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Why Nike is betting on an Amazon-free future

Last month, Nike announced it would be pulling all of its products from Amazon in a bid to refocus its distribution strategy and “elevate consumer experiences through more direct, personal relationships”. 

Leaving one of the world’s biggest e-commerce platforms after a two-year pilot is a bold move. So what does the divorce mean for the sportswear giant?

In leaving Amazon, the company is joining a roster of others, from IKEA to Birkenstock, who have tried and failed to make it work on the platform. Amazon has developed a poor reputation when it comes to how it treats its sellers – and it’s doing very little to change it. But as retailers depart the platform to deliver a more personal customer experience – while keeping a tight leash on their product offerings – the e-commerce giant needs to start thinking damage control.

Selling on Amazon comes with an ever-changing set of challenges. While it has been busy expanding its fashion offering, the website is still designed for the convenience shopper, and not the one looking to be wowed or to discover a new favorite brand. Search ranking results can be confusing – for example, searching for sports shoes will not necessarily bring up the Nike sneakers immediately at the top of the page, even though it is a market leader. It is also often hard to find out whether you are buying the item directly from the brand, or a third-party seller.

Then there is the big elephant in the room: counterfeiting. Recently, The Wall Street Journal wrote that the website “increasingly resembles an unruly online flea market.” For the US site, it is now attracting Chinese sellers to post their goods directly to consumers, rather than through North American middlemen. This means a proliferation of sold goods that are deemed either counterfeit, or banned or unsafe for consumption, which are virtually impossible to keep track of.

But Nike’s exit is coming from a privileged position. It has built a community outside the retailer’s website, and will exist just fine without it. For brands of its caliber, this is a good chance to take a leaf out of the direct-to-consumer rulebook and create a distribution approach that not only gives it more say, but enables more direct conversations. 

Nike is now working on strengthening its relationship with other smaller retailers. At Foot Locker’s new NYC flagship, for example, NikePlus app users can reserve shoes in advance and pick them up from dedicated lockers.

On a direct-to-consumer level, it is launching services like the Nike Adventure Club, a sneaker subscription for kids aged 2-10 where for a monthly fee, they receive a certain number of sneakers a year. The brand is targeting time-strapped parents who live in areas that perhaps don’t have a shoe store nearby. Instead of restoring to the convenience of Amazon when their child has moved up a shoe size, Nike is hoping these parents will choose a box service with a trusted brand instead.

This is also a chance for the brand to test out the subscription model, and potentially apply it to other consumer groups in the future, says David Cobban, general manager of Nike Adventure Club.  “We’re starting to think about what other athletes have problems that could be very easily solved by a subscription,” he said. “This is the beginning of something pretty exciting for Nike.”

For all of the sales volume that Nike will be losing by exiting Amazon, the sports brand is hard at work building a tight strategy where convenience meets personalization, which will likely pay off in the near future. 

This is perhaps where Amazon continues to falter – both in the eyes of its vendors and consumers. Next day delivery and low prices come at the price of the user experience, which still leaves a lot to be desired when it comes to discoverability and bringing up (relevant) recommendations. 

Consumers may currently be fully onboard with the endless hamster wheel of speed and low value, but only time will tell if that will be enough to fulfill their more nuanced needs, such as creating emotional connections. Nike is betting on the latter.

How are you thinking about experience? The Current Global is a transformation consultancy driving growth within fashion, luxury and retail. Our mission is to solve challenges and facilitate change. We are thinkers and builders delivering innovative solutions and experiences. Each of the rules referenced above is matched by one of our products and services. Interested in how? Get in touch to learn more.

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e-commerce Editor's pick social media technology

Foot Locker unveils new Air Jordans in AR-enabled Snapchat unboxing campaign

The new Nike Air Jordan Gatorade AJ1's
The new Nike Air Jordan Gatorade AJ1’s

Foot Locker turned to Snapchat for an augmented reality unboxing experience this festive season.

Unveiling the new Gatorade AJ1 sneakers from Nike’s Air Jordan, the initiative gave thousands of fans an early 3D view of the design before they launched on December 26.

Users were able to tap on the creative work developed by BBDO New York to change the colour of the sneakers popping out of their Christmas wrapping. The Snapchat Lens also allowed them to explore the product by looking up close, around and inside them, as well as then “take them for a walk” across the space they were otherwise stood in.

For those feeling the most curious, they could then explore their surroundings for hidden AR extras like a basketball hoop and a vending machine releasing bottles of Gatorade.


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2015: a designer meets digital year in review

AppleWatch_Hermes

It’s been another big year for the fashion industry and its integration with technology: from the release of the (Hermès) Apple Watch, to Natalie Massenet’s departure from Net-a-Porter as it merged with Yoox, not to mention the ongoing and evolving discussions around fashion weeks becoming consumer-facing events.

There’s also been a broadening discussion on the role smart fabrics play in the wearables space, virtual reality is increasingly on our radar for its relevance to retail, and we’re obsessed with how the industry is slowly adapting to a new aesthetic thanks to apps like Snapchat.

Here then, are 10 of the posts you loved the most on Fashion & Mash this year. It’s a collection nodding to many of the aforementioned subjects we continue to track, as well as the likes of personalisation, data, instant messaging, emojis and more. A veritable feast of trends we’re watching across the digital landscape as we head into the New Year…

Thank you for reading and see you in 2016. Wishing you a very happy holidays from everyone here at the (growing!) Fashion & Mash team.

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Footlocker jumps into emoji space with sneaker icons

footlocker_shoemoji

Emojis are increasingly infiltrating daily life thanks to growing integration with mobile messaging services, but more recently as a product of numerous branded launches in the space too.

Burger King, Coca-Cola and Ikea have all experimented with their own emojis or full emoji keyboards, now we’re seeing Footlocker the latest to release its own line fit for smartphone usage.

The sports retailer has introduced 80 iconic sneaker replicas ready for use as part of its new app for iOS and Android. The “Shoemoji” library includes styles from brands including Nike, Converse, adidas, Under Armour and more, and will regularly be updated with new products as they launch.

“Just as smartphone users communicate with each other using various emojis, customers can now share their love of sneakers in a new, visual way and be the first to show off some of their favorite styles with new Shoemojis,” reads the write-up.

BBDO New York, the agency behind the concept, added: “Communicating with your fellow sneakerheads will never be the same.”

It’s a smart move, today there are 41.5bn messages and 6bn emoticons or stickers sent worldwide every day on mobile messaging apps, according to Swyft Media. For Footlocker, the launch is a nice PR story, but also a tool by which to generate downloads of its new app, not to mention a great engagement opportunity tied to future product releases.