Nike established a pilot deal with Amazon to offer a limited selection of the Nike product range through its Vendor portal. This gives consumers the option to buy Nike goods straight from Amazon and benefit from Prime’s free 2-day shipping, Amazon’s customer service and accessibility.
A major reason for the deal with Amazon specifically was the fear that Nike’s brand image was endangered by third-party retailers selling through the marketplace platform, and additionally by the ever-present challenge of counterfeit items making their way into the supply chain.
By signing up to a pilot with Amazon’s Vendor service and wholesaling a limited selection of inventory to Amazon, Nike was able to negotiate stricter controls on who is permitted to list Nike brand items.
It also improves the bottom line. Margins in their direct-to-consumer business were estimated by Merriman analysts to be 62%, compared to 38% in the wholesale business. Also included in this line of thinking is the shakiness of specific forms of offline retailers. Undifferentiated experiences and offerings no longer appeal to consumers, and as department stores and other retailers are becoming less valuable as sales drivers, major brands are rethinking their reliance on wholesaling to such businesses.
Before Phil Knight started Nike, he was importing Onitsuka Tigers sneakers from Japan and selling them to collegiate sprinters. He was a runner, and he knew from experience that they were a much better running shoe than what was available in the US at the time.
As time went on, Nike started selling shoes meant for all sorts of different contexts — basketball, football, skateboarding, golf, wrestling, etc. By contrast, Allbirds, which was founded in 2014, started off selling one type of shoe (and has since added one slipper).
That’s by design, as Allbirds co-founder Tim Brown explains:
“The insight that kicked this whole journey off was, ‘Could you make a very, very simple sneaker that wasn’t adorned with branding?’ It felt like it was very, very hard to find.”
Nike began by reselling a single type of sneaker to a specific market, but it gradually started broadening its line as well as iterating on each one with new features.
Allbirds built its brand around the design of the shoe itself and its non-branding. The centrepiece of the product is the shape, look, and feel of the shoe. This ethos helped the company raise its $17.5 million Series B in September 2017. Now the company is on track to do more than $50M in revenue, according to Campfire Capital.
3. Warby Parker
DTC originals like Warby Parker can teach a masters course in this as they consistently develop stronger, one-to-one relationships with consumers that make up loyal, engaged audiences.
Warby Parker’s success traces back to a digital engagement strategy designed to take advantage of their millennial audience’s digital sharing habits. Warby encourages customers to post photos of themselves wearing their trial frames on social media to get style advice from their friend, which they then regularly like, share and comment on. Before they knew it, Warby Parker had enlisted a veritable army of brand advocates lining up to share content on their behalf and not as part of some half-baked hashtag campaign.
Warby was early to embrace UGC (user-generated content) and has consistently encouraged its consumers to tell Warby’s story themselves, and in turn, help build the brand as well as its owned audience and reach. Warby takes consumer-generated social content, turns it into powerful brand advocacy by reposting it to owned social channels and ultimately achieves greater engagement and influence than brand or influencer content could.
Smart brands are taking that data and using it to develop essential one-to-one relationships.
Take M. Gemi, the direct-to-consumer Italian footwear brand, for example. The brand relies on owned customer data for decisions made across the company. The company tracks what customers try on, purchase and return (both in-store and online) along with customer feedback received by way of reviews left on their own website to better cater to customer needs. Understanding the path to purchase (and repeat purchase) has never been more important.
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