Obviously, Nike's strategy helped it achieve the effect. DTC sales alone are more than the annual sales of some competitors, and this is a road of continuous growth.
The continuous growth of DTC strategy
With the right product, you need to make the most correct choice that suits the present. If you switch to DTC channel, the cost will increase exponentially. Few brands should pursue the economic growth brought by this transformation more than Nike, and big brands often have many advantages in doing so.
(Figure Source Network, Invasion and Deletion)
Most importantly, the sales profit of DTC is higher, so there are more and more DTC start-ups. Nike has a strong brand and can get more business and income through its own channels. Another advantage is that Nike can better control the way its brand is displayed through DTC channels, which may be one of the reasons for its withdrawal from Amazon.
With the epidemic situation, DTC changes at a double rate, and brands begin to see a virtuous circle of DTC sales and profit margin, rather than a "vicious circle" with small channel scale. In the medium and long term, brands that want to develop need to aim at 20% DTC business goals, or higher.
The acceleration of Nike's direct-to-consumer sales does not mean that it will change overnight. The giant has been developing steadily in the past few years. However, with the rapid growth of e-commerce due to the epidemic, Nike's next phase strategy is very timely.
However, Nike is not the only company that realizes the advantages of selling products directly to consumers. Andema is also seeking to withdraw from thousands of wholesale stores. Adidas plans to make DTC account for 50% of its sales by 2025, and retailers in other industries also realize that DTC sales need to be re-emphasized.
The ecosystem built by Nike
Nike has been carefully building an ecosystem to support this transformation. Its DTC strategy begins with digital stores and stores. After years of experiments, Nike plans to open 200 small stores in the same mode as Nike Live, and tries to make its applications add color to the in-store experience and create interrelated experiences.
In addition, Nike also has a strong awareness of the purpose of each channel service. Nike's new store will provide consumers with a place to contact products, which will not only help to make up for the loss of closing wholesale stores, but also help to build a community with loyal customers. Similarly, many DTC brands regard their stores as marketing channels, not just income-generating opportunities.
(Figure Source Network, Invasion and Deletion)
The main force that really drives digital growth is the application of Nike. The current business of single application is $65.438 billion, accounting for 654.38+08% of the total online sales in 2020, and the application increased by nearly 200% in the first quarter of last year. It has become a sticky ecosystem. As long as you download Nike-related fitness, shopping and other applications, you can receive targeted emails to understand your sports trends and styles, and notify you when you launch new products.
Unique personalized kernel
The core of Nike's various channel strategies is to emphasize uniqueness and individuality. For example, Nike Live Store focuses on providing localized categories that are most suitable for these regions, and its wholesale partners receive different products according to the types of consumers they serve. Match the classification with popular goods in a specific area, and these stores can also be used as potential delivery points or pick-up points for online orders from nearby customers.
In terms of market segments, Nike has also done a good job in many sporting goods manufacturers, avoiding excessive overlap among wholesale partners, even flagship products. There will also be different color schemes and subtle differences, which will help to segment the market. It even provides products that can only be obtained on exclusive websites to promote business development.
(Figure Source Network, Invasion and Deletion)
Nike's powerful data ecosystem is the reason why it creates a seamless online and offline experience. These data provide reference for marketing strategy and how to market to specific consumers.
In the past few years, the company has made four acquisitions in the field of data and analysis. The acquisition of Celect, a forecasting analysis and demand awareness company, helps to "get the right product at the right time and place", and the acquisition of Datalogue helps to improve search and personalized product recommendation, and predict when customers may need new products.
Because of Nike's emphasis on data, it not only personalized some store products, but also the online experience of individual consumers is unique.
Internal adjustment and input
Ambitious strategies require investment, risks and sometimes unpopular decisions. Nike is particularly outstanding in the last aspect, which helped it through the past crisis.
This time, it was Nike's indiscriminate wholesale partners who paid the price. Increase DTC channels, reduce wholesale share, and layoffs are also close behind. Executives pointed out that the new strategy enabled them to simplify the organization and adjust management to better align with the new plan.
"Changes in leadership, together with Nike's business model and strategic adjustment, will create greater focus and agility and serve consumers through a more flexible and flat organization," the press release at that time reported.
Nike's fearless attitude is also compatible with the willingness to invest a lot, but a lot of income is slowly eliminating the sting of these investments. Even during the epidemic, the revenue reached $37.4 billion, which was $65.438+0.36 billion more than that of Adidas last year.
In fact, it is more difficult to turn to DTC for smaller brands that lack funds and liquidity to plan and obtain investment, and for larger backward brands that lack agility and change culture.
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