Nike's changing policy tells resellers 'just (don't) do it'

Nike updated its terms of sale policy earlier this month in an effort to reduce the number of resellers that sell shoes on the secondary market. The new terms and conditions are meant to make it harder for people to purchase sneakers with the intention of reselling.

First reported by The Wall Street Journal on October 11, the updated terms state that Nike has the right to decline any sales or automatically cancel online orders from anyone who is suspected to be purchasing merchandise with intention of reselling. This applies to both in-store and online purchases.

“Nike Stores, including any consumer rights or policies offered in Nike Stores, are intended solely for the benefit of end consumers, and therefore purchase of products for resale is strictly prohibited,” according to the terms of service.

It’s no secret that Nike, and other well-known brands, despise resellers and will do anything to get rid of them. Unfortunately for Nike, the company made it fairly easy for these savvy entrepreneurs to make a quick buck or two off of its sneakers. With the company’s 60-day free return policy, resellers are able to buy large quantities of sneakers practically risk-free and have the peace of mind knowing that they have a month to return whatever they didn’t sell to get their money back.

Nike’s free return policy is free for the customer but not the company itself. Since Nike pays the shipping fee for each return, the company is losing income. As Retail Asia reports, "Nike’s net income dropped by 22 percent to $1.46 billion in the first quarter of its 2023 financial year, down from $1.87 billion in the previous year.” The number of returns they receive has increased significantly over the past decade.

Nike saw a switch from people returning shoes that were the wrong size to people returning copious amounts of shoes that they couldn’t resell. In an effort to reduce company expenses, the new policy seeks to help reduce the money spent on returns. Interest rates are on the rise and can result in Nike’s revenue continuing to worsen if this problem is not managed.

Additionally, this is good news for collectors. If the number of resellers there actually are goes down, they will be able to buy pairs of shoes at retail prices and save themselves some money.

How will this affect people who resell sneakers and other merchandise? It's kind of hard to tell at the moment. It'll most likely make things easier for Nike to crack down on resellers online rather than in-store. Unless someone was buying an absurd number of sneakers in store, it may be hard to tell who is buying for themselves or the secondary market.

To make an online purchase, customers have to sign in to their account to place their order, and the information from each order and account can be monitored to see order and return history as well as detect whether bots are being used.

The company has also added restocking fees to the list of consequences for reselling. This is a fee charged when merchandise is returned for a refund. Adding this fee is the easiest way for companies to charge back on products, especially large companies like Nike which are large, well-established businesses.

Some resellers think that this may be a publicity stunt due to how fast it was reported by The Wall Street Journal. Before they were updated, the terms and conditions didn’t affect the reseller market, and despite Nike's intentions, probably won’t — even with the newly updated terms.

It's impossible to stop all resellers from buying, but this new policy will hopefully scare some people enough to cut down on the number of resellers there are around the globe.