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Stitching digital into the Nike fabric<\/h3>\n\n\n\n
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There\u2019s no denying that the COVID-19 pandemic pushed Nike\u2019s digital strategy forward and enabled the retailer to hit that 30% digital penetration mark years ahead of schedule. Including the most recent one, Nike has seen three consecutive quarters with digital sales growing more than 80%<\/a>, a trend many other large retailers have also experienced. <\/p>\n\n\n\n Bumps in digital sales are nice, especially when they\u2019re close to triple-digits, but it’s not the biggest indicator of digital prosperity for Nike. In fact, those surges are almost a byproduct of growth stemming from Nike\u2019s investment in its entire digital ecosystem.<\/p>\n\n\n\n \u201cWe know 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.\u201d<\/p>John Donahoe, CEO, Nike. <\/cite><\/blockquote>\n\n\n\n \u201cDigital is now woven into everything we do as a company,\u201d explained Donahoe in Nike\u2019s most recent earnings call. \u201cIt\u2019s how we operate and prioritize, from how we engage with members, to how we operate our supply chain, to how we serve consumers in the marketplace \u2026 Through innovation, we are serving consumers in ways no other brand can. We’re using digital to connect product <\/span>to consumers like never before.\u201d<\/p>\n\n\n\n Donahoe’s final comment illustrates what makes Nike a differentiator, and how many other retailers are trying to play catch-up. Nike products are sold in tens of thousands of stores, yet the retailer only operates about 1,000 of its own. Despite the ubiquity and availability of the brand, Nike is fulfilling its own destiny and becoming a D2C brand. Instead of going to the mall or a local sportswear shop, customers are buying Nike through direct channels. And it’s the way consumers are reaching those channels that is Nike\u2019s biggest point of digital pride. <\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n Nike\u2019s ecosystem of apps is robust, to say the least. The Nike commerce app regularly moves in and out of the top 10 retail apps globally, and through it, customers can shop for shoes, athletic wear, and more. A huge amount of Nike\u2019s digital success can be attributed to its primary commerce app, and 150%+ growth in mobile sales in back-to-back recent quarters cements that. But it\u2019s three other apps that actually weave Nike\u2019s digital strategy together: SNKRS, Nike Run Club, and Nike Training Club. <\/p>\n\n\n\n \u201cWhat\u2019s fascinating to watch is the consistency of the growth across digital \u2026 and our ability to reach consumers digitally in a variety of manners is just getting better and better as this pandemic goes on,\u201d Donahoe said on the call. <\/p>\n\n\n\n SNKRS is the crown jewel of Nike Digital. The app, which has reportedly<\/a> been downloaded up to half a billion times on iOS alone, offers exclusive footwear drops for customers in the US, China, and Japan. It functions as the most important piece of Nike\u2019s D2C puzzle: By creating a digital platform that offers direct access to highly-desirable products, Nike creates demand that is accessible worldwide. That formula is obviously working, as Nike reported that SNKRS brought in over $1 billion in revenue for the first time in 2020.<\/p>\n\n\n\n SNKRS offers a glimpse of Nike’s D2C magic. In October 2020, Nike hosted a live stream product drop of Air Jordan 4 PSG shoes via SNKRS. Every single pair sold out in two minutes. Shoe releases can change, too: The Kyrie 7s came in four colorways and were available only as mystery purchases through SNKRS. More recently, 23,000 Air Jordan 1s (between $90 and $170 a pair) went on sale earlier this month and sold out…one minute before they were supposed to launch. <\/p>\n\n\n\n Donahoe said that SNKRS \u201ccontinues to push digital retail to the next level,\u201d and called the app \u201cone of Nike\u2019s greatest competitive advantages.\u201d When an app can deliver upwards of $4 million in sales in less than 30 seconds, it has earned its “competitive advantage” label. <\/p>\n\n\n\n Take Nike Run Club and Nike Training Club\u2013two apps that have a decidedly-less intense focus on e-commerce. Whereas SNKRS is built for Nike shoppers, Run Club and Training Club are built for Nike fans, which is an important distinction. Through these two apps, users can plot workouts and runs and compete with themselves (or friends) to earn rewards through Nike\u2019s platform. In fact, to make the platform more open to all kinds of users, Nike dropped its premium subscription fee for Training Club in March 2020.<\/p>\n\n\n\n Nike\u2019s workout apps flourished in 2020. In the summer, 50% of Nike\u2019s worldwide members logged a workout via the apps, and in April, Nike reported over 20 million workouts per month from Training Club\u2014up from 1.8 million in 2016. <\/span><\/p>\n\n\n\n Run Club and Training Club are essential components of the Nike experience, as they allow the company to gather data about its top users and continually invite them back to the Nike world through gamified experiences and rewards. And, of course, the exercise apps have a small shopping section meant to reach people with specific workout gear and accessories. <\/p>\n\n\n\n Even though there is a retail element to Run Club and Training Club, Nike\u2019s goals for the app move beyond the buy button. It’s obvious that SNKRS and the commerce app accomplish the D2C sales heavy lifting, and Donahoe has repeatedly stated that the apps\u2014particularly Run Club and Training Club\u2014exist to create a direct connection with consumers. <\/p>\n\n\n\n \u201cAfter all, we know a consumer who connects with us on two or more platforms has a lifetime value that’s 4 times higher than those who don’t,\u201d said Donahoe on a September 2020 earnings call. <\/p>\n\n\n\n Consistent digital engagement is more than a metric for Nike. It’s the retailer’s lifeblood. If Nike can deliver value to a shopper in more ways than simply buying a piece of clothing online, it literally quadruples their potential revenue. It could be argued then that Training Club and Run Club are even more valuable than the SNKRS and commerce app\u2014by augmenting the Nike experience beyond retail, it creates an environment that blurs the line between shopper and user. That’s where Nike wants to live. <\/p>\n\n\n\nThe scale of Nike’s app ecosystem<\/h3>\n\n\n\n
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