At Recode’s Code Commerce event in New York City, Heidi O’Neill, Nike’s president of direct-to-consumer business, discussed Nike’s aggressive moves into direct-to-consumer, its decision to sell directly to Amazon and its overall digital transformation.
Much of her discussion was spent on Nike’s reorganization announced in June that has earned the most attention for Nike’s move to cut its global workforce by 2 percent in a streamlining move.
O’Neill said the major benefit of the reorganization will be merging its digital product organization – including digital product design, engineering and creation – with its retail commercial organization – charged with planning consumer experiences across Nike product – “in a really kind of intimate way.”
She noted that “consumers don’t live in silos so nor should we” in its digital and physical approaches. She added, “The heart of the thinking was we’ve got to deliver holistic consumer experiences.”
A secondary reason, according to O’Neill, was to make digital transformation more of a companywide effort. O’Neill is now partnering closer with Adam Sussman, Nike’s VP and chief digital officer, to guide Nike’s direct push.
As far as Nike’s overall plans to double direct connections with consumers also announced in June 2017, O’Neill said it was less a reaction to weakness at brick & mortar retail but Nike’s digital commerce being “really on fire” and digital sales with its retail partners being “really strong and we see tons of room for acceleration.”
She adds, “I’d like to think, to use a sports analogy, that were on the offensive but it definitely sets us up to drive a really strong mono brand and multi brand offense where we drive elevated consumer experiences from a Nike perspective.”
She particularly cited the success Nike is having through its member programs as well as its apps, including Run Club, Training Club and SNKRS apps.
Overall, Nike members, who have signed up for exclusive deals, early reserves and other benefits, are currently worth three times the value of an anonymous consumers. At the most personalized level that tend to occur with those signed on through its SNKRS program, Nike is starting to see a five-times annual value.
Particularly success has been SNKRS Stash, which unlocks access to exclusive Nike and Jordan product using mobile geo-locations; and Shock Drop, which offer surprise alerts for coveted sneakers that allow consumers to buy instantly through the app or at their nearest Nike or wholesale store.
Asked about the impact on its direct and DTC pushes on its traditional wholesale partners, O’Neill said there’s “a lot credibility and trust honestly” in its relationships with retailers. They understand that Nike is “going to set the market” in bringing “amazing consumer experiences” to retail and then leverage those learnings back to its wholesale partners.
“We’re having those exact conversations right now and building great consumer experiences,” said O’Neill. “Every wholesaler has a different consumer, a different value proposition and need to differentiate in the marketplace. So the solution isn’t the same for every retailer but that’s exactly the way we’re working with them.”
Regarding Amazon, O’Neill described the move to sell direct earlier this year as a “consumer-centric” decision based largely on the popularity of the website.
“What we’re trying to do is keep the consumer at the center of everything we do so we’re watching the marketplace, we’re watching consumer behaviors, where they’re shopping, and obviously Amazon is a strong proposition.”
Through the partnership, Nike has been able to reduce unauthorized re-sellers while working to improve the positioning and imagery of Nike on the website.
“We’ve elevated the Amazon experience,” said O’Neill. “That is both through the lens of the re-seller as well as how they experience the Nike brand.”
Nike remains in the middle of its first pilot with the e-commerce giant and is learning about “what works for their consumers, what works for that consumer journey and that shopping experience,” as well as how to work with Amazon.
O’Neill adds, ”We want to be part of consumers’ lives and there’s some really incredible consumer journeys that Amazon is doing a great job with.”
Asked about acquisitions, O’Neill cited the success of last year’s acquisition of Virgin Mega, which had been a 12-person startup inside Richard Branson’s Virgin Group. The group, now based in New York City, has already developed seasons two, three and four of the Sneaker Hunt section of its SNKRS App as well as working on some other gamification projects. She adds, “They’re also teaching us as an organization and helping us learn and create other experiences.”
The full interview an be SEEN HERE.
Photo courtesy Recode
