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How Nike leads the e-commerce market to maturity

Growth within the e-commerce market has been staggering. In 2022, global e-commerce sales are forecast to grow by 12.2%, reaching $5.542 trillion. Last year, expansion was particularly rapid, with the COVID-19 pandemic pushing growth rates up to 16.3%. But this recent growth has roots that pre-date the pandemic – which can mask a longer-term trajectory. In fact, worldwide e-commerce sales are expected to grow by 50% over the next four years, reaching approximately $7.4 trillion by 2025.

A fixation on overall growth can also hide a more complex picture. Namely, that not all e-commerce channels are growing at the same rate. Increasingly, consumers are making their purchases using their smartphones. So much so, that the share of mobile e-commerce sales as a proportion of total e-commerce sales increased from 52.4% in 2016 to 72.9% in 2021. More and more sales are taking place via smartphones, making it imperative that brands have a strong mobile presence.

Looking long-term, mobile e-commerce is set to continue growing in importance. Mobile devices are starting and ending more consumer journeys, the online share of mobile traffic expands every year, and mobile sales have made up a consistently higher proportion of e-commerce sales over a prolonged period. Among 18-24-year-olds, 68% shop using their mobile one to four times a week. With younger generations, in particular, more likely to make purchases using their smartphone, the future of mobile e-commerce looks bright.

Although smaller players are often thought of as being more nimble, agile, and innovative than their larger peers, one global, multinational brand is showing that this isn’t necessarily the case. For years, Nike has led the way in terms of mobile commerce, quickly realizing the impact that smartphones can have at every stage of the customer journey. Here’s how Nike created a mobile-first e-commerce strategy and what other retailers can learn from it.

The need to adapt

Initially, major brands that had become accustomed to generating most of their revenue through in-store sales had to gain extensive knowledge of e-commerce. Then, mobile shopping came along and disrupted things further. In 2017, for example, Nike relied on a network of approximately 30,000 retailers to distribute its products. As the company has focused more on digital channels, this number has decreased significantly. 

A real shift in direction came as Nike began to notice that the traditional way of selling to customers through bricks-and-mortar stores was slow to adapt to the increasing maturity of the mobile app market. As a result, the company instigated a strategic change, refocusing its efforts on e-commerce and direct-to-consumer (D2C) sales.

Much of Nike’s commitment to increasing digital sales centers on its mobile apps. Research suggests this was a worthwhile move, with mobile users spending 90% of their mobile time using apps versus just 10% browsing the rest of the internet. So instead of launching a mobile-optimized webstore, Nike focused on creating apps that truly provided added value to customers. 

One of these added-value features includes a loyalty program where customers can use the Nike app to view rewards, receive messages and browse member-only collections. By offering exclusive products in-app, Nike boosts download figures, encourages customer retention, and reduces costs because Nike has less need to spend money on advertisements redirecting consumers to their direct sales channels. 

An e-commerce app also provides a way of ensuring customers are not stolen by competitors. When browsing products online, customers may purchase one of your brand’s items – but they could just as easily select a product sold by another company. With a D2C app, the risk of a consumer purchasing footwear or clothing from another brand is significantly reduced. The customer journey is more controlled than with the free-for-all of the world wide web.

Nike was quick to recognize the growing maturity of the app market. This didn’t just include the rising number of smartphone users, but also the evolution of mobile operating systems, the development of payment ecosystems, and changing consumer behaviors. The mobile app market is projected to grow in value from $106.27 billion in 2018 to $407.31 billion by 2026. This will be driven by sales, of course, but also how online purchases intersect with innovative strategies to boost customer engagement and retention, like those pioneered by Nike.  

In-store but on the phone

Another strength of Nike’s mobile strategy is the way that its apps become more than just a purely digital sales channel. Nike has successfully combined its mobile apps with its physical stores to provide an experiential shopping experience. For example, the app has a “Scan to Try” feature, which allows consumers to scan a barcode to learn more about a product and its availability. Shoppers can even use the app to request sales associates bring products to certain store locations, adding another layer of personalization. 

Nike has also realized that one app is not enough to secure its position as a mobile commerce leader. Instead, the company has a SNKRS application offering limited-edition shoes and augmented reality features. Across the 12 months leading up to October 2021, the global number of SNKRS users increased by 57% and generated in-app demand of $1.69 billion. Last year, Nike updated its SNKRS platform to ensure it offered an even more personalized service. The app market continues to progress towards maturity and Nike is keeping pace each step of the way. 

Nike has had success with its mobile strategy in part because the company has not been afraid to do things differently. Its apps are not simply mobile versions of its existing website, but bespoke offerings. The company has invested time and money into its app ecosystem, utilizing data analytics and machine learning to give customers a personalized experience, optimize revenue, and provide a truly omnichannel offering.

Just Do It

As befits a brand with the slogan, “Just Do It,” Nike has never shied away from its mobile e-commerce ambitions. The company has been brave, introducing features that may typically have been seen as off-putting to consumers like the need to enter personal credentials to use the app. But while this has added an extra hurdle within the customer journey, it has allowed Nike to gain access to valuable consumer data that simply wouldn’t have been available if shoppers bought from third parties. 

Nike has built a mobile-first e-commerce community using its apps – one that is vindicating the company’s strategy. Already, e-commerce represents21% of Nike’s total D2C revenue, with 40% of that coming from its mobile apps. Within a few years, Nike expects e-commerce to grow beyond 50% of its total sales.

Of course, Nike isn’t the only major brand that is pursuing mobile e-commerce success. Other companies including Walmart, IKEA, and Starbucks have shown that mobile apps, when designed and deployed innovatively, can drive much more revenue than simply having an online store (even a mobile-optimized one).

What are you waiting for?

So what are you waiting for? At JMango360, we can help you build a premium e-commerce app in just days. Don’t just look at the growth of mobile e-commerce and the evolving app market, wondering how your brand can reap the benefits. Be more like Nike. Just Do It.

Written by

Michel

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