Design-Build-Ship: Nike goes from code to sneakers to shelves
Nike has shipped its first shoe influenced by member polling on its “SNKRS” app.
The multinational described the sales as its “first full circle insights-to-shopping experience.”
Members who participated in the polling were the first to have access to the “Design by Japan” Air Max 1 ’87, with conception of the polling idea to shoes hitting shelves happening in under a year, Nike said.
Nike tripled its digital sales from 9% of business in 2019 to 27% in its fiscal 2023 Q3, ended February 28.
It has used customer data and engagement via a burgeoning set of apps to increasingly personalise marketing.
The multinational says it has now got 150 million active members across its range of digital platforms.
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Speaking on its March 21 earnings call, CEO John Donahoe said: “We continue to capture opportunity with our growing digital advantage. Member moments throughout the quarter drove double-digit growth in repeat member buying. On the NIKE app, we integrated personalised product recommendations for members using available inventory to increase sell-through of key products. In addition, return on ad spend improved for another quarter as we test personalization and consumer experiences with activity and preference data.”
Nike reported revenues of $12.4 billion, up 14% year-on-year for the quarter. Net profit fell 11% on foreign exchange headwinds and “elevated freight and logistics expenses” among other challenges.
Nike’s digital success comes as annual ecommerce sales climbed above $1 trillion in the US for the first time in 2022. Comscore said that hit ecommerce sales across the board hit $1.09 trillion; a figure that excludes online travel sales. The analytics and measurement company said that Q4 alone accounted for $332.2 billion.
Nike neither talks nor writes in much detail about its underlying technology stack driving its sales, but a look at engineering and other roles as well as LinkedIn profiles gives a flavour of some of its components – with its team between 2018 and 2021 building a “centralized event streaming platform, based on Apache Kafka, which would enable Nike’s engineering teams to build real-time data solutions unlocking a variety of possibilities.”
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A recent lead data engineer role advert meanwhile asks for “experience working with Big Data streaming services such as Kinesis, Kafka, etc.; experience working with NoSQL data stores such as HBase, DynamoDB, etc.; experience provisioning RESTful API’s to enable real-time data consumption; experience working in AWS environment primarily EMR, S3, Kinesis, Redshift, Athena, etc.; experience with data warehouses/RDBMS like Snowflake & Teradata;and experience with workflow scheduling tools like (Apache) Airflow.”
CEO John Donahoe emphasised on the earnings call this week that China was a rather unique case: “We’re building hyperlocal product and storytelling ability [so] our tech stack is increasingly China for China. There’s really not been a time when we can serve consumers in China in a more agile and personalized way.”
A big focus now is improving the profitability of digital channels. Nike CFO Matthew Friend said: “This year, we’ve seen higher markdowns and promotions in our direct channels as we’ve been moving through excess inventory, but we think those are transitory costs, and we should begin to see the recovery… in fiscal year ’24.”
New Pitchbook data shows that across the ecommerce market 77 deals happened in Q4, worth a muted $1 billion. The markets data firm notes: “Many ecommerce merchants face headwinds in the form of intense competition, rising customer acquisition costs, shrinking margins, and the potential for an economic recession.”