Nike Inc. started cleaning its stats sheet last week and the 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 cutting out the middleman.
Nike sells to retailers through a combination of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance being a retailer-as opposed to a wholesaler-was a relative highlight. Sales on Nike’s own online store were up 19% in the recent quarter, while its retail locations notched a 5% grow in same-store sales. 28% of sales are direct this season, in contrast to 4% five years ago. CEO Mark Parker said the business is obsessed today with making shopping more personal. “Retailers who don’t embrace distinction will likely be put aside,” he warned over a conference call Tuesday.
Still, that wasn’t enough to impress investors-at least, not even. The overlooked beauty of bricks-and-mortar retail is how well retail chains lend themselves to what economists call price segmentation. Shoemakers like Nike can certainly target customers by sending the cheap nike shoes from china free shipping to the right type 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 in such places as DSW Inc.
If done properly, all this socioeconomic slotting moves as much merchandise as you can with minimal fuss, whilst not tarnishing the greater brand. To make no mistake: Nike will 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 every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager with a giant spreadsheet, making sure “Momofuku” Dunks aren’t too readily available, ordering up wholesale nike shoes free shipping for China, distributing its best-sellers to all the correct 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 trying to make a conclusion run around the basic economics of price segmentation. The strategy-a bold move, due to the historical manufacturer-to-retail model being discarded-requires an abundance of swagger. But Nike’s numbers show that the bet appears to be 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 heart of the lineup, meanwhile, sells on Nike.com and then in its very own big box stores. When it comes to cheaper, less-popular kicks, they quietly trickle into the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even has a studio in New York City that creates wholesale nike shoes in about an hour or so.
To put it briefly, the company is deemphasizing its ready-made network wemjjs retailers to create a more precise targeting mechanism. Tuesday Parker said the end goal is to get in front of the consumer and present “the most personal, digitally connected experiences” in the industry. “While switching your approach is rarely easy, Nike has proven before that if we do, it’s always ignited the next phase of growth for the company,” he explained.
In theory, Nike can know any given customer better-and her or his willingness to pay for-by utilizing its own venues and platforms, particularly on its digital properties. The challenge will be building the mechanism to sort all of the data, and by doing this, the shoppers. In real life, they sort themselves: The high-end boutique isn’t right next to the cut-rate discount outlet. Inside the virtual world, it’s not so easy.
For the record, Under Armour Inc. is slightly ahead of Nike Inc., with 31% of its sales coming directly from consumers; Adidas AG is slightly behind, with 23% of revenue from retail. At its current pace, Nike will soon be collecting one in three of its sales dollars directly from consumers. Its challenge is going to be making sure that none of them get too good an agreement.