Nike in China case study

Nike in China: Embracing digital transformation

Amid slowdown of global markets, the Chinese market is increasingly significant for international sportswear brands like Nike. Then, what is Nike, the largest athletic company, doing to succeed in China’s challenging market. Nike in China owes some of their success to their digital strategy.

“China’s fast growing 5G technology infrastructure, artificial intelligence, machine learning and digital related-business environment, as well as people’s willingness to connect with various products via digital applications, are creating many opportunities, Michael Martin, vice-president of Nike China, said. So, to succeed on the Chinese market Nike has expanded its digital presence in China.

Nike in China: Business is blooming

US-based Nike, Inc., the world’s leading sportswear and apparel company, has had a customer presence in China since 1981. For Nike, China has been a significant growth driver for many years.

Nike China’s revenue surged 21 percent in 2018 to $5.13 billion, which accounts for 14 percent of Nike’s total global sales. In 2019, sales of Greater China increased at a rate more than double the company’s growth. Sales were up 20.9% in 2019, from $5.13 billion to $6.21 billion.

Nike’s revenue in Greater China
[Source: Nike, “Nike’s revenue in Greater China from 2009 to 2019, by segment”]

According to China Daily, a top executive at Nike has stated that Nike will continue to expand operations in the country, which is a growing consumer market for many US companies.

Channel Strategy of Nike in China: Digitalization

Nike’s digital direct retail framework

[Source: daxue consulting, “Nike’s digital direct retail framework in China”]

Nike’s strong sales growth is largely thanks to its digital strategy in China. In 2012, Nike started its online journey in the Middle Kingdom by open its flagship store on Tmall, one of China’s largest e-commerce shopping platforms. Then, Nike launched its official website store, SNKRS App and WeChat Store in next several years. In November 2019, the widely acclaimed Nike App was launched in China, which takes a further step in Nike’s digital transformation. Currently, Nike is focusing on developing its digital platforms, including innovative platforms and digital channels.

DTC strategy of Nike in China

DTC revenue of Nike China
[Source: daxue consulting, “DTC revenue of Nike China”]

Nike has established a Direct-to-Customer (or DTC) retail framework covering online and offline, 7975 offline stores and digital supply chain since 2012. Nike is always placing a heavy emphasis on direct-to-consumer channels through, brand own Apps, Nike WeChat store and its own retail stores and DTC’s revenue share in Greater China increased from 23% in 2014 to 40% in 2019.

Nike’s China brand-own digital channels

Nike's private traffic strategy

[Source: daxue consulting, “Nike’s Brand-owned channels”]

Apart from Nike Tmall flagship store and Nike’s China official website, Nike also sells online through its WeChat mini-program. On the one hand, WeChat has 1 billion monthly active users, providing a huge pool of potential members for Nike. On the other hand, the Nike’s China mini program offers Nike’s consumers a full range of products and services. Leveraging the power of WeChat, Nike is able to connect with their Chinese consumers closely and personally.

In 2019, Nike launched Chinese version of Nike App and built its digital DTC system. Nike drives traffic from website and WeChat to its brand-owned apps, where it can deliver the most personal access to its products, events and exclusive content including coaching tips and personalized services for Chinese members. Since its launch, the app is widely acclaimed due to its multifunction and convenience. At the same time, Nike gradually transfers its sales to brand-owned channels, especially the Nike App, since self-own channels mean higher profits and more loyal members than e-commerce platforms. Such strategy works well and currently, around one third of Nike’s digital revenue comes from its brand-owned Apps. 

“Nike has reported that its revenue for the second quarter of 2019 grew 10 percent. Nike’s international business grew 18 percent, led by Greater China at 23 percent thanks to Nike’s digital advantage in the marketplace. The Nike app and the SNKRS app are outperforming all other channels, driving digital growth of 38 percent for Q2”, Mark Parker, the executive chairman of Nike, Inc. said.

Cooperation with e-commerce platforms

The cooperation with Chinese e-commerce platforms like Tmall has great impact on Nike’s business in China. Opening the Nike flagship store on Tmall not only enables Nike to win international and local competitors in a short time, but also contributes to Nike’s China digital strategy in the long run.

Nike is driving growth through partnership with Tmall. For example, Nike placed as the top apparel-industry seller on Tmall and its flagship store’s transaction volume hit 10 billion yuan in hours on the Singles Day in recent years (2017-2019). Also, thanks to Tmall’s large customer base all around the countries, Nike has seen an impressive increase in new members in China. For example, the number of Nikeplus members increased 3 million in 2019 Single’s Day.

Nike also collaborated with Tmall for data-driven marketing projects. With the partnership with commerce platforms, Nike can access vast consumer behavior and industry trend data from third-party online platforms, which together with data collected from its own channels, to develop its consumer study and offer new products and better services to Chinese consumers. Currently, Nike China is deepening its partnership with Tmall, especially when to comes to innovating New Retail.

New retail strategy of Nike in China: Starting from Nike 001

Nike Shanghai 001 shop

[Source: Nike, “Nike Shanghai 001 shop”]

“Nike’s lead in retail and sports innovation is also redefining the future of sports retailing,” said Heidi O ‘Neill, President of Nike global Nike Direct. “Opening up digital and offline retail services is critical to providing seamless connection to the personalized consumer experience.”

Opened in Oct. 2018, Nike’s first global flagship store (Nike 001) aims to bring digital driven sports retail innovation, design and personalized services to the Chinese market. The launch of Nike 001 can be viewed as a cornerstone of Nike’s new retail and digital strategy in China.

“The ‘House of Innovation’ is set to propel our consumer-direct strategy as it provides the best that Nike brands has to offer through the integration of digital and physical retail,” said Angela Dong, vice-president of Nike Inc. and general manager of Nike China.

Digitalization, personalization, online-and-offline integration, the key elements of “new retail” can be found at each corner of Nike 001. The store is equipped with a mobile-checkout so the customers do not have to wait in line. Through advanced or in-store booking, the Nike Expert Studio of the Nike 001 gives NikePlus members unrivaled access to try on exclusive and personalized products in one-on-one sports expert sessions. As for online and offline experiences, Nike members have access to their customized products and private services in the store through online reservation. Also, from Nike’s WeChat Mini-program, members can get information about Nike’s latest products and exclusive members’ benefits.

Starting from Shanghai 001, Nike is leading the transformation of sport retail in China.

Nike’s Membership Community in China

Brand’s community allows two-way interactions which can draw regular customers closer to then brand and through them the band has access to more precious data about their customers’ behavior and need. Nike’s lifestyle community which evolves around the platform Nike+ is a good example in this context.

Nike online community in China: the troves of consumer data

Nike+ is a modern digital platform that integrates many products and features. The content of Nike+ is created by the members themselves through sharing and interacting on the platform. On the one hand, Nike+ motivates members to actively connect with each other, which further leads to strengthening the connection between the brand and its users. On the other hand, Nike+ online community collects rich data regarding user’s sporting behavior, which enables Nike to perform an evolving consumer study.

Nike has delivered a fully localized version of the Nike+ membership program to reach and engage millions of Chinese members. For example, Nike creates and keeps updating the Nike+ Run Club (NRC) official account on WeChat, in order to build a single place for Chinese runners’ needs. With action points such as run routes and crews provided by NRC WeChat account, new runners are able to run with experienced runners and crews. Such a good running partner is widely acclaimed and popular among Chinese runners: within 2 months of the launch of the account, more than a hundred thousand users had a signed up.

Nike’s Chinese App collects consumer data for important business decisions

Additionally, in Nov. 2019, Nike launched the Chinese version of the Nike App — Nike’s one-stop shop, which aims to provide Chinese members with a personalized, immersive experience, and to inspire every Chinese consumer to live a fit lifestyle.

The Nike+ ecosystem allows Chinese runners to share their experiences, track their running progress and create and meet challenges for themselves and their running networks. It is the information and data uploaded by runners that have become an important basis for Nike’s business decisions such as product design, new product promotion, and online and offline marketing. The collection of users’ running information can help Nike find potential customers and understand them better by analyzing how the fans and consumers behave, what they like about Nike’s footwear and apparel. Thus, Nike is able to conduct data-driven marketing campaigns more accurately by leveraging the troves of consumer data.

Nike offline community in the Middle Kingdom: increase members’ loyalty

Nike has garnered the power of community and learned more about what Chinese users want through holding a series of offline activities. The sports brand has organized a series of ‘social’ sport events (for example the China High School Basketball League, races) annually and also held theme activities regularly through many community clubs such as Nike Runs Club, Nike Training Club. For example, Nike “JUST DO IT SUNDAY!” runs campaigns are hold on a regular basis in different cities around the country, and new elements like technology, books, music, charity, etc. are added to the events in order to make running more interesting and meaningful.

Nike offline market strategy

[Source: Nike, “Nike ‘JUST DO IT SUNDAY’ event”]

Events like races provide consumers with a platform for immersion in the Nike experience, through their willingness to engage personally and interact socially online and offline, Nike and its runners are co-creating an experience together. Therefore, members are motivated to actively connect with each other through taking part in the Nike’s offline events, which further results in more sense of belongings and loyalty of the members to the Nike. Through the offline community events with specific theme matched with Nike’s spirit, Nike is able to establish emotional resonance with its members and in this case, the connection between Nike and its Chinese customers is deepened.

Digital Marketing Strategy of Nike in China

As more consumers start adopting various digital technologies in their daily lives across the country, Nike has developed its new digital marketing strategies in order to continue engaging the Chinese audience.

Female-focused strategy

Data from the Nike+ Running community proves the growth in women’s running around the world especially China. In China, female Nike+ runners are growing at an even faster pace than men. In recent yearsNike has laid more emphasis on Women’s business by launching various community campaigns and providing tailored services targeting women.

Nike marketing towards Chinese women

[Source: Nike, “Nike Women China ‘Better For It’ Brand Campaign”]

How Nike China targets women runners Nike has activated Nike+ Run Club and Nike+ Training Club to provide women runners of all levels with more comprehensive running programming and elite coaching. Nike also launched Nike Women WeChat account, which aims to provide a social platform for Nike’s female customers and advertise women-based products and events. Therefore, with the digital platform base (integrating Nike+ Run Club, Nike+ Training Club, Nike App, Nike and Nike Women WeChat account), Nike is able to realize its woman-based marketing strategy and build a more cohesive female community in China.

Nike markets to women by empowering them

In addition, Nike launched its global “Better for It” campaign meant to spark women’s interest in sports and Nike localized the campaign under the tagline “Just for better (只为更赞)”. For the Chinese campaign content, Nike leveraged female influencers like actress Wang Luodan relating to the frustrations of every day exercise and the love-hate relationship many have with working out. Influencers on WeChat and Weibo helped Nike connect with the target by sharing their training stories and inspiring women to be “Better for It.”

Also, Nike drove traffic and downloads of the N+TC app, that provides a community and personalized workouts with professional trainers for women to complete at home. For offline marketing, Nike’s N+TC Tour officially kicked off in Shanghai on March 8,2015 and has since completed its first-ever Greater China tour, connecting with over 8,000 women across 4 cities. Two-time tennis Grand Slam winner Li Na joined over 1,000 young women for the inaugural Shanghai N+TC Tour celebration and is joining the #betterforit call to action with her own story.

Nike China opens women’s only store

Moreover, Nike opened its second, women’s-only store in Shanghai. In this store, specialized services, weekly programming and tailored events are designed to inspire and enable the community of active women. It is from the store, we can see the key of Nike’s digital marketing strategy: Integrating online communication and offline retail terminals around digital community platforms. For example, Nike Women Shanghai also features a digital community area displaying updated calendars for the Nike+ Run Club, Nike+ Training Club classes and store events. Profiles of Nike coaches and trainers, the latest product and campaign information, Nike+ content and downloads will also be easily accessible.

Nike Women's only store

[Source: Nike, “Nike Women store in Shanghai”]

Brand community on social-media

Nike shows the successful creation of a strong relationship with its online brand community demonstrated by an active customer engagement.

Nike encourages its brand community members to post photos of their workout on social media by offering templates and hashtags. That way, sharing goals, struggles and achievements with either friends or strangers motivates Nike+ users themselves as well as other brand community members. Additionally, community members spread information about Nike and its products and act as stealthy brand ambassadors.

Nike Weibo marketing campaign

[Source: Weibo, “Posts with #NikeTraining hashtag on weibo”]

Particularly on Weibo, one of the top social networking platform in China with 516 million monthly active users, Nikes’ brand community members transfer their experiences in form of individual images and words under a collective hashtag #NikeTraining or #Nike+训练营. Thereby they express their commitment to both, the brand and the brand community. Currently, there are around 1.955 million reads on Weibo #NikeTraining topic. With the help of social media, brand stories created and shared by users influence not only existing community members but also new ones, who might get confirmed in their brand spirits and gain more trust towards the brand. In this case, Nike successfully promote itself among billions of users in Chinese social media platforms, and this further leads to long-lasting relationships between the Chinese customers and the brand. 

Digital strategy is the key to Nike’s success

“The digital economy will bring huge market opportunities for China and the other parts of the world, as technology has profoundly affected consumer behavior and raised the expectations of potential customers.” Iris Yen, vice-president of Nike Direct China said.

Nike believes digitalization as a strategy in China will help it perform better in Chinese market. Focusing on digital platforms, Nike aggregates segmented users to create different communities and provide diverse online services and offline experiences. Also, for brand marketing and promotion, Nike integrates the resources such as retail terminals, digital platforms, and offline experience activities, etc. With the digital strategy in China, Nike is creating its brand ecosystem, which covers consumer insight, products innovation, customer experiences and value creation. The pattern is expected to constantly drive growth for Nike in the Middle Kingdom and help it lead the future of retail.

Let China Paradigm have a positive impact on your business!

Listen to China Paradigm on iTunes

China Paradigm is the #1 China business podcast

marketing research china