You may not see this right now, but soon enough, we will all notice the dramatic shift in Nike’s business. And, as sneakerheads, this is something that could potentially change the entire game for us – not in a good way. We’re talking about the Nike direct to consumer paradigm shift.
Just think of this. How the HELL could Nike’s shares reach an all-time high right in the middle of a global pandemic? When every other sneaker retailer’s record sales took a major hit, Nike’s online sales SPIKED. This was not some act of sorcery, black magic, or voodoo – it was just a proper marketing tactic.
To make it through a global pandemic stronger than before is a signal of Nike’s extreme, long-term e-commerce potential. It also proved that the Nike direct to consumer plan from (2011) was put into motion. It was time they took matters into their own hands. Let’s break it down for you.
NIKE DIRECT TO CONSUMER MODEL
The Nike direct to consumer model involves a lot of strategies where Nike cuts back on its wholesale distribution. It also involves setting high standards on third-party partners – focusing more on content, culture, and customer satisfaction. Investing in D2C is investing in data analytics, logistics abilities, and even customer retention. All-in-all, the Nike direct to consumer model is a revolutionary change for the brand and its future. Let’s dive into it!
WHAT IS DIRECT TO CONSUMER (D2C)
So, before we go into specifics about the Nike direct to consumer model, we gotta explain D2C a bit.
Direct to consumer business is the type of business that skips the part with suppliers and retailers altogether. Instead, organizations sell directly to their end customers without involving a middleman. In other words, businesses sell their own products directly to customers without third-party retailers. It promotes self-sufficiency and helps expand e-commerce and digital marketplaces.
In our case, the sneaker middlemen would be wholesale partners and all Footsites and Shopify sites that host Nike releases. Therefore by eliminating or limiting the middleman, Nike would ultimately be in full control of releases… yikes.
NIKE DIRECT TO CONSUMER
(2011)
We’re gonna go back to 2011 where the Nike direct to consumer model began – back when Nike’s sales were still wholesale. Let’s take a look at Nike’s 2012 and 2021 Fiscal Report of the fourth quarter – ended May 31.
By the end of 2011, you can see that around 84% of Nike’s sales were still wholesale. On the other hand, only 16% went to direct to consumer businesses like brick-and-mortar stores and websites. But, with the progression of time, things started to change! If you take a look at 2021, the Nike direct to consumer percentage was around 38%. It was pretty obvious that Nike was already focusing on growth through direct channels. This was all pre-pandemic, but the shift towards the virtual was already in motion! Times were changing and trends shifted.
NIKE DIRECT TO CONSUMER
(2017)
A few years later in 2017, Nike announced the “Consumer Direct Offense” strategy – an alignment to better serve consumers. They decided to leverage the power of digital to allow their brand to grow through accelerating innovation and production.
“The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” said Mark Parker, NIKE, Inc. Chairman, President, and CEO. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering products faster than ever.”
The Nike Consumer Direct Offense related to integrated category, geography, marketplace, product, merchandising, digital, and direct-to-consumer teams. They called it Nike’s Triple Double – 2X Innovation, 2X Speed and 2X Direct connections with consumers. Nike used immersive stores and digital channels like its Nike SNKRS app.
CUTTING OUT THE MIDDLEMAN
The percentage of Nike direct to consumer sales in total sales has more than doubled over the past 10 years. The Nike direct to consumer sales percentage of the total brand’s revenue reached 39% in the fiscal year 2021. As for the actual revenue – talking money- it grew SIX times more than it was in 2010. This is all obviously related to Nike’s increase in direct sales, especially across its digital platforms.
Nike’s digital commerce sales have increased by 4 BILLION dollars from 2016 to 2020. This is completely relative to the increase in total Nike direct to consumer sales. Nike’s digital platforms account for 21% of Nike’s total D2C revenue with 40% coming from mobile apps. That came from two of Nike’s e-commerce apps, the Nike app, and the SNKRS app.
Also, the number of consumers in Nike’s loyalty programs grew by 80% while adding over 70 MILLION users in 2020.
Furthermore, the DTC online sales from nike.com have grown more than 50% every fiscal year Q4 compared to prior quarters. And over 37% increase in the fiscal year compared to the year before.
Of course, the Nike direct to consumer change does not necessarily mean overnight changes. But, this has been an ongoing process for the past decade. The steady shift to DTC turned rapid due to the pandemic strike accelerating e-commerce growth. It was the perfect opportunity and Nike took it into an incredibly-timed strategy for growth.
THE PIVOT
The Nike direct to consumer model is just the beginning of an entire pivot in the industry. Nike aims for direct sales to represent around 60% of its business by the year 2025. The magnitude behind this shift is obviously something others have recognized! Adidas recently announced their “Own the Game” strategy with a similar initiative. Adidas plans to reach a 50% increase in direct-to-consumer sales by 2025 as well.
Obviously, we’ll be experiencing a rise in Nike bots and the demand for bots in general. Reallocating the stock to fewer retailers means a bigger chance at copping in bulk – music to our ears! Therefore, the most important thing YOU should do to prepare for the DTC wave is getting a sneaker bot.
So, this way, no matter what changes happen in the industry, you’ll always have a fighting chance. Bots are a sneakerhead’s loophole to sneaker copping that will NEVER go away! If they split their stock between their sites and a handful of retailers, your bot will still pull through! Click on the button below to find the sneaker bot for YOU!
