Nike's Risk Shifted to Retailers via Futures

“To push its advantage, Nike introduced a shrewd mechanism known as Futures. The principle was that they would convince retailers to place firm orders and guarantee payments in advance. With these commitments, Nike could increase its orders from Asian manufacturers without gambling too much. In other words, they shifted some of the financial risk to the retailers. In return, the retailers who took part in Futures would obtain a sizeable rebate on their orders and could rest assured that they would ac- tually obtain the goods. In a market driven by wild demand, this was an unbeatable argument.”