The Next Technology Giant Is Nike?

Shanghai, China - 60% of consumers wear shoes that are not fit for size and are not in conformity with shoe size.

Nike realized that this is a big problem, and it is also a big business opportunity.

After the Spring Festival, they will issue a brand new technology Nike Fit in China. This unique scanning technology uses computer vision and machine learning technology to help consumers find the appropriate shoe size. This function will appear in Nike App and Nike's physical retail stores. Nike App will remind consumers to take a picture of their own feet with a mobile phone photo function, and then generate a recommended shoe size range after App. This shoe code will be bound with the Nike+'s personal information of the user. In the future, when he buys Nike products in Nike store or on the Internet, the system will automatically identify his shoe size.

The technology used the technology from Invertex, a start-up company, which mainly used automation technology to develop consumer and medical products, and Nike acquired it in March. Then, in May 9th, Nike launched the first Nike Fit in the United States.

From the point of view of Nike's use of Nike Fit, Nike App is inevitable. That is to say, in addition to solving a shopping pain point, Nike Fit still has the value of encouraging more consumers to register Nike App for Nike. This will provide Nike with more substantial data and let Nike know which shoe size and type are more popular, so as to optimize inventory management. At that time, Michael Martin, vice president of Nike global digital products and innovation, said on April Nike Fit's Demo that when they put Nike Fit into three retail stores at the beginning of the test, those who had no Nike membership were also very active in asking how they could save their shoe size information.

"In the future, if you buy a pair of shoes online, you will no longer have shoes and gender, but your name will only appear, which is our goal," Martin said.

As early as 2016, Nike launched Nike App, but it was not until November 26th of this year that Nike App was formally launched in China. As the core of Nike digital ecology, its function is more focused on the ecological construction of Nike membership system: according to the personal interest of member users, it can push sports stories, suggestions and other contents that may be interesting to them; make an appointment for the offline activities and sports courses of Nike organizations; purchase the exclusive products of the members ahead of time; and add the function of sharing the products to WeChat's circle of friends.

Before that, Nike's App matrix can be said to be quite complete. Interestingly, they do not seem to be paying consumers directly as their direct goal. For fitness enthusiasts, Nike provides a large number of professional exercise courses in Nike Training Club; for runners, Nike has specialized Nike Run Club; these two App are content to concentrate on content, and do not embed any purchase advertisements or jump messages. The NBA Nike Connect and the Nike Adapt, which are exempt from shoelace shoes, emphasize interaction experience and operation respectively. And SNKRS App is the official application of the original price "shoe toe" for the limited price shoes. Although the order can be placed, it is too difficult for the limited edition to sell so that fans can not afford to spend money.

All of these applications are aimed at users, thereby constantly enhancing the brand's direct business to consumers and reducing their dependence on traditional wholesale businesses. This is also the core of Nike's digital transformation in recent years.

But this round of digital transformation is totally different from that of Nike, which is dominated by new technology products. At that time, wearable technology products became a hot spot in the market. Nike invested a lot of power in launching the digital fitness tracking wristband FuelBand in 2012, and competed with start-ups such as Fitbit and Jawbone. Later, after Apple launched the apple watch, Nike terminated the FuelBand project. Many commentators believe that this behavior is enough to prove the failure of the product LED digital strategy. However, Nike soon found the right direction, realizing that the software that drives these technologies and the data they collected is more valuable to Nike than developing a hardware product.

In June 2017, Nike put forward the strategy of "Consumer Direct Offense". The core of the strategy includes focusing on major cities, speeding up product innovation, editing product catalogues, providing precise selection of best presentation styles, and enhancing digital input with mobile devices as the main channel. This time, Nike's digital strategy shifted to data mining and forecasting analysis, and bought a series of artificial intelligence and data analysis startups to better understand consumers' buying behavior.

The birth of SNKRS App was due to the acquisition of Virgin Mega. The start-up company originally hatched from Virgin Group of Richard Branson, providing a high-quality mobile digital experience for fans community. Nike acquired it in 2016, and Ron Faris, who once worked for Virgin Mega, is currently the global vice president of SNKRS App. In August, Nike acquired Celect, a start-up company from Boston. The company developed the retail forecasting analysis and demand sensing technology. Its AI platform will enhance Nike's big data capability and predict the demand for new products in advance. This is also the third company that Nike has acquired in the field of data analysis in the past two years. Of course, the acquisition of Invertex directly led to the development of Nike Fit.

Besides Nike, another sports brand is also keen on takeovers. From 2013 to 2015, Under Armour bought several fitness App for 710 million US dollars, including MapMyFitness, MyFitnessPal and Endomodo. They help Under Armour quickly acquire new users in the short term. MapMyFtiness acquired 20 million registered users when it was acquired in 2013, and MyFitness Pal and Endomodo each had 80 million and 20 million users in 2015.

The acquisition of Nike is never intended to buy users. They acquire the ability to provide consumers with better experience.

Nike currently has more than 185 million members worldwide. By the end of fiscal year 2020, direct retail (DTC) business is expected to reach US $16 billion in sales, which was 11 billion 800 million US dollars last year. At present, Nike still has 2/3 of its revenue from its retail partners. Increase the proportion of DTC business, so that Nike can bypass the wholesale channel and other intermediaries, sell products at a higher price, and have more control over the display and discount of products. At the same time, it can reduce dependence on third party channels, especially some precarious department stores. But it does not mean Nike will abandon the third party retail business completely, but will have more stringent screening for retail partners. Foot Locker became the first third party retailer to integrate into Nike App in August this year. Consumers can scan products for inventory and product information, win free products or sell products exclusively. In November, Nike announced that it would stop selling its products on Amazon. "The most important goal for our company is not to let consumers buy products, but to provide consumers with products that meet their expectations. To achieve this goal, we must create a seamless Nike consumer experience. If you are just an indifferent retailer, only selling Nike products without providing additional services, then I think this is of no value to us. What I mean is the value of providing services to our consumers, "said Michael Martin, currently vice president of Nike Greater China and general retail sales manager, in an interview with BoF.

Martin is officially taking the initiative in October of this year. In this new position, he will work to promote the development of Nike Digital China's retail strategy, create a highly integrated and digital priority ecosystem, and establish closer ties with members and consumers. At present, there are more than 260 outlets under the direct retail business in China, with more than 6500 stores employees in the Nike.

The first major event after he took office was the launch of the Chinese version of Nike App. Nike's existing digital direct retail framework has basically completed its laying in Greater China, including Nike App, SNKRS App, Nike.com, "Nike Nike" WeChat Mini program and Nike Tmall flagship store.

When it comes to anticipation of Nike App, Martin said: "Nike's Tmall flagship store performs quite well, and Nike WeChat's small program has a very good momentum of development. While the two platforms have been successful, we can see that neither of these two approaches can further enhance our customer service level. Consumers' consumption behavior and consumption expectation on Tmall are basically limited to shopping. How to motivate and lead consumers to build a better and healthier lifestyle, pure consumption shopping platform can not be achieved; and Nike App can do this. As far as my personal experience is concerned, what attracts users is often those excellent or excellent platforms or products that have been done in a specific way, rather than those products that are comprehensive. So digital ecosystem strategy is very important for Nike.

Martin doesn't think Nike's App is too much at present. It will confuse consumers, but produce different contact contacts with members. Each contact can provide services for athletes at different time points, and find the best combination through these contacts. For example, during runtime training and training, NRC is needed, and users can get support and guidance immediately. Nike App is a one-stop platform for members to provide the most accurate personalized experience and opportunities. Next year, besides Nike Fit, Nike App@Retail will also be launched in China. Consumers will be able to use Nike App to view all the real time inventory of Nike stores around them, and also use Nike App to scan the barcode for details, and then self check out.

Although several sports giants have begun to transform to DTC business, no one has been able to benefit more than Nike. In the second quarter earnings report released by Nike last week in the 2020 fiscal year ended November 30, 2019, the revenue reached US $10 billion 300 million, an increase of 13% over the same period on the basis of exchange rate unchanged, exceeding expectations. In the quarter, Nike's Greater China revenue was US $1 billion 847 million and grew 23% over the same period on the basis of exchange rate unchanged. This is Nike's double-digit growth in China for the 22 consecutive quarter.

At the end of October, Nike unexpectedly announced that the Mark Parker, who served as Nike CEO for more than 13 years, will retire. His replacement will be the John Donahoe of technology origin, and Nike's determination to transform digitally. Donahoe has joined Nike's board in 2014 and is currently chairman and CEO of ServiceNow, a cloud computing company. It has served as chairman and CEO for eBay for seven years. If Parker is proficient in design and inject it into this classic sports brand, Donahoe's solid technological background will lead Nike to go further in the digital road. Parker has predicted that 1/3 of Nike's business will come from digital channels by 2023. Now, it is no doubt a more sensible choice to hand over the position of CEO to Donahoe, which is proficient in deep technology.