How Nike plans to turn ecommerce into a $7bn business

Nike’s online sales are currently worth around $1bn but it wants to hit $7bn by 2020 through a focus on making the digital experience “simple and personal”.

nike

In its second quarter results, announced yesterday (22 December), Nike saw ecommerce sales growth accelerate to 50% (from 46% the previous quarter). Some of that growth comes from expanding the markets where it offers online sales – over the last three months it has added Canada, Switzerland and Norway and it plans to expand to Mexico, Turkey and Chile over the next quarter.

However, Nike’s CEO Mike Parker, speaking on an earnings call, said it is not just down to expansion. He highlighted that the roll out of Nike.com drives “great energy” across the business and gives consumers access to “the best of Nike”.

“We have focused our investment in digital and mobile over the last several years and they are paying off. Driving the connection of Nike.com to our broader digital strategy continues to be, without a doubt, one of our greatest opportunities as a company,” he said.

Parker promised more innovations in digital next year but said the key to success will be to focus on making the experience “simple and personal”. He pointed to the creation of the Nike+ ecosystem, which gives users access to their training programmes, fitness history and favourite sportswear.

“Digital allows us to deepen the relationships we already have with consumers by tailoring every interaction to their specific needs.”

Mike Parker, CEO, Nike

“We are continuing our never-ending quest to make the digital experience more simple and personal. Simple: moving toward one access point for the best of Nike; and personal: more and more tailored to the individual.

The growth in ecommerce helped Nike report a 20% increase in profits. Results were also boosted by strong forward orders, also up 20%, from retailers prepping for a glut of high profile sporting events next year including Euro 2016 and the Rio Olympics.

Net income came in at $785m, while revenue rose 4% to $7.69bn and inventories were up 11% due in part to higher average selling prices and an increase in revenues coming from direct-to-consumer sales through Nike’s own channels.

In Western Europe the performance was even stronger with revenue up 12% in the quarter and future orders up 25%. Direct-to-consumer sales increased by 26% with sportswear and football proving particular high points.

“This momentum has solidified Nike as the region’s most coveted sports brand with strong growth across all territories. This geography-wide market growth, coupled with market share gains, proves the clear success of our efforts in Western Europe and the vast potential this geography offers for years to come,” explained Parker.

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  1. It will be interesting to see how Nike integrate eCommerce with their physical store experiences and the importance of concept stores to drive the emotional off-page engagement.

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