Nike announced plans to end cooperation with thousands of online distributors in China starting January next year to organize the fragmented online market and accelerate business recovery after prolonged sales decline.
After this restructuring, Nike's online channels will be limited to its official website and app, along with Official Flagship stores on Tmall, JD.com, and Douyin—major Chinese e-commerce and social commerce platforms—with implementation beginning January next year.
Previously, customers could buy Nike products through both official channels and thousands of online stores operated by retail partners and small distributors nationwide, creating a large network that made products easily accessible.
However, a major issue Nike recognized as deeply rooted and long affecting the brand was inconsistent brand image and varying prices across stores. This became an obstacle for Nike’s efforts to revive sales in the Chinese market.
Cathy Sparks, Nike’s Vice President and General Manager for China, stated in a letter to partners that the new Flagship stores will be the primary destination for consumers on each platform, offering clearer product presentation, better brand storytelling, and more connected shopping experiences.
She emphasized this change is not a reduction in product access but a removal of channel redundancies to provide customers with consistent experiences, strengthening the brand in the long term. A deeper goal is to reclaim pricing power and reduce online price competition.
However, analysts view this strategy might hurt short-term revenue, as China has seen Nike’s sales decline about 30% over the past five years. Chinese media reported this plan last month, prompting Laurent Vasilescu, a BNP Paribas analyst, to warn the strategy resembles Nike’s past North American approach.
That is, reducing the role of wholesalers by cutting distribution channels then allowed competitors to capture market share, leading Nike to lose leadership, with sharply declining sales and profits. He maintained an Underperform rating on Nike stock, citing that the company’s core problem is product competitiveness, affecting multiple global markets.
Over the past year, Nike’s stock has fallen about 41%, mainly due to ongoing global sales declines, new products failing to meet market demands, and new competitors taking market share in sports and lifestyle segments.
China, Nike’s third-largest market, remains a major concern. This e-commerce restructuring is part of a broader plan to accelerate business growth recovery in China.
Nike reported last month that mainland China sales dropped 17% year-over-year in Q4, a sharper slowdown compared to a 10% decline in the previous quarter.
Meanwhile, Nike faces growing competition from rapidly expanding domestic brands like Anta and Li Ning, which are capturing more market share, as well as international brands On and Hoka gaining steady popularity. This situation has led investors to increasingly question whether CEO Elliott Hill’s recovery plan still faces significant challenges.
In nearly two years as CEO, Elliott Hill has refocused Nike on sports business, rebuilt relationships with North American wholesale partners, and launched new products to stimulate consumer demand.
Nike revealed that many of its 16 main retail partners in China, who manage thousands of Nike stores nationwide, will stop selling Nike products through online channels following this announcement.
This restructuring also affects Chinese retail partners who have invested heavily in online business expansion over recent years, though some key partners support the plan.
Shares of major Chinese sports retailers Topsports and Pou Sheng dropped sharply in early trading, with Pou Sheng down 10% and Topsports plunging 23%—its heaviest daily decline ever—erasing about HK$3 billion (approximately US$382.7 million) in market value.
Topsports, whose revenue includes about 22% from Nike online sales, stated in a stock exchange filing on Wednesday that the change could significantly impact business in the short term. Pou Sheng reported Nike online sales account for about 15% of its total revenue.
However, Topsports, Nike’s largest distributor in mainland China, expressed support for Nike’s decision, acknowledging short-term pressure but believing the changes will build a more orderly, robust, and sustainable retail system in the medium to long term, enhancing consumer experience and product appeal.
Topsports added it will continue working closely with Nike, leveraging its store presence, customer service, and extensive multi-tier city network to develop new concept sports stores and deliver better shopping experiences tailored to Chinese consumers.
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