Nike Inc. started cleaning up its stats sheet last week and the very first time, the sneaker empire declined to report “future orders,” a critical way of measuring wholesale demand from your galaxy of retailers who sell the famous kicks. Nike, No. 9 inside the B2B E-Commerce 300, says the metric doesn’t matter much anymore, because now it’s focused on working directly with consumers and eliminating the middleman.
Nike sells to retailers through a mix of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance as being a retailer-as opposed to a wholesaler-had been a relative highlight. Sales on Nike’s own web store were up 19% inside the recent quarter, while its retail locations notched a 5% gain in same-store sales. 28% of all the sales are direct this coming year, in comparison with 4% five-years ago. CEO Mark Parker said the business is obsessed right now with making shopping more personal. “Retailers who don’t embrace distinction is going to be left out,” he warned on the conference call Tuesday.
Still, that wasn’t enough to thrill investors-at least, not even. The overlooked beauty of bricks-and-mortar retail is the way well retail chains lend themselves from what economists call price segmentation. Shoemakers like Nike can simply target customers by sending the cheap nike shoes free shipping to the right kind of store (think: first-class vs. coach, iPhone X vs. iPhone 8, Banana Republic vs. Old Navy). In Nike’s case, it ships expensive, limited edition sneakers to high-end boutiques, routes its stock Jordans to chains like Foot Locker Retail Inc., and dumps its low-end product and off-key colorways such places as DSW Inc.
If done correctly, all this socioeconomic slotting moves just as much merchandise as you can with minimal fuss, without tarnishing the greater brand. Making no mistake: Nike does it correctly. On its face, the Swoosh is actually a design shop supercharged by the type of storytelling its TV commercials, billboards and magazine ads are famous for. But Nike’s real genius isn’t marketing, it’s merchandising: knowing exactly what to ship where. For each and every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager with a giant spreadsheet, making certain “Momofuku” Dunks aren’t too easy to find, ordering up nike wholesale shoes for China, distributing its best-sellers to any or all the best Di,ck’s Sporting Goods Inc. outlets and dumping a lot of Chuck Taylors at outlet malls.
Nike has become upsetting its own well-oiled applecart. In giving traditional retail the stiff arm, which Nike made official in June, the Oregon empire is tearing up that playbook and working to make a conclusion play the essential economics of price segmentation. The strategy-a bold move, due to the historical manufacturer-to-retail model being discarded-requires no shortage of swagger. But Nike’s numbers reveal that the bet is apparently working, primarily because Nike has been sharpening its digital game.
Sought-after sneakers now ship out via Nike’s own ecosystem of apps, including SNKRS, which it launched early this past year. The center of their lineup, meanwhile, sells on Nike.com and then in its own big box stores. When it comes to cheaper, less-popular kicks, they quietly trickle to the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even has a studio in Ny that makes cheap nike shoes from china free shipping in about one hour.
In short, the organization is deemphasizing its ready-made network wemjjs retailers to produce a more precise targeting mechanism. Tuesday Parker said the final goal is to buy in front of the consumer and present “the most personal, digitally connected experiences” in the business. “While switching your approach is rarely easy, Nike has proven before that whenever we all do, it’s always ignited another phase of growth for our company,” he explained.
Theoretically, Nike can know any given customer better-and his or her willingness to pay for-by making use of their own venues and platforms, particularly on its digital properties. The process will likely be building the mechanism to sort all the data, and in doing so, the shoppers. In the real world, they sort themselves: The high-end boutique isn’t right next to the cut-rate discount outlet. In the virtual world, it’s not too easy.
For your record, Under Armour Inc. is slightly ahead of Nike Inc., with 31% of the sales coming straight from consumers; Adidas AG is slightly behind, with 23% of revenue from retail. At its current pace, Nike will soon be collecting one out of three of its sales dollars right from consumers. Its challenge is going to be being sure that none get too good a deal.