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Nike Outlines Rules to Block Resellers — Will It Make a Difference?

Nike is cracking down on resellers.

This month, the Swoosh updated its Terms of Sale (TOS) and said it reserves the right to cancel orders, charge restocking fees, limit purchase quantities and deny access to Nike products to any customer that appears to be purchasing products with the intent to resell. The company also stated it can cancel any order if it appears to be made through an automated ordering service, which has become a common tool in the sneaker resale industry, or if it exceeds product purchase limits.

The new rules build upon Nike’s previously outlined stance against reselling. According to the WSJ, which first reported on the update, the new TOS expand upon potential consequences for users who violate the rules.

FN has reached out to Nike for a comment.

As sneaker reselling has become more lucrative, resellers have targeting high-heat companies such as Nike — and the retail stores that sell the brand — in an effort to obtain more pairs to resell at a premium. As such, bots, or software applications that expedite the checkout process for products online, have been a constant struggle for retailers including Foot Locker and others that carry in-demand products. Last year, Foot Locker outlined a revamped model for its launch reservation system to help keep product access away from bots and maintain fairness for consumers, though the retailer later mentioned a reduction in Nike product that will be available in stores.

According to sneaker YouTuber David “Kari” Daniels, the new TOS will likely impact resellers who now risk not being able to return their unsold inventory back to Nike. This could make them become more selective with what they choose to purchase. But for the regular sneaker consumer, little is likely to change.

“These terms will help ensure that inventory that gets sold, especially in large amounts, and stays sold in an effort to help the inventory overflow issue the brand is having,” Daniels said, referring to Nike’s inventory excesses that have been a recent headwind for the brand. “It’s very hard to determine when sneakers are purchased for resale outside of glaringly obvious large purchases made in stores with a history of numerous returns, so for most of us I think it’ll be business as usual.”

In a tweet, Brendan Dunne of Complex also noted that the news appears to be an “oversell” of the actual update, potentially even for resellers.

In responses to the tweet, users mentioned that the new TOS could do little to slow down resellers, especially those who get sneakers through backdooring, which is the process of obtaining product before it is released to the general public via an off-the-record relationship or agreement with a store or designer.

Meanwhile, Nike continues to profit from its high-demand product. The athletic powerhouse said in its earnings call last month that its commerce app had its highest traffic in history in Q1. Nike CEO John Donahoe said that the SNKRS app, its home for high-heat footwear releases, saw the most member entries ever for the Travis Scott x Air Jordan 1 release in Q1, with 3.8 million accounts vying for the shoe.

“It’s no secret that the sneaker resale industry has been a boon for Nike Inc., and quite possibly a contributing factor to the absolute flood of shoes we’ve seen releasing recently,” Daniels said.

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