Nike just did it: Digital (R)evolution

Nike is world’s leading company in athletic shoes and apparel holding 62% of US market share and having total worldwide sales of $31 Bi in 2015.

To maintain its dominance, Nike needs not only to have a digital presence, but also to excel in it. Nike executives know that and, even though they proved to be successful in the online-direct-to-consumer-sales, reaching $1B figures in 2015, they disclosed an aggressive plan to reach $7B in 2020. But online sale is almost a pre-requisite to maintain its market share, so to take its digital presence to the next level, Nike saw the opportunity to create a communication channel through social networks and mobile devices. An impressive data point that proves that Nike is shifting its focus to online is the recent change on its marketing budget –the company slashed its print and TV advertising spending by 40% and shifted that money to digital marketing.

The first steps in the digital world

The company was officially created in 1972 when co-Founders changed the name Blue Ribbon Sports to Nike and started using the famous swoosh logo, which was designed by a student for $35 (a little over $200 in today’s currency). Nike’s growth was accelerated by its strong marketing campaigns and consistent use of technology and product innovation – from the first waffle sole shoes, to shoes made from waste. More recently, Nike decided to also innovate on the way it communicates and interacts with costumer – capitalizing on the digital innovation.

Its digital innovations journey started to get traction when Nike decided to position itself to target young soccer players during the 1998 World Cup. At that time, the company created its first stand-alone website – Nikefootball.com and started the so called “viral” campaigns to get awareness in social networks.

Exploring mobile devices

Nike started creating apps in 2006 and its main purpose is to create brand loyalty through dialogue and leverage this loyalty to have consumers advocating for the brand online (versus merely converting new customers through advertising). This was the main concept behind the creation of the Nike+ apps – according to Nikki Neuburger, Vice President, Global Brand Running at Nike “Our mission was always about making athletes better. While gear is a sharp point for us, what we really see is the opportunity to extend and deepen the relationship with customers, making it more than a dashboard of data.”

The “dashboard” feature of Nike’s apps were extended to include (but not limited to):

  • Track their running progress – location, pace, distance, elevation, heart rate, miles splits
  • Have personalized coaching and training tips
  • Direct access to Nike’s online digital store with highlights of products
  • Compete and compare results with friends, sharing their results on social network
  • Have their own social network, with a tailored feed based on personal interests

 

What is next?

While I believe that there are other digital opportunities outside mobile – for example increasing the digital experience in its stores through interactive apps that mix on and offline– the future is in the mobile devices.  We can certainly expect a stronger presence on “newer” social networks (e.g. snapchat), but the real next steps are still to be discovered as Nike stablishes a digital studio to focus only on the mobile (r)evolution.

 

 

Sources:

http://fortune.com/2015/11/12/nike-ceo-mark-parker/

https://www.capgemini.com/resource-file-access/resource/pdf/The_Digital_Advantage__How_Digital_Leaders_Outperform_their_Peers_in_Every_Industry.pdf

http://fortune.com/2016/08/02/nike-new-app-social-ecommerce/

http://www.forbes.com/sites/darrenheitner/2016/08/02/just-do-digital-nikes-fundamental-shift-to-direct-to-consumer/#1afbedb8707a

http://www.nike.com/us/en_us/c/nike-plus/running-app-gps

http://www.businessinsider.com/history-of-nike-facts-about-its-50th-anniversary-2014-11

http://www.huffingtonpost.com/entry/nike-recycled-shoes_us_5733436fe4b0bc9cb048b398

http://www.nike.com/us/en_us/c/nike-plus

 

 

 

 

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2 thoughts on “Nike just did it: Digital (R)evolution

  1. Thank you for the post. It is interesting to see Nike make such a large target for themselves in 2020. How much of this increase in online revenue do you think needs to be managed by Nike vs. the natural flux of people purchasing more online in the next few years? It will be interesting to see how they reach out to customers via social media. I remember Nike having a “create your own shoe design” for a release of Kobe’s a few years ago. These sort of promotions would seem to do very well with all the new social media outlets. How do you think they can best reach out to customers on these platforms?

  2. Thanks for writing! A few questions / thoughts:
    – How much adoption has Nike gained for its apps? One thing they did a few years ago with the launch of the Nike Fuelbands (wrist wearables like the Fitbit) was pair it with an athletic tracking app. However, after the market for wearables started to take off and tech giants like Apple stepped in with their own devices, Nike basically dropped the product. That feels like a sign of trouble converting from a traditional retail product and management team to adapt to a higher tech digital model.
    – The 2020 goal sounds like it could be very difficult for a variety of reasons. First, Nike is going to be competing against its own channels (both brick and mortar and digital) in trying to make the conversion to online DTC. Second, purchasing shoes is very much about the fit, and finding the right fit is difficult without trying the shoes on. Companies like Zappos have demonstrated some success in the past, but standardizing sizes / fits / feels for athletic shoes in particular is very important. Additionally, it may require some organizational changes to adapt to a large e-commerce footprint.

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