Nike is cutting off thousands of third-party online sellers in China starting in January. The reason given: they sell Nike products at heavy discounts, which hurts the brand.
But stores don't discount products that are selling well. They discount because shoppers aren't buying at full price. The discounting is a symptom, not the cause.
Removing the sellers doesn't create new demand. The same unsold shoes still have to go somewhere, now into Nike's own app and website and its partners' physical stores. If shoppers still aren't buying, those channels face the same choice: cut prices, order less, or sit on extra inventory.
The latest earnings already hint at this. In the most recent quarter, Nike's China sales fell 26%, and even Nike's own stores and online channels there were down 18%. Those are the channels shoppers are being sent to, and they're already struggling before the change takes effect.
Bottom line: Cutting off discount sellers may make the brand look more premium in the short term. But if people simply want less Nike right now, the problem doesn't disappear. Nike ends up with fewer places to sell, slower sales, and more of the discount burden on its own shoulders.