Nike'S Ambition Is Not Just Selling Products On The Chinese Version Of Nike App.

Nike is making further progress on the road to DTC.

In November 26th, Nike announced the official launch of its official online shopping mall Nike App Chinese version. As the core platform of Nike online retail system, Nike App finally entered the Chinese market in the third years after its launch in North America in August 2016.

Nike App can be regarded as the mobile end version of Nike PC end official mall Nike.com, but compared to the PC terminal, its function is more focused on the ecological construction of Nike membership system: according to the personal interest of members, it can push sports stories, suggestions and other contents that may be interested, make an appointment with Nike's offline activities and sports courses; purchase the exclusive products of the members ahead of time; and add the function of sharing the products to WeChat's circle of friends.

"Most of the contents in the Chinese version of Nike App are localized, such as eating habits, exercise skills, etc., all tailored for Chinese consumers." Yan Yizi, vice president of retail business and e-commerce general manager of Nike Greater China, said.

At this point, Nike's existing digital direct retail framework has basically completed its laying in Greater China, including Nike App, SNKRS, Nike.com, "Nike Nike" WeChat Mini program and Nike Tmall flagship store. This is in line with the direction of Nike's digital transformation in recent years.

A month or so ago, Mark Parker, President and CEO of Nike group, announced that she will be stepping down in January 2020. The successor is former eBay group CEO and now Silicon Valley cloud computing company ServiceNow CEO John Donaho (John Donahoe). Nike's move is widely believed to be a strong signal to further promote digital transformation.

Also in June of this year, Nike set up the position of "global chief digital information officer", which was appointed by former Kohl's department store chief technology information officer Ratnakar Lavu, responsible for Nike's global information technology and digital business development.

In Nike Greater China, this year also experienced an important personnel appointment: Mai Xiuyuan, vice president of Nike global digital products and innovation (Michael Martin), was transferred to vice president of Nike Greater China and general retail manager of Martin. Mai Xiuyuan, a product manager, also has a profound technical background. SNKRS, Nike Fit and other official Nike App are his own. The newly released Nike App is Nike's first "work" after it was transferred to greater China.

Several important personnel changes, coupled with the acquisition of technology companies in recent years and the acceleration of direct retail outlets in the world, indicate that Nike hopes to use digital technology to move forward in the strategic direction of DTC.

　 Online platform

In 2015, Nike formally put forward DTC Direct to Consumer as a company strategy. In June 2017, Nike group released a more large-scale "upgraded version" DTC strategy -- Consumer Direct Offense. To this end, Nike has also set up a Nike Direct department to integrate almost all Nike DTC businesses, including Nike official website, direct retail outlets and all digital innovative applications, such as mobile terminal App, online small programs, etc.

In China, Nike's strongest global growth market, Nike also started a large-scale "DTC campaign".

Before and after 2013, China's sports footwear industry suffered a serious inventory crisis. The decline of orders, high inventory and declining profits were the common predicaments faced by all brands. Even industry giants such as Nike have not been spared.

In the 2013 fiscal year, Nike's revenue in the Greater China region showed a negative growth of 5%, which is the only annual revenue growth of Nike in Greater China in the past 10 years (2010 to 2019 fiscal years). In this year's earnings report, Nike will be attributed to several points: reduced wholesale orders, increased discount sales, stock backlog and product returns.

In order to reverse the decline in revenue and profit in the Greater China region, Nike began to build an all directional DTC direct retailing framework covering the online and offline businesses in China from 2014 onwards, namely, the electronic business platform, offline stores and digital supply chain.

The Internet is Nike's first field of strength. In May 2014, Nike integrated the three major websites in the Chinese market, Nike official Mall (Nikestore.com.cn), NIKEiD platform (Nikeid.com) and Nike+ platform (Nikeplus.com), into a new official website Nike.com, and the data, goods and services of the three platforms were opened up. This is also seen as an important node of Nike's massive online DTC platform in the Chinese market.

In 2016, Nike acquired Virgin MEGA, a digital design studio in New York, and developed Nike's SNKRS application. By the end of 2017, SNKRS was on the Chinese market and became the main draw platform for Nike's limited footwear products. In September 2018, the "Nike Nike" WeChat Mini program was formally launched. This means that Nike has also paved the way for its DTC membership system on WeChat, the largest social platform in China.

These online DTC channels are not only for Nike, but also important for consumers' interests and consumption habits.

"Through these App, Nike can learn members' browsing time and magnification on each item, and see which merchandise pictures and skipped items." "These data can make Nike more aware of the habits of every consumer, know what they are more likely to buy, use algorithms to push content to consumers, and even customize products for specific consumers," Quartzy Marc Bain, a senior retail journalist, wrote in a report in November this year.

From the first quarter of 2014, Nike has achieved double-digit growth for 21 consecutive quarters in the Greater China region, and DTC growth has been maintained at a high double-digit rate. DTC's revenue in Greater China increased from 22% in fiscal 2014 to 40% in fiscal 2019. Nike almost mentioned in its annual earnings report that the strong performance of the electricity supplier business is the main reason for the growth of DTC sales in Greater China.

Super store

From a global perspective, Nike is adjusting its sales channels, optimizing its distribution strategy, and guiding more users to its own official website and application so as to further implement the DTC strategy.

In China, the new retail trend has constantly changed the value of the store under the sports brand line. From big data analysis to smart retailing, stores become an important entry of brands, providing services such as display and experience, and also carrying the functions of brand interaction with customers, strengthening brand labels, and so on. This is also an important reason why many brands continue to shut down stores on the one hand and vigorously build flagship stores on the one hand.

In October 2018, Nike world's first House of Innovation flagship store "Nike Shanghai 001" settled in Shanghai Nanjing road pedestrian street. Dong Wei, vice president of global vice president and greater China general manager, interviewed in August this year, said: "Shanghai 001 is the largest entry of Nike under the China development line, and is an important platform for Nike to open up online and offline retail experience." in August,

With "Shanghai 001" as its representative, Nike's location of Direct stores in recent years will usually be chosen at the corner of large traffic volume, with huge Swoosh trademarks and French windows. "Landing on the street can play a better role in displaying large glass, and a large area of independent shops also provide space for sports brand products and facilities, and effectively enhance customer experience." RET, a commercial real estate consultancy, pointed out in a sporting goods retail research report.

The expansion of Nike's offline stores is reflected in the same store sales data to a certain extent. As an important indicator to reflect the profitability of direct retail business, Nike's sales in the Greater China region have increased 20%, 28%, 19%, 9%, 10% and 23% respectively in the past six years.

However, in Dong Wei's view, the most important factor to measure the next line of Nike stores is experience rather than same store sales. "The future measurement of retail prices may be very different from the traditional single store income." "When consumers enter a store and finish many experience projects, it doesn't matter if they do not form consumer behavior in the store, because consumers are always connected with our brands," she said in an interview with lazy bear sports.

Around the online and offline connections, Nike App developed the Nike App retail function. As a result, consumers will be able to use Nike App to view all the real time inventory of Nike stores around them. They can also use Nike App to scan the barcode for details, and then self check out. Although this function has not yet been opened to the Chinese market for the time being, according to Nike officials, the Nike App retail function will be launched on the Chinese market in 2020.

　　 Building supply chain

In order to provide corresponding technical support for online and offline DTC channels, Nike has acquired a number of digital start-ups in the past few years, and vigorously invested in upgrading and upgrading the original supply chain system.

In 2016, Nike acquired Virgin MEGA, a digital design studio in New York, which was then responsible for the actual development of SNKRS applications. In 2017, Nike acquired the consumer data analysis firms Zodiac and the computer vision company Invertex, the former was to help Nike boost online sales, while the latter was responsible for developing Nike Nike for the application of photo measuring shoe size. In August 2019, Nike purchased AI forecast analysis company Celect to predict consumer behavior, help it reduce the shortage rate and reduce the unplanned addition of sports shoes and clothing demand.

In terms of supply chain, Nike launched a new supply chain system Express Lane worldwide. In 2019, the expansion of Nike logistics center in Taicang, Jiangsu was completed. It not only increased the area of warehousing and logistics area of 60 thousand square meters, but also increased the turnover capacity of logistics. At the same time, automatic sorting equipment and transportation system and warehouse management system were introduced to further enhance the ability of digital collection and analysis, with the aim of shortening the time from the factory end to the consumer end.

After five years of development, Nike has basically completed the DTC framework of electricity suppliers, stores and supply chains in the Chinese market. In such a DTC system, the electricity supplier channel plays a more important role as a sales force; the significance of flagship stores under the line is more than brand display; and the digital supply chain provides technical support for the rapid delivery of the right goods to the right people.

Now, with the core of the Nike App DTC platform in China, Nike is moving towards the "DTC sales account for 50% of the total revenue" in the direction of continuous progress.

"The number of App in the Chinese market is numerous, so we are doing independent App in China, and how to make more consumers understand and install our Nike App is the most challenging thing." Mai Xiuyuan said.