Nike: Building Communities through Digital
“Digital is an accelerator of growth that is shaping everything we do. We are building deep connections to consumers with digital services and communities to driving rapid expansion of our ecommerce business.” – Mark Parker, CEO Nike
Historically, retail and apparel brands have been slow to jump in on the “digital revolution.” That said, many retailers have since come around to seeing the value behind engaging in digital and have started to think more strategically about how they can leverage technology to drive customer engagement and ultimately sales conversion. For most retailers like Nordstrom, Warby Parker, Rebecca Minkoff, etc. this digital strategy has materialized as robust mobile shopping apps, RFID technology, advanced POS systems, as well as interactive/virtual reality-esque shopping experiences. Taking into account this current landscape within retail and the learning curve for those players within digital, I believe that Nike stands out as one particular winner within the digital innovation space, especially within the retail industry.
Nike has consistently managed to embrace and pave the way for retailers to think about how they can better engage with their customers on the digital front and one need only to look at Nike’s performance across the last few years to see that it’s investments in digital are paying off, with its ecommerce business recently surpassing $1 billion in revenues (see below figure).
While Nike was an early player in the wearable tech space, the company was able to make the very smart shift off the path to becoming a hardware manufacturer (e.g. Nike FuelBand) to focus on building up a robust digital strategy through software, various apps, and social media platforms. In this strategic move, Nike has positioned itself to be an ideal partner, rather than competitor, for the wearable device market ; we’ve already seen this type of partnership materialize with the Nike+ Running app launch on Apple Watch earlier this year.
In addition to partnering up with broader social media platforms like Twitter and Instagram to directly engage with customers, Nike has also focused its efforts in developing its own social community. This has given Nike the opportunity to not only create value for customers, but also to generate and capture value from that same community. As an example, Nike’s ability to deliver on mass customization (not an easy feat as evidenced by the recent shuttering of other concepts like Tinker Tailor and Burberry Bespoke) complements the social media nature of its NikeiD app. NikeiD offers customers the opportunity to share and vote on customized designs, meanwhile providing Nike with huge insights into what products/designs really resonate with its customer base. This ability to engage and tap into the customer community has proven to be an asset to Nike and we’re now seeing the company continue with various iterations on this “community” concept, most recently with the launch of the Nike Trainers Hub. This new digital space provides users unique insight and access to some of the world’s top athletes training programs and tips. Again, designed to be part of a larger digital ecosystem, the Nike Trainers Hub pulls in existing communities (users with Nike+ accounts) and creates new and engaging experiences for them, including real time conversations with knowledgeable experts via Twitter.
Great post, and great company 🙂
Is digital simply a mechanism for Nike to sell more of its physical product? Or does the DNA of the company now exist in this digital world? What role will digital play in the apparel of the future? Will clothes and shoes integrate more digital “tracking” technologies? Or will that work be left to devices like the Apple Watch or FuelBand? Curious to hear your thoughts on the decision by Nike to shutter the FuelBand. Does it make sense for them to just be a software developer making apps for platforms like iOS or Android, or do they need to have a piece of the hardware? Is digital fitness tracking just a trend, or will this be a necessary component of athletic apparel companies of the future?
Thanks for sharing your thoughts 🙂
How do you see Nike+ positioning itself in a world of Fitbit, Jawbone, Apple Watches, etc. all reimagined for a few years from now? I believe Nike was very ahead of its time with Nike+, and hope that they continue to innovate and stay ahead of what athletes are looking for and stay out of the hardware space, but I wonder if they can continue to be important in the software integration conversations. In particular some of their best digital offerings are apps directed at helping athletes get better (I love their workout suggestions), and I hope they continue to create or partner with personal trainers to bring consumers original content and at least try to compete on content.
Really interesting post! I have no doubt that Nike will be able to stay ahead of the curve in terms of creating new athletic experiences that blend together the digital and physical. Your point about customization is key- one of the main the reasons I buy Nike shoes is the ability to customize the design. I think Nike has a great opportunity to extend this idea of customization beyond just designs and data to offer an even more integrated and personalized experience for their customers. With the advent of 3D printing, Nike has the opportunity to move towards customizing the structure of their shoes to fit a customer perfectly and drive optimal performance. This move to printing customized sneakers and other athletic gear would allow Nike to give their customers new/more tools to collect data about their own physical performance (e.g. how they run, their step, etc.) and then connect these customers back to their physical product line and experience more results.