Nike is cracking down on bots – but that won't fix its resale problem, insiders and analysts say

• The Wall Street Journal last week reported on a recent change to Nike's terms of sale.
• The revised policy allows Nike to cancel orders placed by customers using bots.

Nike could soon start canceling orders made by US customers placed with the help of bots — or software that expedites the online checkout process. It could also start refusing returns, charging restocking fees, and closing accounts of people it thinks buy the company's hottest limited-edition products to resell for a profit.

But Nike's revised terms of sale, while applauded by many, still comes up short of a full solution to its reselling problem, insiders and analysts said. The Wall Street Journal first reported on the changes last week.

Nike also has policies that prohibit reselling in Europe and South Korea, but they don't specifically state any repercussions. Nike's recent efforts to address bots include hiring cybersecurity experts and giving exclusive access to its most loyal consumers on releases.

"If you solve the problem with technology then you don't need to solve it with these steps," a current Nike technology employee, familiar with the company's work to combat bots, told Insider.

The Nike technology employee, whose identity is known to Insider, but isn't allowed to speak openly to the media, said the changes to the terms of sale are good, but should have come earlier.

"Why don't we solve the problem instead of blaming the consumer?" the technology employee said.

In November, Insider reported on Nike's extensive patent portfolio, which includes inventions that do everything from making it easier to track inventory using computer chips to "cryptokicks," or digital sneakers.

The same technology seemingly could be configured to prevent a single buyer from getting multiple pairs of an Air Jordan retro or Nike Dunk — two of the company's most popular footwear lines. For instance, the "cryptokicks" patent enables the use of blockchain technology to track ownership of a sneaker.

Nike did not respond to a request for comment, including a written question about whether it's begun enforcing the new policy.

"The change reads like a lawyerly response to an issue that was a problem a year ago when complaints about resellers by consumers shut out of SNKRS launches were at an all-time high," said Lois Sakany, director of retail research at OTR Global, and a Business Insider contributing writer.

Nike releases its most coveted, limited-edition shoes on its SNKRS app. The company also restocks some popular footwear on its self-titled Nike app, where it sells most of its apparel.

Nike's admitted inventory troubles make the timing of the terms of sale changes peculiar, Sakany said. In September, Nike reported a 44% increase in inventory. Nike is looking to offload as many sneakers and apparel as it can through the holiday season by way of discounts.

Nike's revision to its terms of sale haven't swayed investor opinion too much so far. Shares increased slightly on Wednesday. But the changes could do more to help improve consumer perception, Tom Nikic, Wedbush Securities senior vice president and equity analyst, said.

"If you look on social media, sneaker blogs, or other sources of sneaker content online, you often see 'sneakerheads' venting their frustrations about how hard it is to get access to these shoes without paying a premium - sometimes, a very large premium," Nikic said, referring to the secondary sneaker market. "So, this makes sense, as it likely alleviates one of the biggest sources of angst from their most loyal customers, who desperately want to get their hands on these shoes."

Sakany added that it would benefit Nike to point out how exactly the brand is making launches on its apps more fair to improve consumer perception.

"Nike's SNKRS app is basically un-bottable," she said. "But the average consumer doesn't know that."

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