Nike’s Digital Transformation Efforts Continue to Win Big
Long a pioneer in the retail sector, over the past decade Nike has emerged as a true digital visionary. The embrace of cutting-edge technology combined with a “Consumer Direct Acceleration” (CDA) strategy has not only enabled Nike to survive the turbulence of the last two years, but thrive.
In fact, according to the company’s most recent earnings report, digital channels and applications now account for 26% of Nike’s revenues, its Q3 earnings revealed, with digital sales in the US up 33% on the same quarter last year. Furthermore, Nike revenues for the quarter were $10.9 billion. Net income was $1.39 billion, down 4% on the same period in 2021.
In the years leading up to the COVID-19 pandemic, Nike made a number of savvy digital investments including the launch of its mobiles apps (NIKE mobile app, the SNKRS mobile app, the NTC (Nike Training Club) and NRC (Nike Run Club Nike’s exercise app, the Training Club, alone was responsible for boosting sales in China by 30% during the pandemic.
In partnership with intelligent automation provider Laiye, they also launched a chatbot that not only helped e-commerce customers find what they were looking for, but could also offer the shopper personalized product recommendations.
The company has also made significant investments in data science technology, acquiring data integration startup platform, Datalogue, in 2021 as well as two predictive analytics tools Zodiac (2018) and Celect (2019).
However, the transformation hasn’t stopped there. Here’s a look at what else is on Nike’s digital transformation plate.
In November 2021, Nike introduced the world to Nikeland, its Roblox-hosted metaverse. Since then, 7 million people have visited to browse merchandise, build and style avatars, design sneakers, play games, and roam its immersive 3D landscape.
Later that same year, Nike also acquired digital sneaker company, RTFKT, to help them expand into the NFT space and, so far, the partnership has proven to be successful. For example, in April of 2022, Nike and RTFKT Studio launched CryptoKicks Dunk Genesis, a collection of 20,000 non-fungible tokens (NFT) shoes that can be purchased and worn by your avatar in the metaverse. A total of 600 pairs of NFT sneakers were sold out in just 6 minutes, generating a total revenue of $3.1 million.
Perhaps seeing the writing on the wall, Nike began reimagining its supply chain to reflect its increasingly digital, D2C strategy. To start, the company opened dozens of new regional distribution centers and launched a “sole train,” a dedicated high speed Los Angeles-to-Memphis train to transport items from the nation’s largest container ports and the company’s omnichannel facilities.
Similar to many companies, they also expanded their use of physical robots (or co-bots, short for collaborative robots, as they call them), advanced demand-sensing technology and inventory optimization platforms to not only increase the speed of order processing and helped them triple their order capacity during the holiday season, but increase the accuracy of demand forecasts and minimize environmental impact.
As Nike themselves put it in a recent blog post, “Using AI and machine learning, Nike is leveraging technology to forward-position the products that consumers love most and deliver faster, more precisely, and without compromising sustainability.”
When it comes to Nike’s long-term digital transformation ambitions, the race has only begun. In April 2022, it was announced that Nike had hired Dantley Davis as vice president of digital design. A long-time industry player, Davies helped build Netflix’s widely emulated digital interface and, later, served as Twitter’s first chief design officer. This move signals that a new era of innovation is about to commence.
So does Nike’s announcement that they plan to build a new technology center in Atlanta. According to Footwearnews.com, “As part of this new office, Nike said it is launching three ‘Centers of Excellence’ focused on disciplines that are particularly strong in the region like logistics and supply chain, which Nike is using to accelerate its digital- first supply chain strategy. Nike added that the center will also focus on cybersecurity and will establish an East Coast cybersecurity command center. The facility will also explore artificial intelligence and machine learning to help reimagine consumer experiences.”
Furthermore, Nike also recently announced it will revamp its Nike China digital ecosystem including the Nike app and nike COM, snkrs app, Nike wechat applet, NTC wechat applet and other self owned digital platforms this July. Many also speculate that Nike will begin developing the next generation of fitness apps – ones that use biometric data to provide users with workouts specifically tailored towards their unique exercise habits, preferences and needs.
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