You may not see this right now, but soon enough, we will all notice the dramatic shift in Nike’s business. And, as sneakerheads, this is something that could potentially change the entire game for us – not in a good way. We’re talking about the Nike direct to consumer paradigm shift.
Just think of this. How the HELL could Nike’s shares reach an all-time high right in the middle of a global pandemic? When every other sneaker retailer’s record sales took a major hit, Nike’s online sales SPIKED. This was not some act of sorcery, black magic, or voodoo – it was just a proper marketing tactic.
To make it through a global pandemic stronger than before is a signal of Nike’s extreme, long-term e-commerce potential. It also proved that the Nike direct to consumer plan from (2011) was put into motion. It was time they took matters into their own hands. Let’s break it down for you.
NIKE DIRECT TO CONSUMER MODEL
The Nike direct to consumer model involves a lot of strategies where Nike cuts back on its wholesale distribution. It also involves setting high standards on third-party partners – focusing more on content, culture, and customer satisfaction. Investing in D2C is investing in data analytics, logistics abilities, and even customer retention. All-in-all, the Nike direct to consumer model is a revolutionary change for the brand and its future. Let’s dive into it!
WHAT IS DIRECT TO CONSUMER (D2C)
So, before we go into specifics about the Nike direct to consumer model, we gotta explain D2C a bit.
Direct to consumer business is the type of business that skips the part with suppliers and retailers altogether. Instead, organizations sell directly to their end customers without involving a middleman. In other words, businesses sell their own products directly to customers without third-party retailers. It promotes self-sufficiency and helps expand e-commerce and digital marketplaces.
In our case, the sneaker middlemen would be wholesale partners and all Footsites and Shopify sites that host Nike releases. Therefore by eliminating or limiting the middleman, Nike would ultimately be in full control of releases… yikes.
NIKE DIRECT TO CONSUMER
(2011)
We’re gonna go back to 2011 where the Nike direct to consumer model began – back when Nike’s sales were still wholesale. Let’s take a look at Nike’s 2012 and 2021 Fiscal Report of the fourth quarter – ended May 31.
By the end of 2011, you can see that around 84% of Nike’s sales were still wholesale. On the other hand, only 16% went to direct to consumer businesses like brick-and-mortar stores and websites. But, with the progression of time, things started to change! If you take a look at 2021, the Nike direct to consumer percentage was around 38%. It was pretty obvious that Nike was already focusing on growth through direct channels. This was all pre-pandemic, but the shift towards the virtual was already in motion! Times were changing and trends shifted.
