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nike dtc case study

Nike’s New Business Model Focusing on DTC: What Business Students Stand to Learn

If all companies’ business models stayed the same, they would fail. In recognition of the need to evolve and increase profits, Nike has undergone a dramatic change to how they do business

Just a few years ago, Nike announced a dramatic change to its overall business model. The change to the model, along with its resounding success, is an excellent example of the importance of innovation in business. It also highlights Nike’s extraordinary ability to create a world-recognized brand and maintain its status as an industry leader.

The Changes to the Business Model – In Summary

Historically, Nike has had some direct-to-consumer (DTC) sales but went on to focus primarily on wholesale. Recently, however, the company announced a planned shift to focus primarily on DTC sales.

A Closer Look at the Changes to the Business Model

For most of the company’s history, Nike has worked primarily with wholesalers. The brand had a fairly typical business model. They sold the products to wholesalers, who then displayed the products in their stores and sold them to customers. Wholesale partners included department stores, sporting goods stores, mom-and-pop shops, and more.

Now, it is incredibly difficult for wholesalers to work with Nike. The brand has gone all-in on a direct-to-consumer strategy which means that even wholesalers who worked with them for years can no longer buy the products. This has led to a significant shift in how people buy Nike shoes. Now, Nike primarily sells shoes to consumers via digital channels, such as its various apps and website. The company also has branded immersive stores.

Nike Combines DTC Experiences 

Examining Nike’s DTC approaches shows a significant amount of overlap. Like most brands, there are both digital solutions, like the website and apps, and physical locations. But Nike has taken the integration of technology and the digital experience in stores to the next level.

Specifically, Nike gives in-store shoppers multiple ways to use their phones to improve the shopping experience. They can start a dressing room or pull up products on their phones. To streamline the new customer experience, Nike also has signs throughout its stores highlighting the various smartphone-connected in-store features.

How Wholesalers and Stores Are Adapting 

Stores that used to rely on Nike for a significant amount of their income had to think quickly to determine a way to keep selling the products or fill the gap. For many stores, the only option to stock Nikes became doing so “on consignment.” With this model, the stores themselves do not own the shoes. They are owned by someone else who consigns the shoes to the store. When sold, the store takes a cut of the profit, but the owner of the shoes makes the bulk of the money. There are obvious complications with this new consignment option. For one, it makes it much more challenging for stores to offer Nikes at all, let alone a variety of them. Stores may have to work with multiple people who want to consign their shoes and those people can’t buy the shoes wholesale either.

On top of that, the process cuts into the profit margins of the stores. They can still ultimately control their profits via the price of the shoes, but they have to increase the prices to make the same profit they had previously made as wholesalers. The owner of the shoes who consigns them to the store is essentially another middleman in the process, meaning another cut of the profit is taken out.

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The Role of Influencers 

With the new DTC approach, social media influencers play a larger role in Nike’s overall approach. They become a key part of the brand’s marketing as influencer-created content reaches consumers. On top of that, Nike works with some social media influencers like they previously worked with wholesale retailers. For that part of the relationship, Nike largely determines which influencers to sell to based on audience size and reach.

The Effect on Prices 

For consumers who buy shoes directly from Nike, as is the brand’s goal, there is not necessarily a dramatic change in the prices. However, many shoes are now in high demand. This lets Nike sell them for more, but it also means that shoppers must act fast if they want a particular shoe.

nike dtc case study

That scarcity, combined with the consignment model many stores are using, has driven prices up. The fact that shoes in stores now feature an extra middleman (the owner who consigns them) has also driven prices up. In fact, some basic models can now reach $1,000 or multiples of that for a single pair. It is not hard to find a pair selling for $10,000 or more.

The Effect on Shoppers

In addition to the rising prices, this change means that Nike buyers will find themselves with limited options for trying the shoes on. This is especially true given that in many stores that sell the shoes on consignment, the sneakers are wrapped in plastic.

Other Key Elements of the Consumer Direct Offense

The Consumer Direct Offense strategy from Nike is a well-rounded approach that involves more than the transition to DTC. It also includes accelerating innovation and the creation of products. It features expanding operations in 12 strategic cities in ten countries as a way to move physically closer to consumers. Finally, it aims to deepen the one-on-one connections with customers by creating more interactive experiences.

Consumer Direct Acceleration Further Emphasizes the DTC Priority

Nike followed up its Consumer Direct Offense in 2020 with the Consumer Direct Acceleration. This began with the creation of a connected digital marketplace for a seamless brand experience. It includes Nike’s store concepts, including the Nike House of Innovation, Nike Unite, Nike Live, and Nike Rise. The common theme is that Nike aims to connect digital services with offline ones.

This Consumer Direct Acceleration also includes more straightforward categories for kids, women, and men. It also features aggressive digital investment. Since announcing the initiative, Nike has invested in demand sensing, inventory management, and insight gathering.

The Extent of the Shift from Wholesalers to DTC

Simply stating that Nike has decided to shift its business model to focus more on DTC than wholesalers is not enough. It doesn’t accurately show the extreme degree to which the shift occurred. The changes began in 2017 when the brand announced a “consumer direct offense.”

nike dtc case study

A better point of comparison is to look at Nike brand sales in 2011 and again for the 2021 fiscal year. In 2011, 84% of the sales were to wholesale customers. The remaining 16% were direct to customers in Nike stores and via its website. By the end of the 2021 fiscal year, direct sales (from the main Nike brand) were up to 39%. Wholesale sales were at around 61%.

More recent figures show that the focus on DTC continues to be a success. Figures from the most recent three-month period ending on February 28th confirm this. During that time, Nike had a 17% increase in direct-to-consumer sales. Those DTC sales accounted for 42.3% of Nike’s overall revenue for the fiscal third quarter.

Nike Is Still Working with Certain Wholesalers

While Nike has shifted its focus on direct-to-consumer sales, the brand still works with some wholesalers. According to Nike, the focus is on “compelling local neighborhood partners” with connections to sports performance and lifestyle. This includes some of the brand’s larger strategic partners, such as JD Sports, Foot Locker, and Dick’s Sporting Goods. The brand also still works closely with local skate shops.

In practical terms, Nike is only working with retailers that feature it prominently and make the brand seem special. Even then, Nike will not work with every retailer that does this.

The Future of the Transition

If Nike’s plan remains on track, direct sales will account for 60% of its business by 2025 . This figure will include digital sales.

For reference, the original goal was to hit 30% digital penetration by 2023. In this case, digital penetration refers to 30% of the total sales being e-commerce revenue from Nike. But the brand achieved that in 2021. This was then replaced with a goal of 50% digital penetration for 2022.

Reasons for the Shifting Business Model

When Nike announced its “consumer direct offense” in 2017, it highlighted some of the reasons it chose to change strategies.

Direct Sales Boost Profits

One of the likely reasons for the push on direct sales is that it improves the profit margins. With direct sales, there is no middleman taking a cut of Nike’s profits.

The fact that direct-to-consumer sales boost profits is well-known. This is why so many startups follow the model.

Connections to Customers and Customer Data

By focusing on direct sales, Nike also collects data on its customers directly. This can be useful for marketing. Direct sales also mean that Nike has direct contact with customers, something that can also be helpful for marketing as well as customer service.

Nike Has More Control

The other key factor is that focusing on direct sales lets Nike control its brand. By contrast, Nike doesn’t have much control over what retailers do with its products after buying them. They could just place Nike shoeboxes with competitors or in a way that the brand doesn’t prefer. Some experts believe that this lack of control is why Nike decided not to continue working with Amazon.

DTC Trends During the Pandemic

Estimates indicate that the pandemic caused an overall market shift toward direct-to-consumer sales. Of course, these were not on the same level as Nike’s efforts. Research from McKinsey and the World Federation Sporting Goods Industry reported on the shift. Researchers suggest companies aim for at least 20% of their business to be direct-to-consumer. Nike was clearly ahead of the curve with this trend.

Other businesses have since started following the trend led by Nike. For example, Under Armour wants half of its sales to be direct-to-consumer by 2025. Under Armour is on a similar track, closing relationships with thousands of wholesalers.

The Successful Change Highlights Nike’s Brand Power

Sales figures show that the changing strategy has worked well for Nike. According to Nike, digital sales via websites and apps increased by 22%. This included a 33% growth within North America, which led the area. This is especially impressive when compared with the growth figures for other brands and retailers.

Another indication that Nike is on the right track with its innovative strategy is its overall sales. Sales in 2021 for DTC reached $16.4 billion. The trailing 12 months saw $46.2 billion of total sales.

nike dtc case study

To provide a point of comparison between Nike’s success and that of other brands, consider the figures at the end of fiscal 2020. Nike had revenue of $35.6 billion, $37.4 billion across the company. By contrast, Under Armour only made $4.5 billion in that time, and Adidas made $23.8 billion.

The impressive growth that Nike has achieved with the change highlights not only the company’s innovation but also its brand power. A direct-to-consumer approach cannot take advantage of the marketing from retailers; it must rely on the brand’s own marketing and name power. Nike certainly has this, as it is among the best-known and most popular sneaker companies in the world.

What Nexford MBA Students Stand to Learn

Whether you are studying for a Nexford MBA or an undergraduate business degree , there are some important insights to learn from Nike’s successful changes.

Reinvent to Adjust to Market Conditions

Nike examined the market and noticed that it was time for a change. The company recognized that the demands of consumers were changing, as were the technologies and opportunities available. Nike adapted to these changing market conditions.

Business students of Nexford University can learn the same thing. You must be willing to reinvent yourself when necessary to adjust to changes in the job market. Reinventing yourself and searching for improvement provides a way to stand out from other candidates in a job search.

How to Translate Reinvention into Your Business Life

For Nike, reinvention and adaptation meant changing the balance between wholesale and DTC sales. For business students or anyone in search of career advancements, this can be continuous learning. Lifelong learning at Nexford allows you to improve your skill sets . Each new skill set that you acquire is a way to reinvent yourself and stand out in the market.

Several years ago, Nike announced a transition from focusing on wholesale customers to direct-to-consumer sales. The transition has gone smoothly and is leading the brand to success. MBA students at Nexford can use Nike as inspiration and work to constantly improve themselves. Expanding your skill sets is your personal version of Nike adapting to the changing market demands.

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nike dtc case study

Künstliche Intelligenz in Unternehmen: Innovative Anwendungen in 50 erfolgreichen Firmen

Der Bestsellerautor und Geschäfts renommierter KI-Experte Bernard zeigt, wie sterben Technologie des maschinellen Lernens das von Unternehmen verändert. Das Buch bietet einen Überblick über einzelne Unternehmen, beschreibt das spezifische Problem und erklärt, wie KI die Lösung erleichtert. Jede Fallstudie bietet einen umfassenden Einblick, der einige technische Details wichtige Lernzusammenfassungen enthält. Marrs Buch ist eine aufschlussreiche und informative Untersuchung der transformativen Kraft der Technologie in der Wirtschaft des 21. Jahrhunderts.

nike dtc case study

Bernard Marr

Bernard Marr is a world-renowned futurist, influencer and thought leader in the fields of business and technology, with a passion for using technology for the good of humanity. He is a best-selling author of over 20 books, writes a regular column for Forbes and advises and coaches many of the world’s best-known organisations. He has a combined following of 4 million people across his social media channels and newsletters and was ranked by LinkedIn as one of the top 5 business influencers in the world.

Bernard’s latest books are ‘Future Skills’, ‘The Future Internet’, ‘Business Trends in Practice’ and ‘ Generative AI in Practice ’.

Generative AI Book Launch

Bernard Marr ist ein weltbekannter Futurist, Influencer und Vordenker in den Bereichen Wirtschaft und Technologie mit einer Leidenschaft für den Einsatz von Technologie zum Wohle der Menschheit. Er ist Bestsellerautor von 20 Büchern, schreibt eine regelmäßige Kolumne für Forbes und berät und coacht viele der weltweit bekanntesten Organisationen. Er hat über 2 Millionen Social-Media-Follower, 1 Million Newsletter-Abonnenten und wurde von LinkedIn als einer der Top-5-Business-Influencer der Welt und von Xing als Top Mind 2021 ausgezeichnet.

Bernards neueste Bücher sind ‘Künstliche Intelligenz im Unternehmen: Innovative Anwendungen in 50 Erfolgreichen Unternehmen’

How Nike Is Using Data to Sell Directly to Customers

24 March 2022

Nike is successfully transforming from a traditional consumer goods business into a digital direct-to-consumer company. Find out how Nike’s DTC sales have skyrocketed as the company focuses on big data and predictive analytics.

How Nike Is Using Data to Sell Directly to Customers | Bernard Marr

Leading footwear and apparel company Nike has been ahead of the game for years, inspiring millions of other companies to follow their strategies for accelerating growth.

Now, nearly 60 years after its founding, Nike is not just an innovator in sports science – they’re also leading the way in using artificial intelligence and predictive analytics to sell directly to consumers.

In June 2020, Nike announced the launch of its Consumer Direct Acceleration strategy to speed up direct-to-consumer (DTC) sales.

Their initiatives are clearly working. In 2011, DTC sales accounted for 16% of Nike brand revenue (or $2.9 billion of the total revenue of $18.1 billion). By the end of the 2020 fiscal year, DTC sales had grown to 35% of overall sales, or $12.4 billion.

This bump in DTC sales is driven by Nike’s new formula for growth, which focuses on building a data-centric organization that can compete with existing e-commerce giants like Amazon.

Let’s take a look at how Nike is making the successful transition to direct-to-consumer sales and how data science fits into their plan to enhance the customer experience and boost profits.

A Wellspring of Customer Data

Nike offers sales support, workouts, training programs, and loyalty incentives through a large array of apps. These apps allow Nike to optimize the consumer experience, but they also provide Nike with a veritable treasure trove of incredibly valuable customer data.

The Nike Fit app creates a digital picture of a customer’s foot using a combination of computer vision, artificial intelligence, and machine learning – then uses that picture to make informed product recommendations to the consumer. Long term, this intelligence on people’s feet also helps Nike create better shoes!

Nike uses their data to serve customers more targeted offers, including products and services. Through the Nike Plus rewards program, customers can get access to personalized workouts and sports experts.

Predictive Analytics

Nike acquired two predictive analytics companies – Zodiac and Celect – in 2018 and 2019, respectively. These solutions help Nike crunch data from their apps and from IoT devices like Fitbits and use that data to understand customer habits and predict purchasing behavior. For instance, Nike now incorporates Zodiac’s marketing data into its app to serve up personalized content and make product recommendations.

Using Celect’s inventory management tools, Nike can now anticipate consumer demand and determine what products they should produce and where those products should be sold. Nike's hyper-local approach to inventory management ensures the customers can always find what they need and be able to purchase the items they're most interested in.

Making Data-Driven Decisions at the Highest Levels

Nike’s data analytics systems are fully integrated, so business leaders can use predictive data – including purchase patterns and social media behavior – to anticipate customer needs, create better products and services, and improve business processes. Every member of Nike’s senior leadership team has access to a personalized analytics dashboard and data visualization tools that are customized for their decision-making needs.

Nike’s Data-Driven DTC Initiatives

As new startups continue to enter the apparel industry, Nike has chosen to defend its mega-giant status by investing heavily in Big Data and AI to better understand its customer journey and capitalize on DTC revenue streams.

Business Trends In Practice | Bernard Marr

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Bernard Marr is a world-renowned futurist, influencer and thought leader in the fields of business and technology, with a passion for using technology for the good of humanity.

He is a best-selling author of over 20 books, writes a regular column for Forbes and advises and coaches many of the world’s best-known organisations.

He has a combined following of 4 million people across his social media channels and newsletters and was ranked by LinkedIn as one of the top 5 business influencers in the world.

Bernard’s latest book is ‘ Generative AI in Practice ’.

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How Nike’s Direct-to-Consumer Plan Is Crushing the Competition

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In June 2017, Nike outlined a new strategy to drive growth into the coming decade, which it called Consumer Direct Offense. The pillars of the plan included focusing on key cities , ramping up its innovation pipeline, editing its product catalog while offering a deeper selection of its best-performing styles and enhancing its digital efforts with mobile as the primary channel.

Today, it’s clear the brand has more than made good on its goals: Its stock has risen more than 73% since then, reaching all-time highs this week on the back of impressive earnings. Its revenues, too, soared to $10.7 billion in the first quarter, with digital up a staggering 42%.

“The key to expanding our competitive edge continues to be our total commitment to the consumer through the consumer-direct offense,” Nike CEO Mark Parker said on a call with investors and analysts Tuesday. “We’re focused. We’re investing in our brand in key markets and we’re accelerating in the high growth dimensions of our business. And that’s especially important in the volatile macroeconomic and geopolitical environment that we see today.”

The approach has meant that Nike has intentionally choked off its business with what it calls “undifferentiated multi-brand wholesale” partners while doubling down on direct retail and key accounts such as Foot Locker , JD.com, Amazon and Zalando in what Parker called “a tale of two cities.”

This is bad news for so-called mediocre retailers who were once able to rely on a heavyweight like Nike for top-selling product. These companies now have to compete with the Portland-based giant’s well-financed direct channels for consumer dollars.

It’s great news, though, for the “differentiated” retail partners who made the cut, because Nike said this segment saw high single-digit growth during the first quarter . Foot Locker, for instance, last month became the first third-party retailer to integrate the Nike app into one of its stores, allowing shoppers to scan products to pull up inventory and product information, win free merchandise and get access to exclusive releases. Nike, for its part, is also investing heavily in its app, growing the platform by almost triple digits in the quarter — and this is before it goes live in China over the holiday season.

“The company continues to take share by delivering more compelling innovation at a faster pace than competitors and continuing to enhance customer engagement via digital platforms,” Susquehanna International Group LLP analysts led by Sam Poser wrote in a Wednesday note. “Nike’s increasing digital prowess, scaling of new and existing product platforms, as well as increasing speed-to-market capabilities are leading to improved full-price sell-through across the globe.”

Here, as Poser suggests, Nike is besting its rivals: Under Armour has said in several recent earnings calls that its direct-to-consumer business has been weaker than expected, with North America sales slipping 3.2% last quarter on falling traffic in stores. And while Adidas’ investments in its direct-to-consumer business are paying off, resulting in double-digit growth in 2018, Nike is seeing even larger gains.

Cowen analyst John Kernan also pointed to Nike’s recent personalization-driven M&A activity. “Transformational growth and investments are extending Nike’s competitive advantage, particularly with its acquisition of retail predictive analytics and demand-sensing company Celect in Q1,” he wrote. “Nike’s technology investments and acquisitions in the data science field will support Nike’s ability to read and react to digital demand signals and increase full-price selling.”

“With the acquisition of Celect, Nike greatly accelerates our digital advantage by adding a platform developed by world-class data scientists,” Nike COO Eric Sprunk said in a statement announcing the deal. “As demand for our product grows, we must be insight-driven, data-optimized and hyper-focused on consumer behavior. This is how we serve consumers more personally at scale.”

Scale is important for a behemoth like Nike, which now has a market cap of nearly $144 billion; in comparison, Adidas has a market cap of $53 billion while Under Armour’s is at $8.5 billion. It will become even more essential as it seeks to grow across markets, which it is had done successfully this year: Its sales in China were up 27% in the first quarter, while its North America business grew 4%. While its focus on connecting directly with the consumer is already leading to improved margins, Nike seems to understand that its real value may be in forging deeper loyalties over time.

FN, Footwear News, Steve Madden, cover story

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Nike E-Commerce: How Nike’s D2C Strategy Hits 50% Digital Penetration

  • by Patrick Wong
  • Jan 14, 2022
  • 10 min read

Nike Commerce

This article is part of Commerce 4.0 , a series about the next frontier of e-commerce along with the strategies and tactics used by iconic brands to transform how we discover, select, and purchase products.

Nike , the largest seller of athletic footwear and apparel in the world, has never been shy about its aspirations of becoming a digital-first, direct-to-consumer (D2C) company. Over the years, Nike has accelerated its digital transformation by expanding its global supply chain and making “ significant investments in digital technologies and information systems” to power D2C e-commerce .

As part of its D2C push, Nike set out to reach 30% digital penetration by 2023, meaning 30% of total sales would be Nike e-commerce revenue. However, Nike blew past that goal two years ahead of schedule. It now expects its overall business to reach 50% digital penetration in 2022 .

Meanwhile, total D2C sales have soared from $2.5 billion in 2010 to $16.4 billion in 2021. And, over the trailing 12 months, the company generated a staggering $46.2 billion in total sales, putting it on track to meet its lofty goal of $50 billion in 2022 .

nike-ecommerce-strategy-d2c-sales

In this Commerce 4.0 profile, we’ll review Nike’s digital strategy that serves as its foundation for continued success in e-commerce. We’ll also explore the tactics Nike implemented to realize its mission of driving growth through digital and direct-to-consumer initiatives.

Nike E-Commerce Growth Strategy

The world’s largest sportswear brand has rapidly evolved from a traditional marketing-first retailer into a D2C juggernaut by creating and executing two key strategies: the Consumer Direct Offense (CDO) and Consumer Direct Acceleration.

Consumer Direct Offense

Much of the company’s recent success can be attributed to Nike’s company-wide strategy since 2017, aptly named the Consumer Direct Offense (CDO) . Executing the plan has allowed Nike to completely change its business model, shifting away from the lagging wholesale distribution business toward high-growth direct sales to consumers.

Over the last few years, the company has said goodbye to many long-time wholesale partners including Macy’s, Urban Outfitters, Shoe Show, Dunham’s Sports, Dillard’s, Fred Meyer, and Zappos. Nike also ended a high-profile partnership with Amazon after a two-year pilot program, even though Nike products are still among the top 200 most-searched keywords on Amazon.

Instead of working with these partners, Nike is focusing the majority of its efforts on D2C. Leveraging the power of digital has created a much faster pipeline to better serve Nike’s customers personally, and at scale, with tenets outlined in the CDO.

The Consumer Direct Offense involves:

  • Accelerating innovation and product creation
  • Moving closer to consumers by growing operations in 12 key cities across ten countries
  • Deepening one-to-one connections with interactive experiences across different channels

Consumer Direct Acceleration

In 2020, the company announced the Consumer Direct Acceleration , the newest phase of the CDO. This latest strategy involves several initiatives.

The first is to create the connected digital marketplace of the future , which focuses on developing a premium and seamless brand experience wherever customers shop. This leads with digital, online-to-offline services, as well as physical experiences through store concepts such as Nike House of Innovation , Nike Rise , Nike Live , and Nike Unite .

The second is to operate under a more straightforward consumer construct of men’s, women’s, and kid’s categories. Nike’s customers are not just runners or yoga practitioners, so broadening the categories allows Nike to create products with deeper insights and drive even greater specialization. The shift in consumer construct touches every area of the business, including innovation, product creation, marketing, merchandising, and distribution.

Finally, the third is to aggressively invest in digital capabilities in their end-to-end technology foundation to accelerate digital transformation. To date, this has included demand sensing , insight gathering , inventory management , and more.

Nike E-Commerce Growth Tactics

There are many valuable lessons to take away from Nike’s pivot from wholesale distribution to D2C. But, looking back, several critical decisions were made that directly led to the company’s extraordinary results, including:

  • Investing in key technologies
  • Building a headless commerce platform
  • Strengthening the supply chain
  • Pivoting with changes in leadership

Without these critical decisions, Nike would not have transformed into the technology-first company it is today and exceed expectations in terms of digital penetration. Below, we will explore each of these choices to see how they contributed to the company’s digital resurgence.

Tactic #1: Investing in key technologies

Nike has been investing aggressively in technologies to further its leadership position. Over the last several years, the company has made several key acquisitions of technology startups to help boost its digital capabilities.

Predictive analytics

Nike acquired the data analytics company Zodiac , a predictive customer analytics platform, in 2018. The platform forecasts the behavior of individual customers and customer segments and uses a company’s historical transaction logs to predict each customer’s future buying habits.

Zodiac’s predictions improve customer acquisition, reduce churn, and enhance the accuracy of sales forecasts. This technology has been important for Nike’s apps—SNKRS, Training Club, Run Club, and its commerce app—which have helped drive immense value for the company. According to John Donahoe, “a consumer who connects with us on two or more platforms has a lifetime value that’s four times higher than those who don’t.”

In addition to data analytics, demand forecasting for retailers is an inexact science that’s notoriously crude and error-prone. To help address this issue, Nike acquired Celect , a demand sensing firm based in Boston, in August 2019. The company’s cloud-based analytics platform provides proprietary insights that allow retailers to optimize inventory across an omnichannel environment through hyper-local demand predictions.

The goal is to integrate the technology into Nike’s mobile apps and website, which would allow them to predict what styles of sneakers and apparel customers want, when they want them, and where they want to buy them from.

Computer vision

Another acquisition is Invertex Ltd., a leading computer vision firm based in Tel Aviv, Israel. Invertex was acquired by Nike in 2018 and specializes in 3-D foot scanning. It even created the FeetID system , which includes an in-store unit that can precisely measure and 3-D-scan a shopper’s feet and send the data directly to their mobile phone within seconds.

According to co-founder David Bleicher, “Invertex’s combination of powerful deep learning and augmented reality, combined with its 3-D body scanning technology and domain expertise, have created the world’s most accurate body-based match engine for footwear.”

Data integration

Nike’s most recent acquisition is Datalogue, which it acquired in February 2021 . The company has “built cutting-edge and proprietary machine-learning technology that automates data preparation and integration.” This latest acquisition will help Nike integrate data from all sources—including the company’s app ecosystem, supply chain, and enterprise data—in a fast, seamless, easily accessible, and standardized platform.

Tactic #2: Building a headless commerce platform

Nike has also invested in custom software to create Nike’s e-commerce platform that is powered by headless commerce , cloud-native technology, and microservices . Early on, Nike recognized that technology was a strategic priority and began shifting its focus to transforming the entire tech stack of the organization.

Nike software engineers carefully examined many areas of the company’s engineering organization where off-the-shelf vendor software was routinely used and found that, in many cases, the software did not meet their strategic needs for functionality, security, or scale.

At the time, commerce-in-a-box solutions for enterprises were slow, prone to problems, difficult to scale, and wholly inadequate for a company the size of Nike. Today’s commerce platform-as-a-service (PaaS) providers would have supported all of Nike’s use cases and allowed it to focus on its core IP instead of managing technology infrastructure and services. However, these platforms were still years away from development.

As a result, Nike engineered its own solutions from the ground up. Its engineering teams aggressively marched towards cloud-native, microservice architecture and developed cloud-based software, resulting in cutting-edge applications and platforms that serve at a global scale. These investments enabled speed, scale, and stability across the enterprise.

In addition, they helped ramp up its backend capabilities to capture more of the demand generated from its industry-leading personal experiences.

According to Murali Narahari, Nike’s Director of Engineering, Shared Commerce, and Retail:

“Over the last five years, we have re-imagined our entire technology stack using observability, security, reliability, availability, and performance as core principles for software development.”

Tactic #3: Strengthening the supply chain

Nike’s products are sold directly to consumers through: Nike-owned retail stores; Nike-owned digital platforms; retail accounts; and a mix of independent distributors, licensees, and sales representatives in practically every country around the world. Simply put, getting Nike’s vast catalog of products to its customers requires a robust and highly complex supply chain strategy .

Not surprisingly, the company has invested heavily in IT systems ( p.16 ) to beef up its supply chain. Key areas include product design, production, forecasting, ordering, manufacturing, transportation, sales, distribution, and processing financial information for external and internal reporting purposes, retail operations, and other business activities.

Manufacturing

Independent contractors manufacture virtually all of Nike’s products. In an effort to be transparent, the company releases up-to-date data on the independent factories and material suppliers used to manufacture Nike products, including the name and location of each factory and the products they produce. As of August 2021 , 193 footwear factories in 14 countries and 342 apparel factories in 33 countries supplied the company.

nike-ecommerce-strategy-nike-products

Nike has been actively developing new technologies to enhance its manufacturing business model with investments in automation, modernization, sustainability, and innovative new manufacturing methods.

For example, Flyknit is a digitally engineered knitting process used to manufacture shoes that produce 60% less waste than traditional cut-and-sew methods. Nike has also invested in 3D printing technology for years and announced the Flyprint in 2018, the world’s first 3D-printed textile upper in performance footwear.

Fulfillment

As part of the CDO strategy, Nike has been trying to improve the speed and efficiency of its fulfillment capabilities. For example, in response to the global pandemic, Nike tripled its digital fulfillment capacity across North American, European, Middle Eastern, and African markets last year. The company also opened a U.S. fulfillment center in Los Angeles and ramped up in time to reduce fulfillment costs per unit on West Coast shipments before the holidays in 2020.

Increasing total fulfillment capacity has also included the introduction of robots to fulfillment operations. In 2020, Nike developed more than 200 robots in collaboration with Geek+ and met the rapid growth in e-commerce while also mitigating labor shortages and high labor wages.

Supply chain challenges

Disruptions are testing the resiliency of Nike’s supply chain. Container shortages, transportation delays, and U.S. port congestion interrupted the flow of their inventory last year. In addition, government-mandated COVID-19 lockdowns in Vietnam and Indonesia also caused inventory issues. In response, Nike maximized its footwear production capacity in other countries and shifted apparel production to countries like Indonesia and China to offset the impact of the shortages.

The good news is that consumer demand has never been higher , which will likely help accelerate the company’s D2C strategy . Moreover, according to Nike’s CFO Matt Friend, the temporary supply chain disruptions will likely trigger an even greater acceleration in the transformation of the marketplace—toward Nike and their most critical wholesale partners.

Tactic #4: Pivoting with changes in leadership

When Nike announced that John Donahoe would become the company’s third President and CEO, many people were surprised to learn that a career technology executive was taking the reins of the iconic sports apparel brand.

Donahoe, who served on Nike’s board since 2014, was the former President and CEO of Bain & Company, eBay, and ServiceNow, and still currently serves as the Chairman of the Board of PayPal Holdings.

nike-ecommerce-strategy-john-donahoe

After serving as Nike’s Chairman, President, and CEO for 14 years , this well-publicized transition of power allowed Mark Parker to relinquish his day-to-day management duties and step into an Executive Chairman position within the company. More importantly, Donohoe’s carefully planned appointment as CEO made it clear that Nike would not be making any drastic or significant shifts in its strategy and would safely stay the course with its new leadership.

According to former CEO Mark Parker, “Donahoe’s expertise in digital commerce, technology, global strategy, and leadership—combined with his strong relationship with the brand—make him ideally suited to accelerate our digital transformation and build on the positive impact of our Consumer Direct Offense.”

However, even though Donahoe is a strong choice for the company to continue executing its plans, he is making moves with other leadership changes to try and accelerate Nike’s growth with the Consumer Direct Acceleration strategy.

Nike recently announced a series of senior leadership changes shortly after he became the CEO. The company also shuffled the management team and announced massive job cuts, which resulted in “one-time employee termination costs of approximately $200 million to $250 million.”

More recently, a Nike VP/GM that oversaw the brand’s North America business stepped down from her position after a Bloomberg Businessweek story uncovered her son’s sneaker resale operation. Sarah Mensah immediately replaced her and was named the VP/GM of North America.

With these leadership changes in place, and with Donahue’s recent appointment as CEO, it will be interesting to see how fast and how far Nike can take its digital transformation.

The Future of Nike E-Commerce

It’s not easy to replicate Nike’s digital transformation strategy. Scale matters, and with the company’s breadth and depth, no one has the advantage in this space that Nike has to connect with consumers directly. Nike’s size, products, brand strength, direct consumer relationships, and ability to create seamless and differentiated shopping experiences is how it has set itself apart from competitors such as Adidas and Under Armour.

The company recently filed trademark applications that indicate it might sell digital versions of its sneakers, clothing, and other goods in virtual worlds, such as videogames or other online platforms. Perhaps it sees blockchain technology as yet another opportunity to deepen connections with its customers.

However, the company understands that it’s in the midst of a multi-year journey with lots of opportunities ahead, which is why the company isn’t resting on its laurels. According to CEO John Donahoe, “While we’ve had tremendous success in digital and quickly pivoted to the accelerated consumer shift, I truly believe that Nike is just scratching the surface of what’s possible.”

Key Takeaways

  • Executing on Nike’s Consumer Direct Offense strategy has transformed the company from a traditional marketing-first retailer into a massive D2C technology juggernaut.
  • Key technology acquisitions and investments in cloud-native microservices that power Nike’s e-commerce platform have increased the lifetime value of customers.
  • Nike engineered its own e-commerce platform since no flexible, headless commerce solution was available years ago.
  • New President and CEO John Donahoe is attempting to push digital transformation forward with leadership changes and the Consumer Direct Acceleration strategy.

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The Radical Strategy That Drove Nike’s Pandemic Success

Nike's latest retail concept in Guangzhou, China

  • Doug Stephens

Nike Case Study Article Banner

Amid the sea of turmoil in the retail sector and the weekly waves of disastrous news, at least one brand is not merely staying afloat but thriving. Nike has not only endured the crisis but also managed to accelerate through it. But far from being the result of a desperate pandemic-induced pivot or some happy accident, the seeds of Nike’s current resilience were planted deep into its strategy several years ago.

With a big unveiling on October 25th, 2017, with his company’s stock trading at roughly $51, then chief executive Mark Parker committed corporate suicide. At least that’s what many believed at the time. Because it was on that day that Parker revealed a dramatic culling of Nike’s distribution network. Out of a roster of more than 30,000 retail partners, Parker declared that the Nike brand would focus its time, attention and financial resources on a mere 40 of them. Relationships with the rest, comprising what Parker called “undifferentiated retail,” were very publicly cut off or pared back. Where most CEOs are reticent to fire even a single customer, Parker had just pink-slipped thousands in a single day.

The crucial realisation driving the decision was that while Nike was spending billions to pump equity into its brand, sub-optimal customer experiences at the hands of lacklustre merchants were simultaneously undermining the brand’s equity with consumers. While Nike worked to convince its customers that its products were unique, they were all too often being dumped next to competing labels in a manner suggesting anything but premium or exclusive positioning.

Parker knew that if Nike was to succeed it had to partner only with those retailers that had both the means and the desire to create more fulsome Nike buying experiences. Monies and effort previously squandered on counterproductive distribution would be redirected to what Nike was calling its “Consumer Direct Offense” — a radical strategic move away from wholesale distribution announced in June of the same year.

In a growth-at-all-costs retail world, Parker had stuck a finger in the eye of both investors and distribution partners, boldly launching what Nike captioned its “Triple Double Strategy” — doubling its innovation efforts, doubling its speed to market and doubling its direct connection to consumers.

With that, the brand poured itself into direct-to-consumer sales and in 2017 established a direct-to-consumer sales target of 33 percent of total volume by 2022. By 2019, three years ahead of plan, Nike achieved that goal. In fact, by that time, Nike’s direct-to-consumer trade was achieving a percentage growth rate more than double that of its wholesale volume.

Whether anyone at Nike was conscious of it or not, the organisation had awakened to a momentous reality: that wholesale was largely a manifestation of the industrialised era of retail, a time where true scale, for any brand, could only be achieved through vast networks of indirect retail distribution. Wholesale was, at its core, a devil’s bargain that often came with commodification, brand dilution and a fracturing of the relationship with the end customer. But it was all part of a dance that virtually all brands engaged in. Not because they liked the music or their dance partners, but out of pure necessity.

Wholesale was a devil’s bargain that often came with brand dilution.

By 2017 however, technology and innovation had brought Nike and every other brand full circle, to a place where relationships with individual consumers could indeed be directly formed, nurtured and well-serviced. A time where one pair of running shoes could be made in a bespoke fashion and created at scale. Research also pointed quite clearly in favour of direct selling. A focus on direct-to-consumer sales would — according to credible studies — generate up to 86 percent more revenue than through their wholesale channels, with better margins. All while retaining brand equity and achieving superior customer satisfaction.

At the time, all brands could vividly see these opportunities beckoning. Hardly a week went by between 2017 and now that I haven’t listened to a brand bemoan its hostage-like wholesale situation. Most threatened to launch direct-to-consumer efforts. But while the majority ruminated, vacillated and procrastinated, Nike Just Did It, setting off a brand reinvention that would pay dividends years later, when they needed it most.

The Everything (Except Nike) Store

Almost exactly two years after Parker’s Consumer Direct Offense was unveiled, Nike divorced yet another customer… Amazon. Referring to its work with Amazon as a “pilot project,” aimed at giving Nike more control over grey market and counterfeit Nike items being sold on Amazon, the brand ultimately decided to sever the arrangement .

According to those close to the breakup, even becoming part of Amazon’s brand registry program couldn’t allay the endless stream of third-party merchants that, who, like a game of whack-a-mole, would get whacked, only to pop up again on the platform under a different name. Nike faced a decision. It could either continue the charade or once again reclaim the resources being dumped into Amazon, and instead redeploy them to its direct-to-consumer channel. It chose the latter and never looked back.

Flipping the Funnel

By 2018, Nike began challenging retail paradigms in the physical realm. Its new House of Innovation 000 design in New York City departed entirely from anything the brand had done before. With a deep focus on hands-on engagement and product customisation, Nike’s stores were no longer the well-lit, mini warehouses that most big box shoe stores had become. Instead, Nike was creating beautiful and dramatic stages upon which its powerful brand and product stories could be told. Customers across major cities could not only see the unique store experience but become part of it, engage in it, play and be inspired by it. By October of the same year, House of Innovation 001 opened in Shanghai. But they didn’t stop to congratulate themselves. Instead, they continued to poke at the universe, and this time on a smaller scale.

Nike’s next innovative incarnation was a concept called Nike Live, a small, local and heavily technologically-integrated retail space, the prototype for which is located on Melrose Avenue in Los Angeles. What few recognised at the time was that the store was designed to be as much a hyper-local data point as it was a distribution point. Data from in-app transactions as well as in-store experiences would be parsed and deciphered into highly localised and curated selections of products, as well as unique and technologically integrated member services, such as curbside pick-up and returns, in-store events and even free products. Most notable however was the fact that the Nike By Melrose store was converting shoppers into Nike Plus members at a pace 6 times greater than any other Nike stores. Even more stunning perhaps was the fact that customers that visited the physical store prior to buying online spent 30 percent more on average than customers who enjoyed no such physical experience.

The store was no longer the end of the marketing funnel. It was the beginning.

What Nike had locked onto was a simple yet profound idea and something I wrote about at length in my 2017 book Reengineering Retail . They realised that stores were no longer simply distribution points for products. Brick-and-mortar spaces had indeed become powerful acquisition points for customers. In fact, physical stores had emerged as the most effective means of drawing shoppers into the brand ecosystem. Once acquired, shoppers could operate across any number of channels, all elegantly woven together with branded technology. Physical stores had become a media channel and media had become the store. Where the retail industry had spent centuries using media to drive people to stores, the future would be about using stores to drive people to media. The store was no longer the end of the marketing funnel. It was the beginning. And Nike knew it.

Tech as a Tether

Unlike so many other brands, Nike’s foray into technology was not simply a table-stakes move with the goal of “omni-channel” sales.

Instead, three consistent themes rang through every one of Nike’s technological endeavours: customisation, community and content. Whether through its Nike Running or Training Club, the subtext was always clear. Individuals with unique personal goals and achievements, brought together to form a global community of athletes, fed a never-ending stream of rich, powerful and inspiring stories of human performance.

Put a different way, Nike never viewed technology as simply another channel for transactions, but rather a means of creating an ongoing connection with their customers, while also connecting their customers to the community. The simple goal being, to create a specialty app that is so good it gets real estate on home screens. With over 100 million Nike+ members, logging billions of hours of workouts, and an in-app average spend that is three times greater than on Nike.com, it’s was clear that the company and its app developers had hit the mark.

The True Product

In October of 2020, Nike competitor Under Armour announced that, like its swoosh-brandishing nemesis, it too would begin to trim its wholesale customer counts. As Nike had done three years earlier, Under Armour declared that it would exit thousands of its wholesale agreements to redouble its focus on its direct-to-consumer channel.

But what Under Armour will learn, if they don’t know it already, is that the foundation of Nike’s success extends far deeper than simply exiting or reducing wholesale relationships. Their resilience has much more to do with what Nike, unlike most apparel companies, sees as being its core product.

For most brands, the product is very clearly the physical objects they sell: shoes, apparel and accessories. For Nike it’s something much bigger. It’s about powerful human ideas. When we buy Nike, we’re buying into a cultural story. It may be a story about social justice and equality. It may be a story about perseverance against the odds, as was the theme of their memorable Find Your Greatness campaign. Or it may be a story about the many failures we all (even legends like Michael Jordan) experience en route to victory.

Nike is, above all else, a master storyteller that also happens to make well-designed products; products that become an emblem declaring one’s cultural alignment with the brand. The actual things Nike sells are simply the outward symbolism of that cultural affiliation. Thus, the relationship with a brand like Nike becomes transformational where the relationship with brands like Under Armour remains purely transactional.

Today, amid the pandemic, Nike’s stock sits at roughly $135 per share, a 150 percent increase in value since Parker’s momentous announcement in 2017. While Nike could never have predicted the pandemic, the decisions it made almost four years ago, have powered its performance through it and provided a roadmap for others.

The lessons for retailers across categories are clear. First, no single customer or level of sales volume is worth sacrificing your brand. The brand is really all you have. Second, direct-to-consumer sales aren’t a departure from the norm but rather a return to the way retail was done for millennia. Wholesale was the aberration.

Moreover, the true (and perhaps only) value of a brand rests in the power of the stories it tells. Lose the story and you lose the brand. Lose the brand and you lose everything. And lastly, while media in every form is now “the store,” physical stores have become the most powerful media channel on earth, real life stages from which those unique brand stories can be told.

Doug Stephens is the Founder of Retail Prophet and the author of three books on the future of retail, including the forthcoming ‘Resurrecting Retail: The Future of Business in a Post-Pandemic World.’

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Inside Nike’s Radical Direct-to-Consumer Strategy — Download the Case Study

Despite Setbacks, Nike Is Scoring with Direct-to-Consumer ‘Offense’

Why Branding Matters Now More Than Ever

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nike dtc case study

Why Nike Pivoted towards Direct to Consumer Strategy

Why Nike Pivoted towards Direct to Consumer Strategy

Nike is the largest Footwear and Athletic apparel brand in the world. Their total revenue in 2018 reached $36.5 Billion Dollars, nearly $12 Billion Dollars more than their nearest competitor Adidas.

Nike’s market capitalization is twice that of Adidas, coming in at $110 Billion Dollars indicating investors are far more receptive to the sporting giant’s outlook and marketing strategy than the competition.

But why is that? What is Nike doing that Adidas isn’t?

Well in summer 2017, Nike announced its triple-double plan. It outline their desire to double innovation, speed to market, and their direct connections with consumers.

Nike is transforming its business towards a direct to consumer marketing strategy. But what is a DTC marketing strategy?

Well first you need to understand what the traditional business model is. To give an example: let’s say you want to start a business that makes custom t-shirts. After spending hours and hours making all your t-shirts, you are finally ready to sell them at $10 a piece.

In this case, you will need to sell your shirts to a wholesale distributor. The distributor will then sell, ship and deliver their shirts they bought to a retailer who will then sell to the public.

However, instead of selling the shirts for $10, the retailer prices are at $16. That’s because both the distributor and the retailer need to raise price to make money.

The inflated price also means you will sell fewer shirts than you would have if the shirts had been sold to the consumer at $10 due to the laws of supply and demand.

If a direct-to-consumer strategy was used however, the shirt will be sold to the consumer at $10 because your product would have avoided the markups from both the distributor and the retailer, thus lowering the total supply chain cost. But how do companies form a direct connection with the consumer and why is it the ideal business model.

Well selling your products online and shipping directly to customers is by far the most popular way. However, it doesn’t have to end there. With the increasing presence of social media in people’s day-to-day lives, DTC companies can simply pay for ads and easily access their target market.

Buying ads on social media gets people talking about your product and helps to create a community centered around it. Companies can now collect more consumer data giving them more information on how to provide exactly what people want and new features like Instagram Checkout option which allows people to buy a product that shows up in their feed is making it easier for companies to make a connection with their consumer.

Not only does the DTC strategy allow companies to access new markets, but also to form more meaningful connections with their consumers and strengthening the company’s perception and brand.

So how is Nike implementing the DTC marketing strategy? As for now, Nike has invested more than $2 Billion Dollars in Nike Direct, the DTC division of their business. Currently however, 70% of Nike’s business is done through wholesale distribution with their near 30,000 partners.

Nike plans to reduce those 30,000 partners to a mere 40. Why? Because the fewer the partners, the easier it is to monitor the customers experience and quality of service.

Nike isn’t trying to get rid of wholesale distribution, they are trying to get rid of the retailers that don’t have the resources to differentiate Nike’s product and brand from others.

These select retailers have agreed to hand Nike their own department and the ability to hire their own employees, people who know about Nike’s products. Nike is also in the process of opening a series of pop-up stores in areas where sales are high.

For instance, a Nike store was opened in Los Angeles, focusing on bringing the physical and digital retailing spaces together. The products the store carries is determined by what is popular in the area, learned via online sales. For example, in Los Angeles the retro-style sneakers are featured because a lot of people bought those styles online.

And if you are Nike plus member, your instore experience will be that much better as customers can request fitting rooms, shoe sizes, and reserve a pair to try on later. You can also checkout and skip the line and receive special offers all through the Nike app.

All these efforts seem to be paying off as Nike’s digital sales rose 36% in the first quarter of 2019 and reached $1 Billion Dollars of net income for the first time in the company’s history.

Rather than continuing with the traditional business model, Nike decided to be proactive and switch their marketing strategy – a move that was necessary to stay relevant for years to come.

To rephrase Charles Darwin’s famous words, it’s not the strongest of companies that survives but the ones most responsive to change.

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Nike Reinforces Future as a DTC Dominant Brand

In the last week, analyst reports circulated suggesting that Nike reportedly plans to cut ties with at least six of its US wholesale partners, including DSW, Urban Outfitters, Shoe Show, Dunham’s Sports, Olympia Sports and Big Five Sporting Goods.  The move comes as an apparent bid to prioritize their growing direct-to-consumer (DTC) channels and exit accounts considered out of step with their brand image. Nike’s direct to consumer business made up roughly a third of their revenues in 2019 and has experienced pandemic-fueled growth. The company’s recent decision to remove the Nike brand from several large US wholesale accounts comes on the heels of pulling back from Amazon and reinforces their strategic focus on growth in owned retail.

  • Expanding Focus on Digital and First Party Data Analytics: During Nike’s Q3 2020 earnings call that took place on March 18th, executives reported the company’s digital business has grown over 70% year-to-date. In a year characterized by significant ecommerce gains, Nike’s digital growth is not necessarily surprising. However, the company’s accelerated digital growth reflects investments aimed at improving the company’s proprietary data, tools, and analytics prowess.  Over the last few years, the company has made four data and technology acquisitions, suggesting a strategic focus on growing Nike’s first-party datasets and advancing their data science capabilities to complement digital commerce growth.
  • Continued Innovation in Owned Omni Channels: Alongside growth in digital, Nike has continued to innovate and grow their increasingly personalized omnichannel store footprint. The company has introduced and continued to invest in modern store formats like their hyperlocal and digitally connected Nike Live stores they’ve been testing for a few years, their experiential House of Innovation flagship concept, and their most recent community-driven Nike Unite stores. Announcements suggest the brand will roll out roughly 150-200 stores in the image of Nike Live within three years across North America, Europe, the Middle East and Africa. Nike is also testing a community-first and digitally enabled format dubbed Nike Rise, and its first Rise store opened to the public in July of 2020 in Guangzhou, China. At Nike Rise stores, visitors can use the Nike app to navigate the store and plug into workshops, events, live sports games and workouts.
  • Preferred Wholesale Accounts Still Play Role in Nike’s Business (for now): The mandate is clear that Nike’s wholesale partners need to offer a differentiated and innovative experience that is unique and brand-building for Nike – or risk losing the business. Preferred wholesale partners stand to gain from Nike’s recent exits from perceived non-differentiated retailers. But for how long? Nike has reported that it plans to become a 50% digital business by 2025, and the company is on track to achieve that goal (perhaps well in advance of the 2025 timeframe). Combine that with favorable margins for directly sold merchandise, and it stands to reason that Nike will become an increasingly direct to consumer retailer.

Nike House of Innovation NYC

Nike House of Innovation, NYC. Image Source: Business Insider

Looking out to a post-pandemic future, Nike is poised to continue evolving into an elevated, digitally nimble, and increasingly consumer-centric brand – with potential gains in personalization, loyalty and lifetime value as the company collects more robust customer data and analytics to tailor products and experiences to meet the needs of their consumers.

At McMillanDoolittle, our retail experts help brands and retailers consider and prioritize initiatives across all channels and opportunities to drive business growth.  We help brands build and evolve their distribution strategy into new markets, new channels, and with new partners. For more information on our services at McMillanDoolittle, simply contact us .

And, if you enjoyed this story on Nike’s move away from legacy wholesale partnerships, check out our other blogs, where we discuss Nike’s success in Operationalizing Customer Data and comment on Nike’s Sustainability-focused Re-Creation Pop-up Store.

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Jill Wahl is a recognized consumer insights expert with extensive experience in quantitative and qualitative research. Ava Buechel provides comprehensive consumer and market research and analysis. Contact us to learn more about how our strategic solutions and services in leading innovative transformations can help your company play to win.

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Inside Nike's DTC strategy

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Sourced from Business of Fashion, Nike; additional content by WARC staff

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Explains how Direct-to-Consumer (DTC) brands place customer relationships at the heart of their business strategies and often position themselves as challengers who seek to disrupt their category by providing a unique online offering with high levels of innovation.

Looks at how direct-to-consumer brands are shaking up retail and disrupting consumer packaged goods by raising the consumer expectations that all brands must meet.

Outlines the insights gleaned from interviews with several DTC challenger brands as well as brand consultancy eatbigfish's own experience of working with challenger brands.

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Nike is feeling the limitation of the direct-to-consumer model. 'DTC isn't all it's cracked up to be,' analyst warns.

  • After trimming 50% of its wholesale accounts, Nike is done with "big account pivots," an exec said.
  • The shift comes as more direct-to-consumer companies start looking for retail partners.
  • An analyst said investors should "remain wary of perceived margin benefits behind the DTC shift."

After four years of aggressively cutting the accounts of retail partners and accelerating its direct sales, Nike says it's entering the "next phase" of its business plan. That's coinciding with a growing sense of the limitations of direct-to-consumer efforts.

On a quarterly earnings call in March, Nike's chief financial officer, Matt Friend, said the company had cut 50% of its wholesale accounts since 2018, adding that Nike had finished with its "big account pivots."

At an investor day in 2017, a Nike executive said the company had 30,000 retail partners.

"We are now moving into the next phase of our marketplace strategy," Friend said in March. "And our go-forward plans are aligned with our wholesale partners. Wholesale partners play an integral role in our future marketplace, first, to authenticate our brands and then to create scale of distribution through a consistent consumer experience across a larger retail footprint."

The shift in Nike's direct strategy comes as more DTC-native brands seek retail partners , part of what Simeon Siegel, a managing director for equity research at BMO Capital Markets, calls the "de-DTC era."

In a recent note about DTC, Siegel told investors it's "not all it's cracked up to be," adding that the advantages of more data, better product showcasing, and higher revenue could be offset by additional costs.

"Despite widespread belief to the contrary, the push to DTC from wholesale appears to hurt, not help, overall company profitability," Siegel wrote.

He also expressed doubts about Nike's focus on direct sales.

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"We see Nike's size and scale as long-term competitive advantages, but remain wary of perceived margin benefits behind the DTC shift," he wrote in a note to investors after Nike's March earnings report.

The note included Siegel's analysis of Nike's profit margins relative to increases in direct sales in four sales geographies. "Higher DTC didn't appear to necessarily drive improved regional GM/EBIT margin," Siegel wrote.

While Nike has cut ties with many retailers, it's become more intentional with the partners it's kept. A recent partnership with The Whitaker Group , which Footwear News named its retailer of the year in 2020, included a collaboration on Jordan and Dunk sneakers .

Friend said Nike was "committed to driving growth with partners like this as they create authentic, deeply connected consumer concepts in key cities and communities around the world."

Nike also recently announced it would link its membership program with Dick's Sporting Goods, a Nike retailer.

While wholesale offers Nike access to new customers, it requires a certain loss of control, something Nike tries to minimize.

"It's a great brand," Trent Out Loud, the founder of the sneaker boutique Exclucity, told Insider. "But I have some areas of concern that I would like upper management to hear."

He said Nike is asking retailers like him to spend too much on brick-and-mortar improvements while reducing product allocations. Exclucity has a Nike NBHD account, a designation that Nike gives its trendiest retail partners.

He said the least expensive store renovations he'd done cost $400,000. He added that lately there's been less back-and-forth with Nike about Exclucity's business needs.

"Years ago it was completely different," he said. "There was different leadership. It was also a different landscape. Ten years ago I would have had the vice president of sales' phone number. We'd be on speaking terms. Now it's hard for me to get my sales rep on the phone. All of their attention is being directed to the SNKRS app and DTC, and not their wholesale account holders."

Watch: Mars CEO explains how Gen Z is transforming the $35 billion company's workplace

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Nike to Double Down on DTC Following Q3 Gains, Plans Standalone Jordan Stores

  • March 23, 2022 at 3:37 PM EDT
  • By Nicole Silberstein

Nike pushes forward with its direct-to-consumer strategy after strong Q3 2022

Nike is pushing forward with its digitally focused direct-to-consumer strategy following a strong Q3, with plans to build “the marketplace of the future” and bring standalone Jordan stores to North America.

Revenues were up 5% YoY in the company’s fiscal Q3, which ended Feb. 28, 2022, led by 15% growth in sales across the company’s owned digital and physical operations, referred to as Nike DIRECT. The brand’s overall digital sales also increased 19% globally, while wholesale revenues were down by 1% .

President and CEO John Donahoe pointed to the results as proof that Nike’s “Consumer Direct Acceleration” strategy is working as the brand approaches its 50 th anniversary in May: “Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport,” said Donahoe. The former eBay CEO took on the top role two-and-a-half years ago with the mission of accelerating the company’s digital transformation and building on its “direct offensive.”

Among the initiatives highlighted by Nike executives were:

  • An expansion of the company’s DTC brick-and-mortar presence , including the debut of Jordan-branded stores in North America;
  • Plans to strengthen its remaining wholesale relationships following the culling of 50% of that business over the past four years; and
  • Growing participation in new digital platforms across social media, livestreaming, metaverse activations and the creation of digital goods.  

Building the ‘Marketplace of the Future’

A big piece of Nike’s direct offensive has been a shift away from wholesale and toward DTC. The company pulled its products off Amazon in 2019 and has shed 50% of its wholesale accounts over the last four years, including its relationships with DSW , Zappos , Dillard’s and Big 5 Sporting Goods .

Looking ahead, Donahoe said the company is focused on “expanding our digital advantage to create the marketplace of the future.” This will feature a full suite of distribution channels that will still include wholesale and third-party digital partners (although not Amazon), but will continue to place a greater emphasis on DTC channels, both digital and physical.

To that end, Nike plans to begin testing a new Jordan-only store concept in North America in 2023. The concept has been “wildly successful” in Greater China, the Philippines and Korea, according to CFO Matt Friend, who said on the earnings call that the company’s approach “is to first pilot these new concepts, iterate and perfect, and then move to scale.” 

Friend also highlighted plans for continued investment in Nike mono-brand stores, including its digitally enabled Nike Live concept . New store investments will focus on “gaps in distribution to serve the growth opportunities we see in women’s apparel and Jordan,” he said.

“Our marketplace strategy is a growth strategy, and it’s driven by the consumer, fueled by their expectations of a consistent, seamless and premium shopping experience,” said Donahoe on the Q3 earnings call. “ Our approach begins with the understanding that consumers expect us to know who they are regardless of channel , online or offline, across the full array of mono-brand stores, Nike Digital and our wholesale partners.”

Wholesale Will Still Play a ‘Very Important Role’

Nike integrated its membership program into the Dick's loyalty app

Now that it has completed trimming its wholesale business, the next phase of the marketplace strategy will focus on aligning with its remaining wholesale partners and elevating those relationships, through digitally connected retail experiences such as its recent integration with the DICK’S Sporting Goods loyalty program. A similar integration was also rolled out last quarter with both Topsports and Pou Sheng in China.

“Our wholesale partners continue to play a very important role in our marketplace strategy,” said Donahoe. “We value the strong strategic relationships we have with our partners, particularly through our shared vision of connected data and inventory . This approach lets us serve consumers with the greatest access to the best of Nike, and to do so with speed and convenience in a more personalized, engaging and sustainable way.”

Donahoe also made a point of reinforcing the importance of Nike’s relationship with Foot Locker . Shares in the footwear retailer tumbled to their lowest point in four decades in late February, after Foot Locker reported a disappointing outlook that was due in large part to the wholesale pullback by Nike, which is Foot Locker’s largest supplier.

“To be crystal clear, Foot Locker always has been and always will be a large and important partner of Nike’s and that will continue to be the case ,” said Donahoe on the earnings call. “They’ll have a very distinct role in our marketplace strategy as a wholesaler, with a particular focus on the culture of basketball, on the sneaker culture and on kids, which is a really big and important opportunity for us.”

‘Growing Participation in New Digital Platforms’

Nike also has been making big moves in the emerging tech space: “Our growing participation in new digital platforms lets us create innovative ways to connect with consumers, letting them unlock virtual experiences, products and rewards as we expand access points to Nike across the digital ecosystem,” said Donahoe.

LeBron James visited the Nikeland virtual world in Roblox during All-Star Week.

Among the recent examples Donahoe highlighted are:

  • New activations in the Nikeland virtual world on Roblox , which has been visited by 6.7 million players from 224 countries since it launched in November 2021. Recent activations included a “visit” by LeBron James during NBA All-Star Week and the launch of virtual products exclusive to Roblox;
  • The debut of Nike Virtual Studios, which is aimed at creating Web3 products and experiences. Digital artifact creator RTFKT, which Nike acquired in December 2021, will play a big role in the new division. Quickly following the acquisition, RTFKT released the first official Nike-branded NFT;  
  • Leveraging Snapchat’s Try On lens;
  • Plans to explore “new dimensions and experiences” in its SNKRS app, including livestreaming, with a focus on women’s products and apparel; and
  • A recent collaboration with EA Sports for the Super Bowl that gave members who ran five miles in the Nike Run Club rewards and unlocks within the Madden videogame. To participate, members had to link their Nike and EA accounts, which was an integration first for Nike. “The number of new members we acquired surpassed our expectations,” said Donahoe of the linkup. “And the framework we developed with EA Sports will allow future membership connects to come to life even more efficiently with new partners.”

“In the end, Nike is doing what we always do; we are staying on the offense ,” said Donahoe. “Our confidence as we look long-term hasn’t changed one bit. We’ve been resolute in fueling innovation and our brand is as strong as ever. Nike’s unique strengths continue to set the pace and keep us in the lead.”

  • Posted In: Business Intelligence , Customer Experience , Data & Analytics , Digital Commerce , E-commerce Experience , Inventory & Merchandising , Market News
  • Tagged With: design:retail News , Dick's Sporting Goods , digital goods , direct to consumer , dtc , Featured , Foot Locker , Jordan , metaverse , NFTs , Nike , Nike Live , Nikeland , Q3 earnings , Roblox , transformation strategy , wholesale
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nike dtc case study

Justin Edwards

Nike dtc : case study 2020 brand plan, nike identified four direct to consumer channels that were key to realizing brand and business potential over the course of the next 3 years until 2020. a consistent strategic message and vision to scale and unify nike’s dtc (nike.com, flagship, partner, factory) channels was needed in order to put the customer’s needs first and reach that potential..

nike dtc case study

Inform strategic and financial plans through 2020 for Nike Clearly articulate “who we are” and “what we believe” Create a sound strategic framework to drive distinction and positive disruption in the marketplace and within our own “go to member” process and consumer engagement plans (for consumers, for our brand, for the business) Rally the extended team and unify our collective efforts with focus and purpose (including senior leadership, other key functions and the extended DTC team)

nike dtc case study

NIKE RESEARCH

15 customer interviews, 39 retail site visits, 2 expert sessions, competitive research, 20 retail experience case studies, opportunity, the dtc brand plan will ground us. it will be a northstar, a filter, a focus. in partnership with nike, we needed to answer fundamental questions in order to define the purpose of the brand plan, gather data and compile a proper strategy. , 1. when everyone is using the same sources of inspiration, everything can start to feel, ‘same old, same old.’
 2. proof of participation is a new product. 
 3. limitless options can be limiting. 
 4. consumers are increasingly empowered to build experiences around their needs, no longer happy to ‘make time’ for tasks.
 5. when all points of engagement offer the same experience, consumers feel no need to explore..

nike dtc case study

Nike research, insights, our competitive retail/brand analysis and collaborative workshops shaped the approach. The end result was captured in detailed chapters of the below areas which defined the framework for Nike’s DTC strategy.

nike dtc case study

Only after workshops with Nike, and rounds of iterating could we arrive at a breakthrough in the form of “Everyday Victory”. This single statement was powerful enough to unify the entire DTC offensive, but flex for each specific need. We were convinced it was perfect, but I needed buy in from our executive sponsor, Heidi O'Neill, President of Nike Direct to Consumer before we could go further and communicate across the Nike organization. The primary means of communication were in keynote presentations. Currency at Nike is in a well rehearsed, beautiful presentation. The decks (sample slides above) were vital to the success of this project and narrative we wanted to tell. To get to that point we needed to also think of the entire design system of this new department at Nike and how it would visually cut through internally. Throughout building our decks we would sharpen the identity using the lock up below and elements to tie back to Nike while feeling fresh and inclusive.

nike dtc case study

The identity system paved the way for us to quickly move into crafting our narrative across mediums. Once we had solidified the strategy and our keynote decks were set, we quickly framed out all the pieces we envisioned that would bring our message to life in print and on screens.

nike dtc case study

EXECUTIVE LEAVE BEHIND

The global dtc brand plan was translated into a succinct executive leave behind. we shot into imagery of store associates (nike athletes*) and used their experiences to represent each dtc channel. the main book contained an edited version of the strategy, vision and how “everyday victory,” comes to life..

nike dtc case study

INTERNAL RESPONSIVE SITE

The online version of our dtc global brand plan allowed us to fully express the richness in content we produced and shot. during our four city asset shoot, we captured imagery, audio and video from representatives at each of the dtc channels. the experience encompassed the full contents from our keynote decks and going much deeper. while the breadth of content was long, we wanted to create an experience that allowed a user to not have to click in order to swipe through each section gracefully. .

nike dtc case study

ASSET CREATION

To create a human connection and compelling narative, we captured a day in the life of four nike employees. on location in new york city, mexico city, amsterdam and shanghai, we collected their experience to represent each unique dtc touchpoint. audio, video, and photography from the shoots were incorporated into all our deliverables: executive leave behind, digital experience, keynote presentations, brand videos..

nike dtc case study

The realization of “EVERYDAY VICTORY,” unified our strategy, but the execution of it depended on the leaders of each DTC touchpoint. To set these teams up with success, we provided a number of customer experience frameworks to aid in mapping and strategy leading up to execution. 

Creative director at the science project customer experience, creative & art direction, digital product design, graphic design, yan sze li, nicole davis, gabe dorosz, rick albert, jeremy bergstein, julie scherr.

Here’s What Brands can Learn from Nike & Adidas’ Digital Disruption Amidst COVID-19

Digital Disruption

Examining the increasingly digital, personalized sportswear market .

As with many retail sectors, the 2020-21 sportswear faced some unprecedented changes due to COVID-19 — both from customers and the market at large.

For starters, COVID’s impact can be seen in changing consumer values. On a surface level, demand for athleisure increased. The pandemic forced stay-at-home orders and work-from-home set-ups that naturally led people to ditch the buttons and collars in favor of comfort. And this comfort frequently manifested in athleisure — what with its multi-purpose functionality and often sleek vibe.

Another value that the pandemic shone a bright light on has been health consciousness. Sensitivity to health matters has, of course, been heightened to unprecedented degrees. As such, consumer interest in at-home workout options has grown — as has the desire for sustainably produced materials.

Beyond the customer, sportswear companies have seen firsthand the benefits of relying on flexible supply channels. COVID can thus be seen as a sort of wake-up call: In an uncertain world, the ability to adapt to market uncertainties is invaluable.

And perhaps no market adjustment is quite as stark as the adoption of digital channels. As we’ll discuss below, sportswear companies like Nike, Adidas, and Lululemon have all pivoted their operations (at times, quite dramatically) to build up their eCommerce and digital marketing avenues. They were undoubtedly headed in this direction prior to 2020, but COVID has expedited the process out of necessity.

So these, in a nutshell, are the biggest transformations seen in the 2021 sportswear market. But now we face the question: what will the sportswear market look like through 2022 and beyond? And what exactly are those big-name brands doing to stay ahead?

The future will be defined by the success of DTC eCommerce

Perhaps most prominent to the individual buyer, direct-to-consumer (DTC) channels are unquestionably becoming the new normal.

More and more of the sportswear market is “cutting out the middleman,” so to speak, relying on their eCommerce capabilities instead of physical stores and third-party vendors. In fact, Nike, Adidas, Puma, and Under Armor all saw DTC account for a greater share of their 2021 sales than in 2019. (Adidas, at the front of the pack, now attributes over 40 percent of sales to DTC; that number is expected to surpass 50 percent by 2025).

Apart from the convenience of shortening the supply chain, DTC channels benefit these retailers by embracing new-age technological capabilities. Specifically, access to user data — both on individuals and demographic groups — enables smarter recommendations and product assortments. In other words, DTC opens the door to a newfound level of personalization.

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What this means, from a big picture lens, is a vastly improved user experience from a number of angles. One of these angles is customer relationship building — DTC eCommerce literally gives you direct access to communicate with consumers (and, in turn, fulfill their desires/assuage their pain points). Another angle: Strategically targeted product deals, rewards and promotions, and loyalty programs.

Now when we pair this tech-minded DTC movement with the current commitment to sustainable production, we get something that every company craves: A brand image that breeds customer loyalty.

The cutting-edge user experience that DTC channels enable is essentially a long-term marketing technique. Greater experience cultivates brand loyalty which, in turn, spawns a greater ROI per customer in the long term.

Success stories: How Nike, Adidas, & Co. are thriving in unprecedented times

Let’s ask: What do these tectonic shifts in the sportswear market mean for the big name brands out there?

Well, for Nike, they meant a quick resurgence after the initial early-Covid-induced dip in sales. With a newfound commitment to online channels, Nike’s sales through those channels ballooned by over 80 percent over the summer of 2020! To be fair, Nike was already trending in this digital direction; pre-Covid projections were that 30 percent of revenue would be digital by 2023.

That number, though, has already been eclipsed. With such substantial returns, we can only expect Nike to dig deeper into this gold mine. Specifically, Nike has used (and will likely continue to use) digital channels to offer exclusive, custom products (namely, shoes). One particularly notable pricing strategy Nike employed was making their at-home workout platform entirely free. The result was increased accessibility, bringing in over 50 million new users who became loyal, paying customers of Nike retail products. But more importantly, this gave Nike access to these new users’ data; with this data, the sportswear giant could then optimize prices to be as competitive and lucrative as possible .

As mentioned above, Adidas has put an industry-leading premium on eCommerce sales. But they’ve also done the extra leg by investing more in digital marketing. One striking development is their newfound interest in hosting ads on Snapchat . Over the past few years, Adidas has committed more and more ad spending to this social media channel — thanks to an ROI boost of over 50 percent in European markets. Whether or not Snapchat marketing continues to be so effective long-term may be uncertain, but it’s safe to expect sportswear giants to keep expanding their creative digital advertising.

Otherwise, Adidas’ 2020 financial review cites pricing flexibility as a major factor in weathering the Covid-induced storm. In their own words, they “exploit growth opportunities… according to market realities.” Thus: By committing to dynamic pricing and extensive market analysis, Adidas puts itself in a position to optimize its profitability with respect to its competitors.

Another big winner in athleisure has been Lululemon, whose revenue from DTC channels now accounts for 49% of the total sales . This despite years of downswing with their in-store sales. CEO Calvin MacDonald credits this recent growth to their timely adaptation of DTC eCommerce avenues… As well as their acquisition of Mirror. The on-demand personal fitness app adds a new dimension to Lululemon, providing a timely offering that’s engaged a whole new user base — much like Nike did. And much like Nike, this new app channel has equipped Lululemon with deeper customer data with which to optimize prices.

Looking ahead: Sportswear and retail at large depend on strong market intelligence

Whether it’s DTC channels, digital commerce, or sustainable production, embracing the new isn’t just about following trends.

These strategies have allowed companies like Nike to strategically grab a hold of rising markets, even through a pandemic. With at-home life gaining prominence, Nike and Co. quickly seized the newfound athleisure demand. As running, biking, and virtual fitness gain steam, so too do Nike and Co. fill the gap. And as target demographics — most notably, female buyers and the Chinese market — contribute to more and more sportswear sales, Nike and Co. are adapting to offer them exactly what they want.

The takeaway here is that these brands have not only adapted to market changes, but they’ve taken advantage of these changes to win over new segments of opportunity. They’ve adjusted to fluctuations in real-time with everything from their marketing priorities to pricing models.

Their success through a global recession is as powerful evidence as any of the merit of real-time, across-the-board market intelligence. So if you want to know how your brand can use such data-driven insights to inch ahead of the competition, book a free demo to chat it over!

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Nike's Strategy to Improve Conditions in its Global Supply Chain – A Case Study

Nike’s approach to managing supplier responsibility has greatly evolved since the 1990s, when the media uncovered claims of child labor, underpaid workers, and poor working conditions in several Asian countries. This report explores how Nike’s approach to improving social and environmental conditions in its global supply chain has evolved through integrated management of sustainability and innovation, increased supplier incentives, and systems innovations intended to prevent problems before they arise.

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CNBC

Nike made a mistake focusing on DTC, says Wells Fargo's Ike Boruchow

Posted: March 22, 2024 | Last updated: March 22, 2024

Ike Boruchow, Wells Fargo, joins 'Money Movers' to discuss cutting his price target for Nike as it and Lululemon see a stock fall.

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IMAGES

  1. Nike E-Commerce: How Nike's DTC Strategy Hits 50% Digital Penetration

    nike dtc case study

  2. DTC Nike Case Study. Brand Performance

    nike dtc case study

  3. Nike Case Study

    nike dtc case study

  4. nike case study questions and answers

    nike dtc case study

  5. Nike-DTC Case Study. 1. How is the Nike performing today?

    nike dtc case study

  6. DTC Case Study- Nike. Analysis and Marketing Mix…

    nike dtc case study

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COMMENTS

  1. Case Study

    Retail Luxury Technology Sustainability Marketing Beauty DTC Global Markets Fashion ... In this case study, BoF breaks down Nike's pioneering direct-to consumer strategy and how it has worked to the brand's advantage, propelling its share price to new heights during the global crisis of 2020. Click below to read the case study now. ...

  2. How Nike is using DTC and data to expand its empire

    Erinn Murphy, senior research analyst at Piper Sandler, said Nike's direct digital channels are on track to make up 21.5% of the total business by the end of fiscal 2021, up from 15.5% in the ...

  3. (PDF) Nike-A Case Study Just Do It

    Narsee Monjee Institute of Management Studies. Nike has gone 35% digital and is planning to reach 50% by 2025. It has shown immense growth and is expected to close year 2022 with over 50-billion ...

  4. Nike's New Business Model Focusing on DTC: What Business Students Stand

    Historically, Nike has had some direct-to-consumer (DTC) sales but went on to focus primarily on wholesale. Recently, however, the company announced a planned shift to focus primarily on DTC sales. ... In this case, digital penetration refers to 30% of the total sales being e-commerce revenue from Nike. But the brand achieved that in 2021. This ...

  5. DTC Case Study: Nike

    The data above shows the revenue generated in the United States market in millions of dollars, starting from 1988 at $900.42 million to the year 2022 at $18.75 billion. The company has grown ...

  6. How Nike Is Using Data to Sell Directly to Customers

    In June 2020, Nike announced the launch of its Consumer Direct Acceleration strategy to speed up direct-to-consumer (DTC) sales. Their initiatives are clearly working. In 2011, DTC sales accounted for 16% of Nike brand revenue (or $2.9 billion of the total revenue of $18.1 billion). By the end of the 2020 fiscal year, DTC sales had grown to 35% ...

  7. How Nike's Direct-to-Consumer Plan Is Crushing the Competition

    In June 2017, Nike outlined a new strategy to drive growth into the coming decade, which it called Consumer Direct Offense. The pillars of the plan included focusing on key cities, ramping up its ...

  8. Nike E-Commerce: How Nike's DTC Strategy Hits 50% Digital ...

    However, Nike blew past that goal two years ahead of schedule. It now expects its overall business to reach 50% digital penetration in 2022. Meanwhile, total D2C sales have soared from $2.5 billion in 2010 to $16.4 billion in 2021. And, over the trailing 12 months, the company generated a staggering $46.2 billion in total sales, putting it on ...

  9. Nike: Leading The Athletic Market With A Resilient DTC Strategy

    Nike also sponsors tennis players Aryna Sabalenka of Belarus, ranked No. 2 in women's, and No.1- ranked men's player Carlos Alcaraz of Spain, which helps the brand's status for key tennis events ...

  10. Product digitalization at Nike: The future is now

    Digital strategy at Nike. The cornerstone of Nike's digital strategy, announced in 2017, was a direct-to-consumer approach, establishing one-to-one connections, as well as using digital technologies to spur product innovation and time-to-market. In each of the three areas, Nike's ambition was to double its capacity by 2023; in short, this ...

  11. 'We've chosen both': How Nike aims to connect DTC and wholesale

    And the truth is we've chosen both," Heaf said. "We've chosen both because it allows us to serve every single athlete with distinction and uniquely across the entire marketplace ...

  12. Nike credits 'innovation, brand strength and scale' for DTC success

    Two key areas of focus for brand innovation will be apparel and sustainability. Nike's apparel sales have grown 16%, particularly due to yoga apparel which is driving the segment with quadruple growth. Product innovations within yoga apparel include Dri-FIT and Infinalon, both "resonating" with users for their sustainable and practical ...

  13. The Radical Strategy That Drove Nike's Pandemic Success

    Today, amid the pandemic, Nike's stock sits at roughly $135 per share, a 150 percent increase in value since Parker's momentous announcement in 2017. While Nike could never have predicted the pandemic, the decisions it made almost four years ago, have powered its performance through it and provided a roadmap for others.

  14. Why Nike Pivoted towards Direct to Consumer Strategy

    by Team CXP Asia. May 20, 2021. Nike is the largest Footwear and Athletic apparel brand in the world. Their total revenue in 2018 reached $36.5 Billion Dollars, nearly $12 Billion Dollars more than their nearest competitor Adidas. Nike's market capitalization is twice that of Adidas, coming in at $110 Billion Dollars indicating investors are ...

  15. Nike Reinforces Future as a DTC Dominant Brand

    Nike's direct to consumer business made up roughly a third of their revenues in 2019 and has experienced pandemic-fueled growth. The company's recent decision to remove the Nike brand from several large US wholesale accounts comes on the heels of pulling back from Amazon and reinforces their strategic focus on growth in owned retail.

  16. Inside Nike's DTC strategy

    It seems to be working. In the fiscal year 2018, almost a third (29% - or $10.5 billion) of Nike's global sales came through Nike Direct, the company's DTC division, which operates both online and a network of owned stores. Though the wholesale business continues to dominate Nike's sales globally - in the US during 2018, 68% of sales ...

  17. Nike Is Feeling the Limitations of Direct-to-Consumer, DTC Model

    Nike is feeling the limitation of the direct-to-consumer model. 'DTC isn't all it's cracked up to be,' analyst warns. Matthew Kish. Apr 21, 2022, 9:50 AM PDT. Shoes lining the shelves at a Nike ...

  18. Nike to Double Down on DTC Following Q3 Gains, Plans Standalone Jordan

    By Nicole Silberstein. Nike is pushing forward with its digitally focused direct-to-consumer strategy following a strong Q3, with plans to build "the marketplace of the future" and bring standalone Jordan stores to North America. Revenues were up 5% YoY in the company's fiscal Q3, which ended Feb. 28, 2022, led by 15% growth in sales ...

  19. DTC Nike Case Study. Brand Performance

    DTC Case Study- Shein. Brand Performance Today. 6 min read · Oct 13, 2022--1. David Tanaka. in. #ThinkAndDoBrand. DTC Case Study: Nike. 1. How is the brand performing today?

  20. Nike Brand Plan

    Nike identified four Direct To Consumer channels that were key to realizing brand and business potential over the course of the next 3 years until 2020. A consistent strategic message and vision to scale and unify Nike's DTC (Nike.com, Flagship, Partner, Factory) channels was needed in order to put the customer's needs first and reach that ...

  21. Here's What Brands Can Learn from Nike & Adidas' Digital Disruption

    In fact, Nike, Adidas, Puma, and Under Armor all saw DTC account for a greater share of their 2021 sales than in 2019. (Adidas, at the front of the pack, now attributes over 40 percent of sales to DTC; that number is expected to surpass 50 percent by 2025). Apart from the convenience of shortening the supply chain, DTC channels benefit these ...

  22. Nike Case Study: Created with AI

    Nike is a multinational corporation that designs, develops, and sells athletic footwear, apparel, equipment, and accessories. The company was founded in 1964. Nike is the world's largest seller ...

  23. Nike's Strategy to Improve Conditions in its Global Supply Chain

    Faculty & Research Publications Nike's Strategy to Improve Conditions in its Global Supply Chain - A Case Study. Nike's Strategy to Improve Conditions in its Global Supply Chain - A Case Study. ... Nike's approach to managing supplier responsibility has greatly evolved since the 1990s, when the media uncovered claims of child labor ...

  24. Nike made a mistake focusing on DTC, says Wells Fargo's Ike Boruchow

    Ike Boruchow, Wells Fargo, joins 'Money Movers' to discuss cutting his price target for Nike as it and Lululemon see a stock fall. Judge wants details on any Trump Organization attempts to secure ...