How Walmart’s Racial-Slur Controversy Sheds Light on the Nike-Amazon Partnership

Walmart
Walmart
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Walmart this week was compelled to address a third-party seller’s use of a racial slur in a product description, and the controversy may provide insight about the newly announced partnership between Nike Inc. and Amazon.

When rumors initially surfaced that athletic giant was mulling a wholesale-distribution deal with mega e-tailer, the response was almost as enormous as the behemoth firms themselves.

Some headlines cast the move as another sign of the times — suggesting that if Nike couldn’t survive retail’s evolution without a partnership with Amazon, then what company could?

The rapid consumer shift toward digital, coupled with Amazon’s monumental rise, is hardly anything to sneeze at. However, a Nike-Amazon partnership may not be the most relevant example of these trends.

Nike eventually confirmed that it was testing a pilot program with Amazon and that much of the goal would focus on “elevating the way the brand is presented” on the platform. As such, a more probable interpretation of the partnership surfaced: Brands whose wares are shopped around on sites by third-party sellers are hampered by a lack of brand-image control.

What’s more, that phenomenon seems to be a direct consequence of the rapid growth of digital as well as consumers’ sense of urgency around having immediate access to whatever they want — authenticity be damned.

Walmart’s scenario this week concerning the use of a racial slur on its online platform is the latest illustration of the challenge of monitoring and policing online marketplaces.

We are very sorry and appalled that this third-party seller listed their item with this description on our online marketplace,” Walmart spokesperson Danit Marquardt wrote in a statement. “It is a clear violation of our policy, and has been removed, and we are investigating the seller to determine how this could have happened.

Walmart — which has moved aggressively in recent months to expand both its digital and fashion presence — was rightfully outraged at the gaffe. And the product’s maker seemed as upset as the retailer, reportedly telling CNN that the version of the item being sold on Walmart’s online platform was counterfeit and distributed by an unauthorized seller.

It comes down to this: Massive online platforms are often wildly successful at moving wares, but the consequences for legitimate brands and retailers can sometimes hang in the balance.

No respectable brand would want to have its merchandise sold on a site where hate speech is employed, and Walmart acted quickly to apologize, distance itself from the use of the slur and remedy the situation.

But more often than not, policing unauthorized and third-party sellers online is far more complicated. The rate at which unauthorized sellers can proliferate inauthentic product — often with minimal policing — is the bane of many a fashion firm’s existence at a time when retail is under immense pressure.

Writing on the Nike-Amazon deal last month, Susquehanna Financial LLLP analyst Sam Poser described Amazon as having “a reputation as a transactional retailer with no interest in brand building,” and suggested that unauthorized and third-party sellers may continue to run rampant on the site and other e-platforms for some time. Even with Nike forging a partnership with Amazon, Poser noted that he was uncertain whether things would change.

“No details were provided with regards to actual terms of the deal, including whether Amazon would remove unauthorized third-party Nike listings (of which there are currently 80,000),” Poser wrote on June 30. “Removing unauthorized third-party Nike product sales would help enhance Nike’s brand presentation and prevent counterfeit sales.”