Nike's Omnichannel Strategy
Oct 12, 2018, 7844 views
At the beginning of its history, back in 1964, the current giant Nike had a very different name: Blue Ribbon Sports. At that time, instead of producing its own goods, the company only distributed some shoes of the Japanese Onitsuka Tiger - that today we know as Asics. More than half a century later, it is recognized for its high quality, its presence in the sports environment and, of course, its system of integration between the physical world and the virtual store, the so-called omnichannel strategy.
But what's so special about Nike's e-commerce? What exactly makes it so different? To summarize in a nutshell, we can say that the great highlight in this case lies in the strategy of media integration adopted by the company. If you want to know more about it, read on.
Like the Nike, Omnichannel did not come up yesterday. Originally titled as customer centricity, it became popular with Best Buy's strategy, which began in the early 2000s to compete against the gigantic Walmart.
The store's proposal was that the consumer should have a 360º experience, whether in the physical store, e-commerce or any other point of interaction.
The idea was so certain that today, the omnichannel is already adopted with great success by several companies, including Walmart, Disney and Starbucks. They exploit a number of platforms in their strategy, many of which did not even exist or were not as popular at the time - such as social networks and mobile apps, which are, in fact, ubiquitous in Nike e-commerce.
Nike e-commerce and brand loyalty
Despite having already had its e-commerce running since the turn of the last century, it was only in 2006 that the idea of the omnichannel began to grow with Nike. And this is mainly due to the NikePlus program, launched even before the first iPhone.
Basically, the NikePlus connected the user's sneakers with his iPod, making it possible to count the steps, the distance traveled and the calories burned. The data was then synchronized with the NikePlus website.
This system promoted not only a positive experience, but the meeting of people with interests in common: a community of corridors, both professional and amateur.
Nike's current proposal is the expanded NikePlus program, which they describe in a press release as a system that "Connects Nike's wealth of sports knowledge with its shoe and apparel offerings. Nike + translates 'more' to 'personal', offering members personalized guidance, support and a variety of features that reveal the best of Nike. "
NikePlus aims to get to know the user well - what are your favorite Nike sub-brands (eg Air Jordan, NIKEiD, Converse etc.), what sports do they play, and what types of products are they interested in. All of this is used to produce content through a personalized newsfeed.
Ads and product reservations are particularly relevant to the NikePlus program, considering how quickly your products run out.
More importantly, the NikePlus application serves as a gateway to connect members to the rest of the Nike application constellation - the Nike + Run Club, the Nike + Training Club, and the Nike + SNKRS applications.
Proof that the system works comes from the company's results: In an interview with CodeCommerce, Nike direct director of consumer Heidi O'Neill said that NikePlus members consume three times the value of an anonymous buyer.
Therefore, the omnichannel strategy can turn casual buyers into loyal customers and boost consumption.
Customer retention in physical and virtual
A number of surveys point to this strategy as a great way to work with customer retention. Recently, the Harvard Business Review examined the behavior of 46,000 buyers to assess the impact of retail omnichannel on their experience. The research concluded that:
- 7% bought online exclusively;
- 20% were from physical stores only;
- 73% used multiple channels to search and buy.
In addition, the results showed that omnichannel customers loved using different touch points, adopting various combinations of channels. Not only did they use smartphone apps to compare prices or download a coupon, for example, but they were also avid users of in-store digital tools, such as an interactive catalog, a price checker, or a tablet.
Another Fluent study found that users who got involved with a particular brand across multiple media made purchases more often. The survey asked the question: how often do you shop at your favorite store's website?
The result showed that 49% of people who follow 10 or more channels in a business shop once a week on the company's website. Of this group, another 36% buy on the site at least once a month. That is, loyal customers, who follow their favorite brand in various channels, buy online on a recurring basis.
The survey also found that 52% who go between one and four channels buy online less than once a month. Although it is still a relevant indicator, the data shows that the frequency of purchases of customers engaged in several channels is much higher.
Therefore, when the customer follows and interacts with a company in various ways, it tends to become more loyal and to buy more frequently.
With this sales model focused on building loyal buyers, Nike was able to create customized offerings for each app user's needs. In the end, this has greatly helped the company to come up with the incredible $ 2 billion in revenue from online sales alone. However, this retention of customers was not limited to e-commerce.
A good connection between virtual and physical stores can be quite beneficial for businesses. All thanks to the ROPO effect, Research Online Purchase Offline - online search and offline purchase. The idea is that for every dollar spent on e-commerce, practically another dollar is spent by the same user in a physical store later. Here comes the distribution system as a crucial point for the omnichannel strategy of any online store.
The importance of distribution
Companies that are looking to offer a 360º experience need to diversify the way their products are delivered. And that goes for both the online and offline buyer and even the reseller. To get a better idea, just see how all this works in the Nike case.
In the case of B2C, we have:
- physical stores - in some cases, specific to certain models of sneakers;
- NIKEiD - Nike's virtual store focused on selling custom sneakers.
In the case of B2B, we have:
- resale of products in physical stores accredited by the Nike retailer;
- resale products in virtual stores and accredited marketplaces.
In addition to these distribution and contact models, Nike also relies on sales through social networks, such as Instagram. Undoubtedly, this scenario shows the ease of the company in dealing with several of the tools available in the market.