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Nike Online Business Booming During COVID-19

S
port retailer, Nike, is proving during the pandemic that its investments in digital are paying off, as its consumers are turning to its website and app in record numbers.

Over the past few years, Nike have been diverting its attention away from department stores and other wholesale outlets, instead turning its attention to opening its own smaller neighbourhood stores, called “Nike Live” to serve as pick-up hubs for online orders.

Nike’s digital sales soared 82% during the fiscal first quarter, despite cutting staff due to the pandemic.

Before COVID-19 hit, Nike had set a goal of having its e-commerce sales represent 30% of total revenue by 2023, however it has already exceeded that; Nike is now on track to break 50% by that time.

Nike chief executive officer, John Donahoe, said: “the accelerated consumer shift toward digital is here to stay.”

“Digital is fuelling how we create the future of retail.

“Nike’s digital transformation strategy is not easily replicated,” he said.

As more sales move online and out of wholesale channels, Nike is finding a way to make those digital sales more profitable, a feat that many in retail grapple with.

Expenses for shipping and handling returns tend to weigh on total sales, driving profits lower.

Nike also said its women’s apparel sales were up almost 200% during the latest quarter.

Nike chief financial officer, Matt Friend, expressed that Nike typically earns roughly 10 more points toward its gross margins on digital revenue versus wholesale revenue, finding customers on its website are more loyal, allowing Nike to lower customer acquisition costs and increase its return on ad spending.

“While we will need to continue investments to expand digital fulfilment capacity, we can improve operational efficiency through predictive modelling tools, data driven member personalisation and inventory staging,” Friend said.