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What Were Nike’s Digital and Other Growth Enablers in 2015?

Phalguni Soni

Nike in 2015: An Earnings Smash, a Widening Moat, and Record Highs

(Continued from Prior Part)

Nike is growing in the e-commerce space

Nike (NKE) reported e-commerce sales of over $1 billion in fiscal 2015, a new record for the company. According to CEO Mark Parker, e-commerce revenue grew 55% and 51% year-over-year in fiscal 2015 and 4Q15, respectively. The company reported both higher traffic and conversion rates, with mobile traffic outpacing desktop traffic.

Online sales now account for ~3.9% of Nike’s total revenue, compared to 2.8% a year earlier.

Smart digital moves

More importantly for Nike, e-commerce sales growth has been accelerating in the last three years. The company has been ramping up its digital platforms. It’s the number one sportswear brand in terms of digital competence according to L2, a digital benchmarking firm. Key online initiatives include:

  • NIKEiD, which allows for product customization
  • The SNKRS app, which provides information on new footwear launches and offers feed personalization, among its many features
  • The NIKE+ digital community, which has a global membership of millions
  • The launch of the Nike+ Running app on Apple Watch (AAPL) in 4Q15

Nike Trainer’s Hub

Last quarter, Nike widened its digital community by launching the Nike Trainer’s Hub. It is a digital initiative consisting of a global network of world-class trainers and it helps athletes connect to the right trainer. Users with a Nike+ login ID can ask questions of these trainers in real-time chat via Twitter (TWTR).

Twitter collections

Nike also announced a partnership to sell selected products on Twitter (TWTR), according to CEO Mark Parker. Nike joins several consumer brands selling on Twitter, including Disney (DIS). This Twitter feature allows firms to engage directly with consumers (XLY) (RXI).

Instagram Shop

Last quarter, Nike set up an Instagram Shop so that some of its Instagram ads will allow users to connect to product pages on Nike.com via a click on a photo, according to CEO Mark Parker.

Digital smarts

Nike has two of the top ten sports brands on Instagram, according to a report by L2. The Nike brand is number one with over 15.4 million Instagram followers. Converse stood at number four, with ~1.8 million followers, as of May 2015. Adidas (ADDYY) with over 4.1 million was second. Vans from VF Corporation (VFC) came in third with ~2.8 million followers. Under Armour (UA) was sixth with ~0.9 million followers.

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