Nike Inc. started clearing up its stats sheet a week ago and for the first time, the sneaker empire declined to report “future orders,” a critical way of measuring wholesale demand through the 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 doing business 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 actually 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 company is obsessed at this time with making shopping more personal. “Retailers who don’t embrace distinction is going to be put aside,” he warned over a conference call Tuesday.
Still, that wasn’t enough to thrill investors-at least, not yet. The overlooked attractiveness of bricks-and-mortar retail is how well retail chains lend themselves from what economists call price segmentation. Shoemakers like Nike can simply target customers by sending the wholesale nike shoes to the right sort 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 correctly, all of this socioeconomic slotting moves as much merchandise as is possible with minimal fuss, while not tarnishing the bigger brand. Making no mistake: Nike can it correctly. On its face, the Swoosh is actually a design shop supercharged by the kind 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 simple to find, ordering up cheap wholesale nike shoes free shipping for China, distributing its best-sellers to any or all the correct Di,ck’s Sporting Goods Inc. outlets and dumping plenty of Chuck Taylors at outlet malls.
Nike is currently upsetting its very 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 attempting to make a stop run around the essential economics of price segmentation. The strategy-a bold move, because of the historical manufacturer-to-retail model being discarded-requires an abundance of swagger. But Nike’s numbers show that the bet seems to be working, primarily because Nike has become 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 its lineup, meanwhile, sells on Nike.com and in their 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 that makes cheap nike shoes free shipping in about one hour.
In a nutshell, the company is deemphasizing its ready-made network wemjjs retailers to produce a much more precise targeting mechanism. Tuesday Parker said the conclusion goal is to get ahead of the consumer and present “the most personal, digitally connected experiences” in the business. “While altering your approach is never easy, Nike has proven before that when we do, it’s always ignited another phase of growth for your company,” he explained.
In principle, Nike can know any given customer better-and his or her willingness to pay for-by utilizing their own venues and platforms, particularly on its digital properties. The task will likely be building the mechanism to sort all of the data, and in doing so, the buyers. In real life, they sort themselves: The high-end boutique isn’t right near the cut-rate discount outlet. Inside the virtual world, it’s not easy.
For the record, Under Armour Inc. is slightly ahead of Nike Inc., with 31% of their sales coming straight from consumers; Adidas AG is slightly behind, with 23% of revenue from retail. At its current pace, Nike will be collecting one out of three of the sales dollars straight from consumers. Its challenge will be ensuring that none get too good an agreement.