Nike sees online eclipsing offline sales
The standard defense to the “Retail Apocalypse” is research showing that online sales still make up less than 10 percent of all retail sales. But Nike just joined a growing crop of brands that now expects over half of its sales to eventually originate online.
On its second-quarter conference call last week, Andy Campion, Nike’s CFO, noted that at its Investor Day last October, Nike predicted that online revenue — both from its own and wholesale partner websites — would generate about 30 percent of its sales by 2023, up from 15 percent currently.
Mr. Campion added that Nike is “already thinking bigger” and eventually expects online sales to surpass those from stores.
“Our industry has lagged many other industries in terms of digital penetration,” said Mr. Campion. “Many consumer products industries are already at 50 percent digital penetration and projected to be well over 80 percent digital by 2030. We all know that disruptive new consumer-centric digital experiences have catalyzed the shift to digital in those industries.”
According to Internet Retailer data, the books/music/video category had the highest e-commerce penetration in 2017 at 70.1 percent of sales online, followed close behind by office supplies at 65.9 percent. Computers/electronics is a far third at 27.6 percent.
Depending on the source, between 15 to 25 percent of apparel and footwear is now bought online in the U.S. Among retailers in that space indexing higher are Nordstrom, with 30 percent of its sales coming online, and Urban Outfitters at 40 percent.
Both Nordstrom and Urban Outfitters have invested aggressively to boost their online reach as has Nike. Nike has added a variety of notifications to its mobile apps to enable access to launch product; deepened partnerships with Tmall, Zalando and Flipkart overseas as well as Amazon in the U.S.; opened a number of stores driven by mobile engagement; and recently added shopping through Instagram, Google Assistant and in-store mobile pay.
Said Campion, “As we increasingly innovate and lead with digital, we are intentionally disrupting our industry. We see this as positive disruption that widens the aperture for growth long term.”
- Q2FY19 NIKE, Inc. Transcript – Nike
- NIKE Investor Day 2017 Transcript – Nike
- 30.2 percent of the computers/electronics market is now online – Internet Retailer
- NPD The report found that in 2017, 76 percent of apparel sales came from in-store purchases while 21 percent came from online purchases. – Apparel News
DISCUSSION QUESTIONS: Does it make sense for a category such as Nike’s to eventually see more online than offline sales? What characteristics do the categories share that significantly over-index in online sales?