Nike, which has previously "blocked" Internet-only
stores from selling its items, "has reversed its stand" and
will allow CA-based Fogdog Sports to sell the full Nike
product line online, according to Saul Hansell of the N.Y.
TIMES, who reports that Nike "extracted a high price" from
Fogdog -- "warrants to acquire" 12% of Fogdog's stock
shares. With the partnership, Nike becomes the "first of
the big athletic shoemakers to forge a pact with a retailer
that sells goods only on the Web." The deal has the
potential to "cast a favorable light" on three-year-old
Fogdog, which has annual sales of "less than" $10M and filed
for an IPO Friday "just as the Nike deal was closed."
Selling points for Nike were Fogdog's intentions to
"maintain its policy of not discounting products below the
manufacturer's suggested minimums" and Nike's feeling that
Fogdog "was becoming the leading on-line company in the
category." In exchange for giving Nike stock, Fogdog will
receive the same "support" Nike gives to big chains,
including preferred stock prices, technical information,
joint marketing and other promotions. In addition, Nike
"will continue to expand its own sales effort through
Nike.com, but it agreed not to sell to any other pure
Internet company ... for at least six months."
IS STRATEGY A RISK? One of Fogdog's competitors, Global
Sports CEO Michael Rubin, called the company's strategy
"flawed and risky." Rubin: "I would never in a million
years give any stock in my company to a manufacturer. What
will they say when Reebok and New Balance come and say,
`What percentage do we get?'" (N.Y. TIMES, 9/27).
