Learning from Nike's Online Business Strategy


Click here for Part 1.

This is part 2 of Learning from Nike's Online Business Strategy.

This is a study on how Nike carefully planned and executed their entry to the online world. Unlike popular belief, Nike was one of the biggest companies to enter the online businesses more recent compared ot the others.

Read below and you will understand how they carefully but strategically used trends, future innovation, and their own strength to gain traction.

Webdesign: It’s Not Just Computers

There are two major trends in contemporary web design that greatly affect company sites and consumer experience: consumer education on technology and the development of technology. As customers start experiencing fast internet connection, people expected for websites to work just as fast. In turn, customer expectations went up and slowly, language was replaced with visual symbols (Thorlacius, 2007). People tended to expect photos and forego reading (Wauters, 2010; Opps, 2010).

This is the one thing that Nike applies well. Their website is heavy on images. Nike uses images to tell stories. They allow for customer and product interaction by putting multi-view functionalities, customer initiated alterations, and on the fly customization.

Future design revisions will build on user experience rather than aesthetics. Nike already has a visual identity, they already have a typeface and those things dictate the aesthetics of their designs. The future will be about how their site may be adjusted to make customer’s shopping experience faster and more convenient, to make the brand and customer relationship stronger, and to make every customer feel secure when they give their personal information to Nike.

Nike should also look into being able to extend their brand to more people to more countries and across all platforms. Smart phone’s growth has helped in the increase of mobile internet use popularity. By 2014, mobile internet will overtake desktop internet use (Savits, 2011).

Business to Business

Aside from directly selling their products, Nike has distributors which allows for their products to be available to more people and in more countries and areas. They also deal with manufacturers and raw materials suppliers.

The internet and its development will play an important part in the future of Nike’s B2B negotiation. The internet allows Nike to know of and reach more suppliers that may have otherwise been unable to reach Nike because of geographical limitations. Many manufacturers in Asia are developing their capabilities to strengthen their capacity to manufacture products for companies like Nike. India, for example, is institutionalizing government policies that would allow for lower manufacturing cost. By setting up websites and online marketing programs, Nike is able to reach out to these manufacturers.

It is also easier for Nike to look for distributors in areas where the demand is too small for Nike to build its capability. The internet is an extra arm and an extra leg for Nike’s B2B platform.

Social Media

There is a connotation that Social Media is limited to Social Networking Sites such as Facebook, Twitter and Youtube. In fact, Social media is any medium that allows for the exchange or pass on of information and media materials (Joel, 2009). That effectively includes any website that is viewable. Corporate sites, blogs, and online stores are all social media outlets.

As social media expands, the socialization that will really matter will shrink. Social media will be about localization. It will be about where ones friends are, where they are going, what they are doing at this very moment and where they will be later. Technology will be used to strengthen the connection between people that are already connected (Wilms, 2011).

Nike will be able to use this development for its advantage because it offers them one thing that every business needs, relevant customer information. The ability to know customers in such an intimate level will also allow Nike to develop products and services that suits the habits and provide for the needs of the customers. It is all about customization and the end of mass marketing.

As more and more organizations are becoming more interested in developing algorithms that will intelligently analyze conversations, mentions and sharing to get more intimate insights on consumer interest, consumer behavior and general market trends (Solis, 2011). One of Nike’s biggest advantages is its internal capacity to develop their own technology that will allow them do this now instead of waiting for other companies to develop the technology.

There are more than 800 million people on facebook (facebook, 2011), more than 200 million on twitter (Chiang, 2011), and one in every four Americans watches videos on youtube everyday (youtube, 2011). People are interacting, conversing and 90 percent of them talk about brands, products and services (Chiang, 2011). They voluntarily share information, they demand information, and some of them silently investigate about brands and products. Nike will develop the capacity to listen to these conversations and process it in a way that will lead to sales.

Conclusions and Recommendations

The continuous development of internet technologies is exciting. It offers businesses, especially the ones that can afford to play with it, an incredible advantage. They can develop new programs to entice customers to spend more time on their site and with their brand. They can develop programs that will measure the effectiveness of their efforts. They can produce more contents, launch more promos, and come up with more advertising materials.

However, the future of the internet is not about what a company can do but what a company can do that is relevant to the customer. Nike is lucky to have a strong brand identity and a strong customer relationship but internet levels the playing field for all brands. This is the same technology that can give smaller competitors the opportunity to take a chunk of Nike’s customer base with the right strategy. Nike should learn that the internet has the data they need to avoid that from happening and they need to use that to keep their relevance.

Click here for part 1.

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