Nike Inc. started cleaning its stats sheet last week and for the first time, the Cheap Nike Shoes From China Free Shipping declined to report “future orders,” a vital way of measuring wholesale demand from the galaxy of retailers who sell the famous kicks. Nike, No. 9 in the B2B E-Commerce 300, says the metric doesn’t matter much anymore, because now it’s focused on conducting business directly with consumers and cutting out the middleman.
Nike sells to retailers through a mixture 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 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, compared with 4% five years ago. CEO Mark Parker said the organization is obsessed at this time with making shopping more personal. “Retailers who don’t embrace distinction will be put aside,” he warned on the conference call Tuesday.
Still, that wasn’t enough to thrill investors-at the very least, not. The overlooked appeal of bricks-and-mortar retail is just how well retail chains lend themselves to what economists call price segmentation. Shoemakers including Nike can certainly target customers by sending the best shoes 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, exclusive 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 properly, all of this socioeconomic slotting moves the maximum amount of merchandise as possible with minimal fuss, without tarnishing the bigger brand. And make no mistake: Nike can it correctly. On its face, the Swoosh is 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 sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager having a giant spreadsheet, making sure “Momofuku” Dunks aren’t too readily available, ordering up an exclusive design for China, distributing its best-sellers to all the best D.ick’s Sporting Goods Inc. outlets and dumping a lot of Chuck Taylors at outlet malls.
Nike is now 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, because of the historical manufacturer-to-retail model being discarded-requires an abundance of swagger. But Cheap Nike Shoes Free Shipping 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 last year. The heart of its lineup, meanwhile, sells on Nike.com and then in its own big box stores. As for the cheaper, less-popular kicks, they quietly trickle in to the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even has a studio in New York that creates customized shoes on-site in approximately one hour.
In short, the company is deemphasizing its ready-made network of retailers to generate a more precise targeting mechanism. Tuesday Parker said the end goal is to get ahead of the consumer and present “the most personal, digitally connected experiences” in the industry. “While changing your approach is never easy, Nike has proven before that if we all do, it’s always kpelqt the next phase of growth for the company,” he explained.
Theoretically, Nike can know any customer better-and his or her willingness to pay for-by utilizing its own venues and platforms, particularly on its digital properties. The task is going to be building the mechanism to sort all the data, and by doing this, the buyers. In the real world, they sort themselves: Our prime-end boutique isn’t right near the cut-rate discount outlet. In the virtual world, it’s not too easy.
For that record, Under Armour Inc. is slightly in front of Nike Inc., with 31% of its sales coming right from consumers; Cheap Jordans From China is slightly behind, with 23% of revenue from retail. At its current pace, Nike will quickly be collecting one in three of the sales dollars straight from consumers. Its challenge is going to be making sure that not one of them get too good a deal.