Nike Case Study: Dominating Sportswear eCommerce with Marketing

There are very few brands which have so consistently dominated a sector as Nike has with sportswear – especially when it comes to shoes – and the Oregon headquartered company is showing no signs of slowing down as we move into the post-pandemic world.

Even when the brand has faced significant challengers – such as when And1 disrupted the basketball shoe market with its gonzo freestyle street ball strategy – it has always been able to effectively pivot to meet them head on and reassert its dominance over the competition.

While Nike has historically been a wholesale brand which has relied on supplying third-party sportswear shops with products to sell on its behalf, the company has recently been making waves by selling its iconic footwear directly to consumers via its own proprietary brick-and-mortar stores and a thriving ecommerce presence.

It would seem an opportune time therefore to delve into just what has made Nike such an ecommerce success in recent years and see if there are any lessons we can take away in this, a special eTail West case study.

COVID-19

The global COVID-19 crisis saw many people reach for ecommerce as a way of alleviating the boredom of being stuck inside under lockdown restrictions through a little retail therapy.

Not only was this a general trend across all ecommerce verticals, but the sports sector in particular saw massive engagement as people sought to keep fit during this time. Data from wearable technology such as FitBit and Garmin recorded a 34% increase in outdoor miles travelled during 2020 compared to previous years and a 65% increase in the number of runs logged.

During this period, Nike saw its business skyrocket by 82% thanks to it already being positioned to take advantage of the situation with the Consumer Direct Offence initiative it launched in 2017 and which in turn coincided with its shift towards a more direct business model which brought the company’s Nike.com, direct-to-consumer retail, and Nike+ channels together under a single management team.

Ten years ago, in 2013 81% of Nike’s business was through wholesale, whereas today it has dropped to 61%. Digital sales currently make up 42% of Nikes total sales, but the brand predicts ecommerce will account for over 50% in the very near future. By reading the writing on the wall and seeing the market shift which was coming down the pike, Nike was able to effectively pivot to a direct-to-customer model and reap the benefits of increased profits and a more streamlined and lean value chain.

Customer Experience

Nike shocked the ecommerce world in 2019 when it announced it would cease selling its products on Amazon. With Jeff Bezos’ online behemoth continuing to dominate the ecommerce space by a considerable amount, few people understood why Nike would make such an apparently self-sabotaging move.

However, the reason for Nike’s decision was to allow it more control over the customer experience – especially when it came to preventing the sale of counterfeit goods. Counterfeit goods are a massive problem on the Amazon platform and Nike did not believe the company was doing enough to combat the problem. Understanding that a customer receiving a fake product bearing the Nike brand – even if Nike did not sell that product itself – will have a negative effect on, not only the customer’s experience, but also its own image led to Nike removing its products from Amazon altogether.

Fake Nike products will still show up on Amazon of course, but if customers know that official Nike doesn’t use it, they are far less likely to be taken in by these scammers.

Technological Investment

Another way Nike has been growing its ecommerce sophistication is by heavily investing in modern technologies which make it better able to read the market and respond to shifts and challenges in a swift and agile manner.

For example, Nike acquired data analytics brand Zodiac. Nike has deployed Zodiac in several of its smartphone applications, including SNKRS, Training Club, Run Club, and its ecommerce app which allows it to track purchases and other behavioral data points to predict future activity and offer an improved service to customers, such as through more accurate personalization.

Another data-based acquisition, Celect uses cloud-based analytics to conduct advanced demand sensing and has allowed Nike to optimize inventory across all its channels – both physical, digital, and omnichannel – through hyper-local demand predictions. With this technology integrated, Nike can better predict which products people are likely to want, as well as where and when they want them.

Nike+

Another fantastic method Nike uses to close the loop on its ecommerce and overall digital strategy is through its proprietary Nike+ activity tracker device.

Much like other devices in the space, Nike+ allows users to log their walks and/or runs and record the distance and pace of those exercises. Nike+ users can upload their data to either the Nike Running smartphone app or integrate directly with the Nike website. Through the website they can produce reports, take part in virtual challenges, such as achieving a certain distance over a month, compete with other users on leaderboards, and communicate directly with others on the "Talk Some Trash” forums – Nike effectively demonstrating there that it’s under no illusions regarding the level of discourse on most online forums.

Moreover, data from the Nike+ app can be used by the company to further direct its ecommerce efforts. This can take the form of engaging directly with each user through personalized recommendations based on their activity, or to collate the information to identify more general trends which can then be used to strategize for the future.

While there are many fitness tracker devices out there, Nike is able to exploit the loyalty many people feel towards its brand and leverage that to benefit both the customer and its own digital endeavors.

NIKE ISPA Link

Nike is also innovating at the manufacturing stage with its new platform where shoes are built with interlocking modules and without any glue – reducing time to manufacture and bolstering the company’s green credentials.

The shoes consist of three modules which can be dismantled when the time comes to drop them off at Nike stores offering the recycling and donation service.

"A new proprietary platform where shoes are built with interlocking modules, and they’re connected without any glue,” said CEO John Donahoe on an earnings call. "From a manufacturing standpoint, ISPA link is revolutionary in its simplicity. One pair takes about eight minutes to assemble, a fraction of the time needed for a traditional sneaker. And it doesn’t require energy-intensive processes like heating, cooling, and conveyor belt system.”

While not directly connected to ecommerce, the ISPA Link development shows how Nike is committed to innovation and, with a far shorter manufacturing time, should mean customers can order shoes more regularly – not to mention the potential for customization.

Final Thoughts

There’s a good reason Nike has been around for as long as it has, while other brands in the same space have failed to match its success. With a combination of savvy marketing, innovative technology, and an inability to remain still for too long, Nike is a powerhouse of digital marketing and the effortless way it has pivoted to, not only the direct-to-customer market, but also its digital expansion, should give us all pause for thought.

Shifting to alternative markets is sure to be a hot topic at eTail West 2023, being held in February and March at the JW Marriott Desert Springs, Palm Springs, CA.

Download the agenda today for more information and insights.