though they do have some "high-end" labels, its mostly off-brand product where price & convenience is the driver...there are examples on both ends of the spectrum and the balance of power between the individual distributors & a supplier is probably always has some bit of fluctuation depending on the circumstance(s)...

consider this, next time you go to a ftl make a note of how much of the wall/store is nike product & what would take up that space if all nike (this includes jordan remember) product was to be removed? and moreover, what would make up the $$$ that space made? i am not saying that ftl has no power w/nike, in fact i am sure they do plenty of demanding & flexing, just that i would think nike has more power...also note this is probably not the case with ftl and the other brands

in terms of distrubutors not having the ability to make demands on the connect...your buggin....If dude is your largest customer


definitely, in a legit enterprise, it is always a discussion for each side to try to do/get what is best for business, but just running with the drug game = any legal business analogy to say the aren't really all that similar; (not that i am well versed in the ins & outs of drug trade) it really distills the issue to simple supply & demand, of course the "distributors" could make propositions to the "supplier", but it seems to me that ultimately it is up to the supplier to make the decision...

Originally Posted by johngotty

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

OUCH! ftl & reebok also had a split, that has only recently began to mend, as a result of all those "crummy reeboks" that they were pawning off in those bogos & 2 fors...

 

[crazy ebw]

Originally Posted by johngotty

I honestly think they have to coexist.

FL Inc. has more retail stores under their umbrella than any other company. If Nike left them, who would they sell to? ****'s

?

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

What if Nike said screw it and just opened retail stores everywhere for themselves? What would Footlocker buy/sell then? Nike would be even more dominant than they are now if they had a massive global set of retail stores at malls, I'm not just talking Niketowns and factory stores. It would be automatic checkmate for Ftl, fnl, etc.

 

[crazy ebw]

Originally Posted by johngotty

I honestly think they have to coexist.

FL Inc. has more retail stores under their umbrella than any other company. If Nike left them, who would they sell to? ****'s

?

But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

What if Nike said screw it and just opened retail stores everywhere for themselves? What would Footlocker buy/sell then? Nike would be even more dominant than they are now if they had a massive global set of retail stores at malls, I'm not just talking Niketowns and factory stores. It would be automatic checkmate for Ftl, fnl, etc.

 

[tokes99]

Originally Posted by Crazy EBW

Originally Posted by johngotty

I honestly think they have to coexist.



FL Inc. has more retail stores under their umbrella than any other company. If Nike left them, who would they sell to? ****'s

?



But on the flipside, I vaguely remember FL doing "okay" in my region when the fallout occurred. I mean there's only so many crummy Reeboks you can pawn off on the public.

What if Nike said screw it and just opened retail stores everywhere for themselves? What would Footlocker buy/sell then? Nike would be even more dominant than they are now if they had a massive global set of retail stores at malls, I'm not just talking Niketowns and factory stores. It would be automatic checkmate for Ftl, fnl, etc.

while it would be hard for ftl to replace the business that nike represents in their stores, it would be just as difficult (maybe harder?) for nike to justify the investment $$$ it would cost for rent, logistics (shipping & transportation to all of these new stores), personnel & product/profit risk it would take to run the amount of stores to make up for the business that ftl represents to them, even if they also increased the amount of business to other distributors. it could end up being really expensive...as ayipapa & gotty alluded to, though nike does have "hand" in the relationship, they do need each other