Nike Inc. started cleaning up its stats sheet the other day and for the first time, the sneaker empire refused to report “future orders,” a critical way of measuring wholesale demand from the galaxy of retailers who sell the famous kicks. Nike, No. 9 within the Business to business 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 mixture of EDI and e-commerce. While wholesale nike shoes reported its slowest quarterly sales growth since 2010, its performance being a retailer-rather than a wholesaler-was actually a relative highlight. Sales on Nike’s own web store were up 19% within the recent quarter, while its retail locations notched a 5% grow in same-store sales. 28% of sales are direct this coming year, compared with 4% five-years ago. CEO Mark Parker said the business is obsessed at this time with making shopping more personal. “Retailers who don’t embrace distinction will be left out,” he warned over a conference call Tuesday.
Still, that wasn’t enough to thrill investors-at the very least, not. The overlooked attractiveness of bricks-and-mortar retail is the way well retail chains lend themselves to what economists call price segmentation. Shoemakers such as Nike can easily target customers by sending the best shoes off 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 these places as DSW Inc.
If performed correctly, all this socioeconomic slotting moves just as much merchandise as possible with minimal fuss, whilst not tarnishing the larger brand. To make no mistake: Nike can it correctly. On its face, the Swoosh is 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 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 a special design for China, distributing its best-sellers for all the right Dic.k’s Sporting Goods Inc. outlets and dumping plenty of Chuck Taylors at outlet malls.
Nike is currently upsetting their own well-oiled applecart. In giving traditional retail the stiff arm, which cheap nike shoes free shipping made official in June, the Oregon empire is tearing up that playbook and trying to make a stop run around the fundamental 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 reveal that the bet is apparently working, primarily because Nike continues to be sharpening its digital game.
Sought-after sneakers now ship out via Nike’s own ecosystem of apps, including SNKRS, which it launched early a year ago. The center of the lineup, meanwhile, sells on Nike.com and in their own big box stores. As for the cheaper, less-popular kicks, they quietly trickle into the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even features a studio in Ny that makes customized shoes on-site in approximately one hour.
In a nutshell, the business is deemphasizing its ready-made network of retailers to generate an even more precise targeting mechanism. Tuesday Parker said the final goal is to obtain ahead of the consumer and offer “the most personal, digitally connected experiences” in the industry. “While changing your approach is never easy, Nike has proven before that if we do, it’s always hfwqsz another phase of growth for the company,” he explained.
In principle, cheap nike shoes from china free shipping can know any customer better-and his or her willingness to pay for-by using their own venues and platforms, particularly on its digital properties. The challenge will be building the mechanism to sort each of the data, and in doing so, the shoppers. In the real world, they sort themselves: The high-end boutique isn’t right near the cut-rate discount outlet. Inside the virtual world, it’s not too easy.
For the record, Under Armour Inc. is slightly in front of Nike Inc., with 31% of their 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 out of three of the sales dollars straight from consumers. Its challenge will be being sure that none get too good an arrangement.