After the recent decline in sales of Nike, the company decided to change its strategy by focussing its distribution on direct-to-consumer channels (Karwatka, 2018). This has proven to be a successful strategy as digital commerce sales went up 35% for 2019 fiscal year (Nike News, 2019). By establishing a direct relationship with the customers, and building emotional consumer experiences, Nike creates a loyal customer base that drives up the sales.
At the moment, Nike owns several distribution channels: physical stores, its website, and apps – Nike+ and SNKRS. SNKRS app represents a digital platform centered around sneakers community. It is not just another digital store, but a platform that offers insider access and content about the latest sneakers. According to Ron Faris, CEO of s23nyc, the studio behind the SNKRS app, the digital community consists of 20% of Hyperbeasts, people that are extremely knowledgeable and fanatical about the community, and 80% of Styleseekers who are interested to learn more (The Next Web, 2018). And the key to driving a digital community and creating a powerful social network is to make those that have the most knowledge to share with those who have the least.
In the case of SNKRS, it offers consumers a platform to share their enthusiasm for Nike shoes, and creates immersive experiences for a chance to access limited edition styles. It creates a digital community of people that are crazy about sneakers, and uses this community to share and drive sales and engagement better than any advertising campaign as it allows to scale up without much investment.
In order to energize such a community and create virality, the app is based upon three components: product, story and experience (The Next Web, 2018). By providing its key product, high-end shoes that are surrounded by a folklore story through a special and unique experience, it can make customers very emotional, enticing them to share and grow the community by means of which the product sells through.
For sneaker community, the experience of buying sneakers as is important as sneakers themselves (The Next Web, 2018). Thus, another component of SNKRS’ strategy is gamification of the purchasing process. The company uses technology, in particular augmented reality, to revolutionize the buying experience by creating a sense of competitiveness fuelled by the adrenaline. For example, SNKRS Stash is campaign that allows users to purchase limited edition sneakers only from a certain location in their city (Karwatka, 2019). With this feature, online shopping can reach another level as virtually everyone and everything can become a Nike store: a poster in a metro, a menu in a restaurant or a concert of a celebrity.
Thus, Nike is redefining online shopping by engaging with customers directly and creating emotional experiences through the use of technology.
References:
Karwatka, T. (2018). Nike just shaped the future of retail with mobile-first commerce. [online] Divante.com. Available at: https://divante.com/blog/nike-just-shaped-future-retail-mobile-first-commerce/ [Accessed 17 Oct. 2019].
Nike News. (2019). NIKE, Inc. Reports Fiscal 2019 Fourth Quarter and Full Year Results. [online] Available at: https://news.nike.com/news/nike-inc-reports-fiscal-2019-fourth-quarter-and-full-year-results [Accessed 17 Oct. 2019].
The Next Web. (2018). Ron Faris (Nike) on The future of retail and digital community | TNW Conference 2018. [online] Available at: https://www.youtube.com/watch?v=JXLwzm2292U [Accessed 17 Oct. 2019]
Hey, a very interesting post you got going here! I was just wondering whether you know more about sneaker reselling. Since many of the SNKRS app users use the app whenever exclusive sneakers drop. They mostly try to win these shoes, so that they can resell them for high profits. However, many of these people are using bots that enter these lotteries thousands of times automatically and then they win multiple pairs of exclusive sneakers just to resell them for very high prices. Just a few days ago fans of Travis Scott sent complaint emails to his management that his exclusive sneakers sell out too fast, and are being resold for extremely high prices. Would you think that the SNKRS app is struggling with negative network externalities, since the number of users rise, so the number of bots increase as well, therefore many users will be discouraged to enter such lotteries for exclusive sneakers.