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How is Nike making a move to E-commerce?

In 2019, Nike, the sports shoes and apparel colossus transformed its line of attack. Nike focused on Consumer Direct fulfilment capacity, and Automation Pays shifted to E-commerce. The intelligent new strategic drivers at the heart of a far-reaching project are digital transformation, content, community and customisation.

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How did they do this? 

Nike informed that they would reduce the number of retailers worldwide, from almost 40,000 down to just a few dozen, a take aback for store chains.

In 2020, Nike informed its 'Consumer Direct Acceleration’ and hard-hitting digital strategy to escalate its E-commerce business. Their primary objective was to build a solid brand and solid relationships with customers.

This project was set off around three years ago. Sales Nike turn into consumers across channels such as its website and stores to succeed in the future; the company requires to gain control of its allocation chain to handle the brand better and expand its relationship with consumers.

The company deploys an „incredibly disciplined approach” by applying a digital operating model that has transformed its management.

They made the courageous decision to benefit from technology to take control of their brand through a Direct To Consumer (DTC) approach, cutting out other unworkable retailers and bringing them closer.

Did it work?

By far! The company 2021 fiscal year direct sales rose to approximately 39% of Nike brand sales, whilst wholesale accounted for about 61%.

Nike displayed the power of its digital transformation all over the world, as this transformation is from top to bottom incorporated in what they do as a company, the way they work, what to prioritise, how to connect with partners, how to manage their Supply Chain, and how they attend consumers in the marketplace.

They recognise that the consumer’s move to digital will endure, becoming the well-defined point of their strategy, the reason why their growing is steadily, even surpassing their competition. The core benefits from the enterprise shifts toward E-commerce sales is evident, enabling Nike to move faster towards their long-term strategic vision of Consumer Direct Acceleration.

Investing in SC technology was also crucial to the Nike transformation. It came with different technology acquisition, such as RFID capabilities; RFID tags allows users to automatically identify and track inventory and assets, which improves inventory visibility and accuracy, making possible better product replenishment and distribution. This transformation drives an excellent return on its technology investments, as for the acquirement of an analytics and demand sensing vendor.

As a result of its strategy and the impact of the pandemic, Nike experienced a 14% drop in retail channel revenue, while traffic in Nike-owned stores remained well but below prior-year levels.

Company reports earlier this year that Nike was reducing inventory allocations to some retail chains by reprioritising product allocations to benefit their differentiated strategic partners. A real challenge for Nike is to enlarge sufficient consumer direct fulfilment capability to go with the long-term strategy whilst carrying out some initiatives to increase flexibility and responsiveness in their SC.

That encompasses:

·       Multi-node network performance and robot delivery.

·       The use of Green packaging.

·       Delivering all products within 48 hours, nearly half with same-day or next-day delivery.

Consumer behaviour has significantly changed, so they might buy online a product, have it shipped from the store, or want to buy it online, pick it up in-store, or they might prefer to go to a store, try it on and then have it shipped home. Robots performed a considerable role with over one million boxes shipped and the productivity that comes with it.

Further comments: Nike Consumer Direct strategy is paying off. It is more profitable for Nike, as it gets to manage the relationship with the customer rather than just offering that opportunity to retailers.

What do you think about Nike’s remarkable change in strategy?

Dave Food

M: +44 7775 861863