Nike is successfully transforming from a traditional consumer goods business into a digital direct-to-consumer company. Find out how Nike’s DTC sales have skyrocketed as the company focuses on big data and predictive analytics.
Leading footwear and apparel company Nike has been ahead of the game for years, inspiring millions of other companies to follow their strategies for accelerating growth.
Now, nearly 60 years after its founding, Nike is not just an innovator in sports science – they’re also leading the way in using artificial intelligence and predictive analytics to sell directly to consumers.
In June 2020, Nike announced the launch of its Consumer Direct Acceleration strategy to speed up direct-to-consumer (DTC) sales.
Their initiatives are clearly working. In 2011, DTC sales accounted for 16% of Nike brand revenue (or $2.9 billion of the total revenue of $18.1 billion). By the end of the 2020 fiscal year, DTC sales had grown to 35% of overall sales, or $12.4 billion.
This bump in DTC sales is driven by Nike’s new formula for growth, which focuses on building a data-centric organization that can compete with existing e-commerce giants like Amazon.
Let’s take a look at how Nike is making the successful transition to direct-to-consumer sales and how data science fits into their plan to enhance the customer experience and boost profits.
A Wellspring of Customer Data
Nike offers sales support, workouts, training programs, and loyalty incentives through a large array of apps. These apps allow Nike to optimize the consumer experience, but they also provide Nike with a veritable treasure trove of incredibly valuable customer data.
The Nike Fit app creates a digital picture of a customer’s foot using a combination of computer vision, artificial intelligence, and machine learning – then uses that picture to make informed product recommendations to the consumer. Long term, this intelligence on people’s feet also helps Nike create better shoes!
Nike uses their data to serve customers more targeted offers, including products and services. Through the Nike Plus rewards program, customers can get access to personalized workouts and sports experts.
Nike acquired two predictive analytics companies – Zodiac and Celect – in 2018 and 2019, respectively. These solutions help Nike crunch data from their apps and from IoT devices like Fitbits and use that data to understand customer habits and predict purchasing behavior. For instance, Nike now incorporates Zodiac’s marketing data into its app to serve up personalized content and make product recommendations.
Using Celect’s inventory management tools, Nike can now anticipate consumer demand and determine what products they should produce and where those products should be sold. Nike's hyper-local approach to inventory management ensures the customers can always find what they need and be able to purchase the items they're most interested in.
Making Data-Driven Decisions at the Highest Levels
Nike’s data analytics systems are fully integrated, so business leaders can use predictive data – including purchase patterns and social media behavior – to anticipate customer needs, create better products and services, and improve business processes. Every member of Nike’s senior leadership team has access to a personalized analytics dashboard and data visualization tools that are customized for their decision-making needs.
Nike’s Data-Driven DTC Initiatives
As new startups continue to enter the apparel industry, Nike has chosen to defend its mega-giant status by investing heavily in Big Data and AI to better understand its customer journey and capitalize on DTC revenue streams.