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Learning from Nike's Online Business Strategy Part 1

By Edited Jul 21, 2016 0 0

Learning from Nike's Online Business Strategy


Click here for part 2.


Nike has been able to utilize the web in two ways, strengthening brand identity and as a sales outlet. Its website is a testament on how well they know their customer. Its design and content provide the customers more reason to engage with the brand. Past marketing efforts have been successful in keeping the interest of the consumers and reigniting the interest on markets that are losing their grip on Nike’s brand essence.

However, the internet is making the world smaller, flatter, and more connected. More and more people are going on the internet and are sharing more of themselves and more of what’s going on in their mind. Nike must learn how to use all these pieces of information to create products and develop services that is relevant to its consumers.

The future of the internet is personalization, customization and relevance. Nike’s survival relies on how well they can make their brand personal and relevant to every customer.

E-Business: It’s Geekier Than You Think

Using Porter’s Five Forces, Nike’s biggest threat is the entry of substitute products or services. The internet is leveling the playing field among all businesses because virtually anyone who can construct a website can sell their products.

Its rivals like Reebok and Adidas have developed their own market and has an existing loyal base and Nike has consciously avoided competing with other online retailers that are selling their product. In fact, they chose to sell their products on their site at full retails price (McIntyre & Perlman, 2000) because they didn’t want to cannibalize the market and destroy long standing relationship with smaller retailers. They also have long relationships with their manufacturers and suppliers. A business decision they have made a long time ago.

Their biggest threats are smaller, newer, and local brands that are entering the market by selling their products online and building a loyal market base through social media.

Nike must learn how to uses the internet to develop a more personal relationship with its customers.

The move of Nike toward e-commerce was a slow and calculated one. Back in the 90s, when everyone was unsure of the effects of selling products online, Nike decided to forget partnerships with its largest retailers such as Foot Locker and Copeland Sports. In 1996, they launched nike.com but used the web only as a brand building platform. It wasn’t until 1999 that they opened their online store (see Figure 2).

Now, Nike’s e-commerce site is one of the most sophisticated online. Customers may search according to sports, gender, body movement, and price. In fact, Nike’s web sales and direct-to-customer revenue increased by 25 percent and 12.5 percent which amounts to about $260 online revenue compared to the $218 they recorded last year (Brohan, 2011).

Nike’s online store is making shopping experience easier and faster and the future will even be brighter if Nike learns how to use emerging technologies.


One of the major concerns on the Nike website is the use of Flash. This is making shopping experience slower for many customers from countries that don’t have the same internet speed capability as first world countries such as the U.S. and U.K. The HTML5 will improve the overall experience. Put simply, HTML5 is a set of additional functionalities to existing HTML programs that will enable websites to load images, videos, and other e-commerce capabilities faster. The HTML5 programs breaks down the components of a site that allows for faster loading and process because each section operates independent of each other. It also compresses big files to smaller bits (Nike, 2010).

HTML5 will enhance the overall customer experience of those visiting the Nike website. As in their adaption of online selling, Nike seems cautious in adapting the technology. Nike.com still runs on Java and Flash but it launched a separate website, http://www.nikebetterworld.com/, that uses HTML5.

Autonomic Communications and Cognitive Networks

The integration of PC experience and mobile experience presents Nike with potential for business growth. Autonomic Communication and Cognitive Networks are systems and processes that will allow for a more intelligent business process through different technologies. As Nike has been strong on digital presence through computers, it has not opened its business through mobile phones. The autonomic communications and cognitive networks will make this possible as it will allow Nike to use a unified system that will be useable across different platforms and devices (Lewis et al, 2006).

Moreover, it will usher in a paradigm shift in the digital experience as it will allow for a more personalized experience. The program will be able to organize information and manage contents in accordance to the interest of the user. It is a very context-aware network. It understands the user which allows it to throw contents, design the system on the fly to a way that will suit the user better.

E-Marketing : Customize It

Nike spends $678 million on advertising last year, just a portion of their almost $2 billion spend on total marketing. However, as bit as this number may seem, this is actually a 55 percent decrease from what they spend ten years ago on marketing and advertising (Story, 2007). Nike credits this to their Nike+ online marketing campaign. Nike+ is a small sensor that may be attached to one’s running shoes. The sensor tracks the progress of the runner. This information may be uploaded to Nike.com which, in turn, will serve as one’s online health and fitness diary. Nike will then be able to give the customer free advice and tips on how to improve their performance (see figure 4).

This has been the direction of Nike marketing, personalization and relevance and it will continue to be the future of Nike. It is all about mining data and the capacity to interpret the data to develop products, services and systems that is customized to the consumer (Lohr, 2011).

Customers transacting online provide the website owner with personal and behavioral data through its website, social networking sites, and even store visits (Andersen & Feamster, 2006). Essentially, Nike has the power to know specifically who are searching for their brand, who are mentioning their brand or products, what they are saying, how long they stay on their sites, who they affect as they post these messages, and other details that could measure brand awareness, brand perception and customer behavior on their brand with details that will allow them to create marketing programs that are more effective for both sales and brand building .

Click here for part 2.


Related Contents:

1) Leadership Styles of Young Internet Giants and What We Can Learn From
2) How To Gain Credibility For Your Online Store
3) Where is IP Law Now?
4) New Website Ideas



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