what is the business model of nike

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Nike Business Model

The Nike Business Model is based on producing and selling athletic and sports products, including footwear, clothing, equipment — and also some services. Everything is under one of the most famous brands in the world. Let’s take a closer look at how and why Nike company has become so relevant in the business world.

A brief history of Nike

Nike was first founded as “Blue Ribbon Sports” in January 1964 by Phil Knight, a student at the University of Oregon and track athlete, along with his coach Bill Bowerman. The company was officially rebranded as Nike in May 1971, which is the Goddess of Victory in Greek mythology.

Headquartered in Beaverton, Oregon, Nike is one of the most well-succeeded sports brands globally, manufacturing shoes and sportswear, but the story behind its foundation is that, before that, Adidas and Puma — both of them German brands — completely dominated the sneakers market, in every single sport.

So, Knight decided to introduce cheap, but high-quality running shoes, and he achieved it through a partnership with Onitsuka Tiger (now known as Asics), a Japanese running shoes company, as its U.S. distributor.

In the ’70s, the partnership between Blue Ribbon Sports and Onitsuka collapsed, so Knight decided it was time for its own line of footwear. The company was relabeled as  Nike, and the worldwide-famous swoosh design was first used in 1971.

After that, Nike thoroughly conquered the sneakers market of sports footwear. Some of its main achievements include Michael Jordan’s signature footwear, the Air Jordan (1984), as well as renowned marketing campaign slogans, such as “There is no finish line” (1977) and “Just do it” (1988). The Nike marketing strategy has been pivotal in establishing the brand’s dominance, and nowadays, it controls an impressive 38% of the global sports market.

Who Owns Nike

Nike is owned by one of its co-founders, Phil Knight, the Chairman Emeritus. The company also has Mark Parker as the Executive Chairman and John Donahoe as the President and CEO.

Nike’s Mission Statement

“ Our mission is what drives us to do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work”.

How Nike makes money

Nike is the largest footwear and apparel seller in the world, and its revenue is generated mainly from these sales. Although its footwear items are designed especially for athletic purposes, with massive investment in innovation and high-quality products, most of them are usually worn on a daily basis, for leisure times.

Nike also sells sports equipment and accessories, such as balls, eyewear, bags, gloves, digital devices, and more, as well as recreational articles for many physical and outdoor activities. The company targets men, women, young athletes, and kids — in order of revenue. And Nike’s product subdivides into six categories: Running, Basketball, Jordan Brand, Soccer, Training, and Sportswear (lifestyle products), being Running, Jordan, and Sportswear are the strongest ones in revenue.

Nike’s Outsourcing

Nike doesn’t actually produce the items it sells. Its manufacturing is all outsourced, mostly outside the United States. They are more than 300 external independent suppliers, in over 35 countries, such as Vietnam, China, Indonesia, and Thailand.

Manufacturers in India, Argentina, Italy, Mexico, and Brazil are also contracted to produce for local markets. In spite of its large supply chain and manufacturing network, Nike still focuses on maintaining the quality and innovative character of its products, investing heavily in research and development.

Nike’s Business Model challenges

• Competition: Sports articles and apparel market is marked by massive competition, not only in the USA but all over the globe, both in marketing and supply chain — because the amount of suppliers for high-quality raw materials is limited. This competition leads to a great investment in research and development and in marketing and sales, in order to stand out;
• Trends: Nike’s success relies on anticipating customers’ demands. But these changing preferences are not always easy to predict. So, there is no certainty that every new product will gain the expected acceptance in the market. Therefore, it requires a great expenditure in adjusting the mix to keep profitable. Moreover, Nike relies on experts in several areas in order to produce innovative articles, such as engineers, physiologists, designers, biochemists, chemists, orthopedists, coaches, etc.;
• Global risks: Some global conditions and changes can have either positive or negative impacts on sales, such as economic crises or recessions (especially in emerging nations), environmental policies, trade regulations, data security and privacy, and more.

Nike’s Business Model Canvas

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Nike’s Customer Segments

Nike markets to anyone who wants to buy athletic and sports apparel, footwear, and equipment. Geographically speaking, Nike’s market is divided into four main divisions, also in order of revenue:

• North America
• EMEA (Europe, Middle East, and Africa)
• Greater China
• APLA (the Asia Pacific and Latin America)

Nike’s Value Propositions

Nike offers products to inspire anyone to become an athlete. Their products heavily rely on the quality, innovation, and status of the brand. This is the foundation of the brand, and it is exactly what the customers seek when they buy a Nike. The company offers a great variety of items, for many different sports and activities.

But, indeed, what matters for the audience is acquiring a product that has been heavily studied and developed from the best raw materials and technology available. Also, they want to carry the successful reputation the brand states, since athletes such as Michael Jordan, Tiger Woods, and Cristiano Ronaldo speak for the company.

Nike’s Channels

Nike uses many different channels for marketing . Its main channel is the brick-and-mortar stores, especially the Nike-branded ones. The company has an extensive sales network, with 1,152 physical stores throughout the world (numbers of 2019).  Nike also has an e-commerce platform, which serves more than 45 countries.

Besides that, Nike employs other channels, such as social media, digital, print, and TV advertising, brand events, and heavy sponsorship of athletes and teams. Therefore, its marketing expenses usually reach over $3.5 billion a year ($3,753 million in 2019).

Nike’s Customer Relationships

The relationship with the customers is practically restricted to self-service. The customer will check the product in a store (online or offline), and buy and use it. There will be some interaction with a salesperson when needed. Moreover, there is a FAQ session on the website and customer support via phone, e-mail, or live chat. Nike also has Nike ID, which is a personalization service that brings Nike products closer to customers’ desires.

Nike’s Revenue Streams

The revenue streams of the company are the sales of its products: footwear, apparel, equipment, and accessories. The total revenue reached $39,117 million, in 2019.

Nike’s Key Resources

Nike’s key resources  consist of:

• Physical structures : Five distribution centers in Memphis and others in California;
• Human resources: Nike Explore Tea Sports Research Lab, with more than 40 researchers that work on innovations;
• Intellectual property : Third-largest design patent portfolio in the United States.

Nike’s Key Activities

The main key activity of the company is designing and developing the products. In order to achieve that, other activities are involved, such as research (about materials, technologies, and trends/behavior) and negotiation with the suppliers. Additionally, marketing, sales, and advertising are essential for this business model .

Nike’s Key Partners

As Nike relies on outsourced contractors to manufacture its articles, these manufacturers are surely its most important key partners . They are more than 145 footwear factories and over 400 apparel factories, mostly outside the United States. Besides that, other partners include some universities and institutions in North America, Europe, and Asia for sports and scientific research.

Nike’s Cost Structure

The largest expenses for Nike are the costs of sales (mostly inventory and warehousing), that account for more than $21 billion per year. Additionally, around $3 billion is for marketing, including advertising and promotion costs, sponsorship, media, brand events, and retail brand presentation. Other general and administrative expenses cost over $500 million a year.

Nike’s SWOT Analysis

Below, there is a detailed  swot analysis  of Nike:

• Production costs: Since Nike’s business model outsources almost all its production, the company has reduced its operational costs, significantly, and focused its efforts and capital on marketing and sales. However, that doesn’t mean Nike has lost control over production quality. It only relies on suppliers that can support the brand’s standards;
• Minor sales variations: The demand for Nike’s products doesn’t fluctuate a lot during the year. The sales of fashion products and apparel usually remain equivalent all throughout the months. Due to some major campaigns, the company sometimes experiences a sudden rise. But, in these cases, there have been many studies, and it is ready to meet the demand;
• Quality: As Nike produces higher quality products, compared to most of its competitors , the company is also able to raise prices. This works out precisely because the quality has made the brand achieve a strong and reliable reputation, resulting in market-leading;
• Speed: For sales to succeed, the companies must transform ideas into products on the shelves as fast as possible. Nike, through its processes, has accomplished this efficiency, keeping its audience engaged and avoiding losses.

-> Read more about Nike’s SWOT Analysis .

Nike’s business model success rests on the sum of innovation and marketing. The company faces some strong players in the market — such as Adidas or Under Armour. That’s why the brand maintains its focus on research and development. Its future plans, for instance, are to increase the use of sustainable material, a strategy to grow popularity and engage the audience. 

Daniel Pereira

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Nike Business Model: Not a business but an inspiration

Born in a family of runners, Nike has always been a household name. I would spend a considerable amount of time trying new models and visiting the Nike Website for any possible discounts.

Quite recently, I finished Phil Knight’s Memoir- Shoe Dog. The story behind the brand speaks of resilience. Nike entered an already dominated market, faced supply-chain issues, financial problems, and lawsuits.

Each hurdle had the potential to put them out of business, but they fought against all odds and emerged to be the most dominant player in the sportswear market. Today, let us analyze the industry and the business model & strategies that made Nike a success story.

The Sportswear Industry

The sportswear industry in the world is dominated by Nike, Adidas, Asics, and UnderArmour. The global sportswear market size is projected to reach US$ 113190 million by 2026, from US$ 93160 million in 2020, at a CAGR of 3.3% during 2021-2026.

The sportswear industry saw a hit during the COVID 19 pandemic; however, it fared far better than the rest of the apparel industry. There was a shift in the sales pattern; people started to buy sportswear for indoor sports rather than outdoor sports.

The industry saw a change in their customer base- there was an increase in women buyers, and currently, more than 50% of buyers are women. Moreover, the pandemic shifted the public’s focus towards physical health and the importance of an active life, which boosted sales for the sportswear industry.

The industry is highly competitive as there is a shortage of raw materials and incredible demand. This problem causes an imbalance in the supply chain. New companies often do not have the funds to handle such an imbalance. Nike faced the same issue for a very long time and was floating due to supply-chain delays but eventually dealt with it after it introduced the idea of “futures” to its stockholders.

The problem was then resolved after the cash inflow when the company became public. However, even a small market share in this segment can yield good profits. Nike was not the first to enter this market, but with its innovative designs and marketing strategies, it managed to make its way to the top. Nike doesn’t sell shoes. It sells an idea with its marketing strategy!!

Nike’s Outsourcing Business Model

Nike has a mass-market business model which caters to sports enthusiasts. The product categories are broadly shoes, sports apparel, and accessories. Their first products were running shoes, given that Phil Knight was a runner himself.

Before they went public, they opened their Apparel line, which has been equally successful. They ventured out to Basketball sneakers and slowly created a demand for shoes as footwear used for daily use.

Nike Inc. (originally known as Blue Ribbon Sports) first started as a reseller for Onitsuka Tiger shoes from Japan. Post their fallout, they outsourced their manufacturing from 300 independent suppliers in 35 countries such as China, Vietnam, Thailand, etc. Today, there are 1096 Nike retail stores worldwide, apart from E-commerce and online platforms. They sell their products in 170 countries across the world. Nike currently has a brand value of 34.8Bn USD.

They have the highest market share in the shoes and sports apparel department. They were the first American shoe-selling company to open their warehouse and sell their products in the Chinese market. Countries such as India, Italy, Mexico, and Argentina have manufacturing units catering to local markets. This move significantly lowers the supply chain woes and makes Nike accessible all over the world.

Value Proposition

Nike’s business model focuses on Innovation and Customization. Despite the sportswear being outsourced, Nike maintains strict quality checks. It spends a lot of resources and time for designing, research, and development.

Bill Bowerman (Nike’s early partner) would often use waffle irons to experiment with shoes! Their designs are admirable- anyone who has a pair of Nike’s Air Zooms can vouch for this. They introduced the world to Air-Cushioning technology in shoes.

There is a special team- Nike Explore Team Sport Research Lab, which is responsible for innovations. It employs researchers with doctorates in biomedical engineering, biomechanics, kinesiology, mechanical engineering, physics, physiology, and systems science. The company maintains advisory boards and research committees consisting of athletes, trainers, coaches, orthopedists, podiatrists, equipment managers, and experts who can guide the product design and development process.

Customization is another feature that Nike provides. NikeID is a service that allows buyers to customize their shoes. They can choose colors, sports style, and traction. One can visit Nike by You, Custom shoes and have a shoe tailored to their needs and likes.

Brand positioning and Advertising

When Knight first started Nike, he did not believe in the power of advertising. Funny how things change, Nike spent 3.59 billion U.S. dollars only on advertising and promotional events in 2020. Nike roughly spends 10% of its revenue on advertising. However, their marketing strategy often reminds me of a verse from the book and their spirit throughout the book.

I’d tell men and women in their mid-twenties not to settle for a job or a profession or even a career. Seek a calling. Even if you don’t know what that means, seek it. Phil Knight

The first employees of the firm were Shoe dogs. Bill Bowerman was Phil Knight’s track coach. Jeff Johnson and Phil Knight went for 13-mile runs when they met to discuss strategies. All of them loved running and shoes. Their love for running pushed them to sell shoes and build amazing designs for runners around the world.

They were passionate about the cause and reflected the same in their marketing strategies. More than advertising their shoes, they advertise running and sports. They are master storytellers; they create demand for themselves by inspiring people to take up sports.

Another amazing strategy that makes the brand alluring is that it is inclusive and takes a firm stand on social issues. Nike was one of the first brands to release Pro Hijab, a product for Muslim women in sports. They’ve encouraged women empowerment and involvement of women in sports- their social media channel NikeWomen inspires women to take up sport and a healthy lifestyle.

Nike’s worldwide fan following is certainly anchored to its essence of standing for social justice over and over again. The recent decision of  Nike to split with soccer player Neymar  based on an allegation raised by a female employee of sexual harassment by the soccer player affirms the brand’s willingness and effort to stick to social norms.

Check out this story on how Nikes stand for social justice has created a powerful  node  in its  brand association .

The company supported and debuted an ad campaign centered on Colin Kaepernick. He was a former NFL player who refused to stand for the national anthem before his games in protest of racism and discrimination in America. The sport boycotted him due to political pressure, but Nike debuted an ad campaign supporting the cause right after the event.

When Nike first started, celebrity endorsements were considered one-way tickets to putting a brand’s shoes on the map. Nike has indeed continued to follow this particular strategy and has the world’s leading athletes to promote its products, including Tiger Woods, Michael Jordan, Cristiano Ronaldo, Rafael Nadal, and many more. In the 2016 Olympics, In the category of shoe brands- Nike had the highest number of players who won medals.

Wrapping up

Shoes are one of the world’s oldest creations. One thing that can be observed is how Nike has always been a pioneer in innovating shoes and sports apparel. Nike has built a business model that observes trends and always stayed relevant to the market.

Entrepreneurs can surely take a leaf out of Nike’s books. Stay resilient, relevant, do not be intimidated by competition, and sell a vision rather than a product.

-AMAZONPOLLY-ONLYWORDS-START-

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Manasvi is an aspiring entrepreneur - always on hunt for problems she can solve. She’s an education, business and public policy enthusiast. She loves spending her weekends teaching underprivileged children or on her couch reading books.

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Nike: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

Nike is a global sports apparel giant, renowned for its iconic swoosh logo and innovative products. This blog article delves into Nike's business model, providing insights into how the company operates and generates revenue. Additionally, a SWOT analysis will be conducted to evaluate Nike's strengths, weaknesses, opportunities, and threats in the ever-evolving market. Furthermore, the article will explore Nike's competitors and examine how the company maintains its competitive edge in the industry. Stay tuned to gain a comprehensive understanding of Nike's current position in the market and its future prospects for 2023.

What You Will Learn:

• Who owns Nike: Discover the ownership structure of Nike and the key stakeholders involved in the company.
• Nike's mission statement: Gain insights into Nike's mission and values, and how they shape the company's overall direction and decision-making.
• How Nike makes money: Explore the various revenue streams and business strategies that contribute to Nike's financial success.
• Nike Business Model Canvas Explained: Understand the different components of Nike's business model canvas and how they interrelate to support the company's operations and growth.
• Nike's competitors: Learn about the main competitors in the sports apparel and footwear industry and how Nike positions itself against them.
• Nike SWOT Analysis: Explore the strengths, weaknesses, opportunities, and threats facing Nike, providing a comprehensive understanding of the company's current position in the market.

Who owns Nike?

Ownership structure of nike.

Nike, the globally recognized sportswear brand, operates under a complex ownership structure. As a publicly traded company, Nike is owned by a diverse group of shareholders who hold its stock. However, a few significant stakeholders have a notable influence on the company's direction and decision-making processes.

Founders and Executive Team

Nike's origins trace back to its founders, Bill Bowerman and Phil Knight. Although they no longer have direct ownership, their legacy is deeply ingrained in the company's core values and vision. Today, Nike's executive team, led by CEO John Donahoe, plays a crucial role in shaping Nike's future strategies and operations.

Institutional Investors

A significant portion of Nike's ownership lies with institutional investors. These investors are typically large financial institutions such as mutual funds, pension funds, and asset management companies. They hold substantial amounts of Nike stock on behalf of their clients, including individual investors and organizations.

Individual and Retail Investors

Individual investors, including retail investors, also play a critical role in Nike's ownership. These are everyday people who buy Nike stock through brokerage accounts, retirement plans, or other investment vehicles. Their collective ownership, though dispersed, can have a meaningful impact on the company's overall ownership structure.

Exchange-Traded Funds (ETFs)

Another important category of Nike's ownership is through exchange-traded funds (ETFs). These investment funds pool money from multiple investors to buy a diversified portfolio of stocks, including Nike. By investing in ETFs, individuals can indirectly own Nike shares without purchasing them directly.

Employee Stock Ownership Plans (ESOPs)

Nike offers Employee Stock Ownership Plans (ESOPs) as a way to incentivize and reward its employees. Through these plans, employees can become partial owners of the company by receiving shares or stock options. This ownership structure further aligns the interests of employees with the success and performance of Nike.

Other Stakeholders

Apart from the aforementioned ownership categories, Nike's ownership extends to other stakeholders as well. These include suppliers, business partners, and strategic investors who may hold specific ownership stakes or have influence over the company's operations due to close business relationships.

In summary, Nike's ownership is distributed among a wide range of shareholders, including founders, institutional investors, individual investors, ETFs, and employees. This diverse ownership structure reflects the company's commitment to maintaining a broad base of ownership and fostering a sense of collective responsibility towards its success.

What is the mission statement of Nike?

Nike's mission statement.

Nike's mission statement is to bring inspiration and innovation to every athlete in the world. The company believes that if you have a body, you are an athlete, and it strives to create products and experiences that empower and motivate individuals to reach their full potential.

Inspiring and innovating

Nike's mission statement reflects its commitment to inspire and innovate. By constantly pushing boundaries and challenging the status quo, Nike aims to create products that not only meet the needs of athletes but also exceed their expectations. This drive for innovation can be seen in the advanced technologies and materials used in Nike's footwear, apparel, and equipment.

Inclusive athleticism

Nike's mission statement emphasizes inclusivity by stating that everyone is an athlete. This means that Nike's products and experiences are designed to cater to individuals of all ages, genders, sizes, and abilities. By embracing diversity, Nike aims to celebrate and empower athletes from all walks of life, encouraging them to pursue their passions and achieve their goals.

Empowering individuals

Nike's mission statement also highlights its objective to empower individuals. Through its products, campaigns, and initiatives, Nike aims to inspire people to believe in themselves, overcome obstacles, and unleash their full potential. By providing athletes with the tools they need to succeed, Nike seeks to empower individuals to push their limits and achieve greatness in their respective fields.

Global reach

Lastly, Nike's mission statement emphasizes its global reach. The company's commitment to bringing inspiration and innovation to every athlete in the world demonstrates its ambition to connect with individuals worldwide. By expanding its presence in various countries and cultures, Nike aims to make a positive impact on the lives of athletes globally, fostering a sense of community and unity through the power of sport.

In summary, Nike's mission statement encapsulates its dedication to inspiring and innovating, promoting inclusive athleticism, empowering individuals, and reaching a global audience. These core principles guide Nike in its pursuit of excellence and its mission to bring inspiration and innovation to every athlete in the world.

How does Nike make money?

Selling athletic footwear and apparel.

One of the primary ways Nike generates revenue is through the sale of athletic footwear and apparel. Known for its iconic swoosh logo, Nike offers a wide range of products for various sports and activities. From running shoes to basketball sneakers, and from soccer jerseys to yoga pants, Nike caters to the needs of athletes and fitness enthusiasts worldwide.

Nike's footwear line is particularly popular, with innovative designs and technologies that aim to enhance performance and provide comfort. Whether it's the latest Air Max series or the timeless Jordan sneakers, Nike constantly introduces new styles to attract customers. The company also collaborates with athletes, celebrities, and designers to create limited edition and exclusive collections, further driving demand.

Licensing and endorsements

Nike's brand recognition and global reach have allowed the company to secure licensing agreements and endorsements with various professional sports leagues, teams, and individual athletes. Through these partnerships, Nike can use team logos, player names, and other intellectual property on its products, including jerseys, shoes, and accessories.

Endorsements play a significant role in Nike's marketing strategy. The company sponsors numerous world-renowned athletes, such as Cristiano Ronaldo, LeBron James, and Serena Williams. By associating its brand with these high-profile figures, Nike aims to create a positive image and inspire consumers to purchase its products.

Direct-to-consumer sales

In recent years, Nike has placed a strong emphasis on its direct-to-consumer (DTC) sales channel. This includes selling products through its own physical stores, as well as its e-commerce platform. By bypassing third-party retailers and selling directly to customers, Nike can maintain better control over pricing, inventory, and the overall shopping experience.

Nike's online store has become increasingly important, offering a wide selection of products and personalized shopping experiences. Through its website and mobile app, customers can customize shoes, join exclusive member programs, and receive personalized recommendations based on their preferences and previous purchases. This direct relationship with consumers not only allows Nike to gather valuable data but also enables the company to build brand loyalty and increase customer lifetime value.

Other revenue streams

Apart from its core business of selling athletic footwear and apparel, Nike also generates revenue through other avenues. These include:

• Equipment sales: Nike produces a range of sporting equipment, such as soccer balls, basketballs, and golf clubs. These products are sold through various channels, including sports stores and online platforms.
• Brand licensing: Nike licenses its brand to third-party companies to produce and sell products such as bags, accessories, and even technology like fitness trackers and smartwatches.
• Converse subsidiary: Nike owns Converse, a popular sneaker brand with a distinct style. Converse operates as a subsidiary and contributes to Nike's overall revenue through its own product sales.

In summary, Nike's revenue primarily comes from selling athletic footwear and apparel, leveraging licensing and endorsements, focusing on direct-to-consumer sales, and exploring additional revenue streams outside its core business. Through these various avenues, Nike continues to strengthen its position as a leading global sports brand.

Nike Business Model Canvas Explained

What is a business model canvas.

A Business Model Canvas is a strategic management tool that allows businesses to describe, design, challenge, and pivot their business models. It provides a visual representation of the key components and relationships of a business model, helping organizations understand and communicate how they create, deliver, and capture value.

The Key Components of Nike's Business Model Canvas

Nike's Business Model Canvas consists of nine key components that work together to drive the company's success. Let's explore each component in detail:

Customer Segments: Nike targets a diverse range of customer segments, including athletes, sports enthusiasts, and fashion-conscious consumers. By segmenting their customer base, Nike can better tailor their products and marketing efforts to meet specific needs and preferences.

Value Proposition: Nike's value proposition centers around providing high-quality athletic footwear, apparel, and equipment that enhance the performance and style of athletes. Their focus on innovation, sustainability, and brand image sets them apart from competitors.

Channels: Nike utilizes various distribution channels to reach its customers, including their own retail stores, e-commerce platforms, and partnerships with retail chains. This multi-channel approach ensures broad market coverage and convenient access for consumers.

Customer Relationships: Nike cultivates strong customer relationships through various means, such as personalized marketing campaigns, loyalty programs, and social media engagement. They strive to create an emotional connection with their customers and foster brand loyalty.

Revenue Streams: Nike generates revenue through the sale of its products and services. This includes revenue from direct sales, wholesale partnerships, licensing agreements, and endorsements by professional athletes. They also offer additional services like customization and digital fitness apps.

Key Activities: Nike's key activities revolve around product design, development, and marketing. They invest heavily in research and development to create innovative products that cater to the evolving needs of athletes. Marketing efforts focus on brand building, sponsorships, and collaborations.

Key Resources: Nike's key resources include their manufacturing facilities, design teams, supply chain network, and brand reputation. Their extensive global supply chain ensures efficient production and distribution of products worldwide.

Key Partnerships: Nike collaborates with various partners, including athletes, sports teams, suppliers, and retail partners. These partnerships help them leverage expertise, expand market reach, and enhance brand credibility.

Cost Structure: Nike incurs costs related to manufacturing, marketing, research and development, logistics, and retail operations. They also invest in sustainability initiatives, corporate social responsibility, and brand promotion. Cost management is crucial to maintaining profitability.

Nike's Business Model Canvas provides a comprehensive overview of how the company operates and creates value. By understanding the key components and their interdependencies, Nike can continuously adapt and innovate to stay ahead in a highly competitive industry. This strategic tool serves as a roadmap for success and guides decision-making processes within the organization.

Which companies are the competitors of Nike?

One of the main competitors of Nike is Adidas. Adidas is a German multinational corporation that designs and manufactures sports shoes, clothing, and accessories. It is known for its iconic three stripes logo and its wide range of athletic footwear and apparel. Like Nike, Adidas has a strong presence in the global market and sponsors numerous professional athletes and sports teams. The rivalry between Nike and Adidas is intense, with both companies competing for market share and constantly innovating to stay ahead of each other.

Under Armour

Under Armour is another major competitor of Nike. Founded in 1996, Under Armour is an American sports clothing and accessories company that specializes in performance apparel, footwear, and accessories. It gained popularity for its moisture-wicking fabric technology, which quickly became a staple in the athletic apparel industry. Under Armour has built a strong brand image and has a significant customer base, particularly among athletes and fitness enthusiasts. The company's focus on innovation and high-performance products puts it in direct competition with Nike.

Puma is a well-known sportswear brand and a direct competitor of Nike. Founded in 1948, Puma is a German multinational corporation that designs and manufactures athletic and casual footwear, apparel, and accessories. The company has a diverse product portfolio that caters to various sports and lifestyle segments. Puma is known for its bold and distinctive designs, collaborating with renowned celebrities and designers to create unique collections. With a strong global presence and a focus on performance and style, Puma competes directly with Nike in the sports apparel market.

New Balance

New Balance is a Boston-based company that has been competing with Nike in the athletic footwear and apparel space for decades. Established in 1906, New Balance initially focused on arch supports and orthopedic shoes but later expanded into athletic footwear. The brand is recognized for its emphasis on fit, comfort, and quality. New Balance has a loyal customer base, particularly among runners, and is known for its wide range of sizes and widths, accommodating various foot shapes. While Nike dominates the market in terms of revenue and brand recognition, New Balance remains a strong competitor, especially in the running shoe segment.

Reebok, a subsidiary of Adidas since 2005, is another prominent competitor of Nike. Founded in 1958, Reebok is an American athletic footwear and apparel company that specializes in sports and fitness products. It has a rich heritage in the fitness industry and has collaborated with various athletes and fitness influencers to create innovative products. Reebok's focus on cross-training and functional fitness gives it a unique positioning in the market. Although Reebok may not be as large as Nike, it competes fiercely with the brand in certain segments, such as fitness and training shoes.

Nike SWOT Analysis

• Strong brand image and reputation: Nike is one of the most recognizable and valuable brands in the world. The company has established a strong brand image through its innovative products, marketing campaigns, and endorsements by top athletes.
• Extensive product portfolio: Nike offers a wide range of athletic footwear, apparel, equipment, and accessories for various sports and activities. This diverse product portfolio allows the company to cater to the needs and preferences of different consumer segments.
• Robust distribution network: Nike has an extensive global distribution network that includes owned retail stores, e-commerce platforms, and partnerships with third-party retailers. This widespread presence enables the company to reach customers in different regions and effectively distribute its products.
• Strong research and development capabilities: Nike invests heavily in research and development to continuously innovate and improve its products. The company's focus on technological advancements and performance-enhancing features gives it a competitive edge in the market.
• Effective marketing and advertising strategies: Nike's marketing campaigns are known for their creativity, emotional appeal, and ability to connect with consumers. The company's partnerships with top athletes and teams, as well as its use of social media platforms, help to create a strong brand presence and drive consumer engagement.
• High dependence on third-party manufacturers: Nike outsources the manufacturing of its products to third-party suppliers, primarily located in Asia. This dependence on external manufacturers exposes the company to risks such as supply chain disruptions, quality control issues, and labor-related controversies.
• Vulnerability to changing fashion trends: The sports apparel and footwear industry is highly influenced by changing fashion trends. Nike needs to continually adapt its product offerings to stay relevant and meet evolving consumer preferences. Failure to do so could result in a decline in sales and market share.
• Potential negative impact of counterfeit products: Nike's popularity and strong brand image make it a target for counterfeiters. The presence of counterfeit Nike products in the market not only affects the company's revenue but also damages its brand reputation.
• Limited presence in certain geographic markets: While Nike has a strong global presence, its market share in certain regions, such as parts of Asia and Latin America, is relatively low compared to its dominance in North America and Europe. Expanding its footprint in these regions could be a growth opportunity for the company.

Opportunities

• Growing athleisure trend: The increasing popularity of athleisure, which combines athletic and casual wear, presents an opportunity for Nike to expand its product offerings. By introducing more fashionable and versatile products, the company can tap into this growing consumer segment.
• Emerging markets: Developing countries, especially in Asia and Latin America, offer significant growth opportunities for Nike. As disposable incomes rise and consumer spending on sports and fitness increases, the demand for Nike's products is expected to grow in these markets.
• E-commerce growth: The rapid expansion of e-commerce presents an opportunity for Nike to reach a wider customer base and increase sales. By investing in its e-commerce platforms and digital marketing strategies, the company can enhance the online shopping experience and drive online sales.
• Sustainability and ethical sourcing: With increasing consumer awareness and demand for sustainable and ethically sourced products, Nike has the opportunity to strengthen its commitment to environmental and social responsibility. By adopting sustainable practices throughout its supply chain and promoting transparency, the company can attract environmentally conscious consumers.
• Expansion into new product categories: Nike can explore opportunities to expand into new product categories, such as wearable technology, fitness apps, and health-related services. By leveraging its brand equity and expertise in athletic performance, the company can diversify its revenue streams and stay ahead of competitors.
• Intense competition: Nike faces intense competition from both established and emerging players in the sports apparel and footwear industry. Competitors such as Adidas, Under Armour, and Puma pose a threat to Nike's market share and profitability.
• Economic uncertainties: Nike's financial performance is influenced by macroeconomic factors such as economic downturns, currency fluctuations, and trade policies. Economic uncertainties can impact consumer spending and result in reduced demand for Nike's products.
• Changing consumer preferences: Consumer preferences and trends are constantly evolving, making it crucial for Nike to stay ahead of changing demands. Failure to anticipate and respond to shifts in consumer preferences could lead to a decline in sales and market share.
• Counterfeit products: The presence of counterfeit Nike products in the market not only affects the company's revenue but also erodes consumer trust in the brand. Nike needs to continue investing in anti-counterfeiting measures to protect its intellectual property and maintain brand integrity.
• Regulatory challenges: Nike operates in multiple countries, each with its own regulations related to labor practices, environmental standards, and product safety. Compliance with these regulations can be complex and costly, and non-compliance could result in reputational damage and legal penalties.

Key Takeaways

• Nike is a publicly traded company, meaning it is owned by shareholders who hold its stocks.
• Nike's mission statement is to bring inspiration and innovation to every athlete in the world, emphasizing its commitment to innovation and inclusivity.
• Nike generates revenue primarily through the sale of athletic footwear, apparel, and equipment, both through its own retail stores and online platforms.
• The Nike Business Model Canvas showcases the key elements of Nike's business model, including its value proposition, customer segments, key activities, and revenue streams.
• Nike faces competition from companies such as Adidas, Under Armour, Puma, and New Balance, among others. A SWOT analysis of Nike reveals its strengths, weaknesses, opportunities, and threats in the market.

In conclusion, Nike is a globally recognized brand that has become a household name in the sports industry. As for the ownership, Nike is a publicly traded company, with the majority of its shares held by institutional investors and individual shareholders.

Nike's mission statement is to bring inspiration and innovation to every athlete in the world. They define an athlete as anyone with a body, emphasizing their commitment to inclusivity and promoting a healthy and active lifestyle.

Nike generates its revenue through various channels, including the sale of footwear, apparel, and equipment. They have a strong presence in both the retail and e-commerce sectors, with a significant portion of their sales coming from direct-to-consumer channels.

The Nike Business Model Canvas provides a comprehensive overview of the key elements that drive Nike's success. It highlights their value proposition, customer segments, distribution channels, and key activities that enable them to deliver their products to consumers worldwide.

In terms of competition, Nike faces stiff competition from other major sportswear brands such as Adidas, Under Armour, Puma, and Reebok. These companies constantly strive to capture market share and innovate in order to attract and retain customers.

A SWOT analysis of Nike reveals its strengths, weaknesses, opportunities, and threats. Nike's strengths lie in its strong brand image, extensive product portfolio, and effective marketing strategies. However, weaknesses such as labor controversies and dependency on third-party manufacturers pose challenges. Opportunities for Nike include expanding into emerging markets and leveraging digital technologies, while threats include intense competition and economic fluctuations.

Overall, Nike's success can be attributed to its strong brand positioning, commitment to innovation, and ability to adapt to changing consumer preferences. As they continue to evolve and navigate the competitive landscape, Nike remains a dominant force in the sports industry.

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NIKE Inc. ( NKE ) is a global footwear and apparel company that designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services. Although primarily designed for athletic use, many of its products are worn for casual or leisure activities.

Key Takeaways

• NIKE designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories.
• Most of NIKE's sales are generated by selling footwear to wholesale customers in North America.
• NIKE faces competition from Adidas, Puma, and ASICS.

NIKE's Industry

The majority of NIKE's products are manufactured by independent contractors and sold either directly to consumers through NIKE retail outlets and digital platforms, or by independent distributors, licensees, and sales representatives. NIKE is based in Oregon with many global rivals, including Adidas AG ( ADDYY ), ASICS Corp. ( 7936 ), Lululemon Athletica Inc. ( LULU ), Puma SE ( PUMSY ), and Under Armour Inc. ( UAA ). NIKE operates through three segments: NIKE Brand; Converse; and Corporate.

• NIKE Brand: Includes six geographical segments: North America; Europe, Middle East & Africa; Greater China; Asia Pacific & Latin America; and Global Brand Divisions.
• Converse: NIKE's Converse segment is engaged in the design, distribution, licensing, and sale of casual sneakers, apparel, and accessories under the following trademarks: Converse, Chuck Taylor, All-Star, One Star, Star Chevron, and Jack Purcell.
• Corporate: NIKE's Corporate segment revenue primarily consists of foreign currency hedge gains and losses related to revenues generated by NIKE's other operating segments.

NIKE announced in March financial results for Q3 of its 2024 fiscal year (FY) , the three months ended Feb. 29, 2024. The company posted a net income of $1.2 billion, down 5% from the year-ago quarter. Revenue stayed flat year over year (YOY) with $12.4 billion. Earnings before interest and taxes (EBIT) , a profitability metric NIKE uses for its business segments, dropped 5% YOY to $1.4 billion. The NIKE Brand segment comprises over 95% of the company's total revenue.

NIKE breaks out revenue, but not profits, for its major product lines and distribution channels. The share of revenue generated by product lines in Q3 FY 2024 was: Footwear (68%); Apparel (28%); Equipment (4%); and Other. A negligible amount is attributable to Other, which includes revenue from licensing businesses of the Global Brand Divisions and Converse segments, and to foreign currency hedge gains and losses accounted for in the Corporate segment. NIKE reports revenue and EBIT for its business segments.

NIKE’s identity was inspired by the Greek goddess of victory and the company was first founded in 1964 as Blue Ribbon Sports by Phil Knight and Bill Bowerman. During the 1970s, NIKE moved from importing Japanese shoes to creating its own footwear. By 1971, the company's Swoosh was created by Carolyn Davidson. In 2024, the company has headquarters in the U.S., China, and the Netherlands with John Donahoe serving as NIKE's President and CEO.  

In 2023, Football Australia and Nike executed a 10-year contract extension for a third decade, the longest of Nike’s federation and club partnerships in Australia. In Feb. 2024, NIKE partnered with NFL clubs to increase opportunities for Native American and Indigenous youth.

Does NIKE Pay Shareholders Dividends?

Yes, owners of NIKE stock receive dividends. In May 2024, NIKE declared a quarterly cash dividend of $0.370 per share on the Company’s outstanding Class A and Class B Common Stock payable on July 1, 2024.

How Many Employees Does NIKE Have?

In 2023, NIKE employed over 83,700 workers.

What Is NIKE's Commitment to Sustainability?

The company is committed to a 100% renewable electricity policy by 2025 in NIKE corporate offices, distribution centers, Air MI, and retail locations. Additionally, the company strives to divert 100% of its waste from landfills.

NIKE enjoyed an estimated sales of more than $22 billion in 2023. The company holds the largest market share for sneakers globally. NIKE was founded in 1969 and has headquarters in the U.S., China, and the Netherlands.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-K for the Fiscal Year Ended May 31, 2023 ." Page 1.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-K for the Fiscal Year Ended May 31, 2023 ." Page 5.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-K for the Fiscal Year Ended May 31, 2023 ." Page 42.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-Q for the Quarterly Period Ended February 29, 2024 ." Pages 21-22.

Nike Inc. " Nike, Inc. Reports Fiscal 2024 Third Quarter Results ." Pages 4 and 7.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-Q for the Quarterly Period Ended February 29, 2024 ." Pages 19-20.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-Q for the Quarterly Period Ended February 29, 2024 ." Page 19.

NIKE Inc. " About ."

NIKE Inc. " Football Australia and Nike Announce 10-Year Partnership Extension ."

NIKE Inc. " Nike Commits $3.2 Million to Fund Football Programs for Indigenous Youth, Partners With NFL Clubs ."

NIKE Inc. " Investor Relations ."

Statista. " NIKE Employees Worldwide ."

NIKE Inc. " Protecting the Planet ."

Statista. " America's Favorite Sneaker Brands ."

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Nike - Ruling The Sneaker Industry

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Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Nike .

Sports is indeed a global medium of communication.  It penetrates through cultures, nations, and divisions. It's a long-standing consumer desire as well as a stimulus of human aspirations and development.

Individual effort, collaboration, respect, how to win, how to lose, and how to compete strongly and fairly are all valuable lessons learned via sports. In both good and terrible times, sports inspire, fascinate, and reward us. Sports is a fantastic industry to work in, and an even better one to run.

Nike has risen from a quiet small town, in Oregon to become the world's leading sports footwear and clothing corporation. It all began with a shoe and a t-shirt. It is now a diverse and sophisticated multinational corporation. Nike is well recognised for its footwear, clothes, and accessories. It offers products under the Nike and Jordan brands, and also via its Jordan Brand and Converse divisions.

Nike - Company Highlights

About Nike, and How it Works? Nike - Industry Nike - Name, Logo, and Tagline Nike - Founders Nike - Startup Story Nike - Vision, and Mission Nike - Business Model, and Revenue Model Nike - Investments Nike - Acquisitions Nike - Competitors Nike - Controversies Nike - Future Plans

About Nike, and How it Works?

Nike is an American multinational athletic brand that designs, manufactures, promotes, and distributes footwear, clothing, training accessories, and service. Many of its merchandise are used for leisure or casual activities while being built for sports purposes.

The bulk of Nike's products are made by independent contractors and sold directly to customers through Nike retail shops and online mediums, as well as through independent retailers, franchisees, and sales agents.

The company's global headquarters are in the Portland metropolitan region, in Beaverton, Oregon, the United States. It employs about 44,000 people globally, and the company's brand was valued at $19 billion in 2014, making it the leading name in the sporting world.

Nike sells its products under Nike Pro, Nike Golf, Nike+, Air Jordan, Nike Blazers, Air Max, and other brands, as well as subsidiaries including Hurley, Jordan, and Converse. Nike supports many popular professional athletes and sports clubs and teams throughout the globe, and its trademarks "Just Do It" and the Swoosh emblem is very well known.

Nike - Industry

The sports sector is becoming the world's largest as more individuals participate in sports and leisure activities to improve and balance their stress, health and work regulation. It has become popular as an active and passive piece of recreation.

Customers are actively investing more in sportswear, with sportswear and accessories accounting for a substantial portion of the cost. Sport in the twenty-first century is an industry characterised by extremism. Market research is currently at the forefront of marketing sports products and accessories, as marketplaces throughout the world become highly competitive.

The worldwide sports equipment and accessories industry is booming, with the rapid acceptance of innovative technology and a willingness to adapt to demographic shifts. The sector is booming because of e-commerce, which is a prominent retail medium these days that allows users to experience all of the available sports equipment manufacturers. It is a one-stop store for all athletics equipment and products, increasing the marketability of worldwide athletic apparel.

Numerous established market participants in retail, e-commerce, sports shops, and wholesale, as well as many new startups, make the sports equipment and accessories industry extremely competitive. Growing consumer health consciousness is predicted to propel the growth of sports equipment throughout the forthcoming years. In addition, the emerging trend of following famous athletes will fuel the accessories industry.

The market for sports equipment and apparel was estimated to be $480 billion in 2021, with a CAGR of 7.2 per cent expected to reach $817 billion by 2026.

Nike - Name, Logo, and Tagline

The word "Nike" was extracted from Greek mythology where Nike is the Winged Goddess of Victory. The 'swoosh' logo is derived from the goddess's wing, and it represents the sound of movement, speed, drive and, strength.

Nike's very popular slogan says, "Just Do It."

Nike - Founders

Bill Bowerman and Phil Knight founded Nike on January 25, 1964, which was then named "Blue Ribbon Sports", and then it became "Nike", Inc. on May 30, 1971.

Phil Knight

Philip Hampson Knight is a multimillionaire American entrepreneur. He, along with being the co-founder, is the former chairman and Chief executive officer of Nike.  Forbes ranked Knight as the world's 24th richest person on July 23, 2020, with his net worth being $54.5 billion.

In addition, he is the co-founder and CEO of Laika, a time-lapse film production company. Knight completed his education at the Stanford Graduate School of Business and the University of Oregon. He competed in track at the University of Oregon under Bill Bowerman , his coach and with him, he eventually co-founded Nike.

Bill Bowerman

William Jay Bowerman was a field and track coach in the United States and a co-founder of Nike, Inc. He coached 51 All-Americans, 31 Olympic competitors, 12 American record-holders, 22 NCAA winners, and 16 sub-4 minute milers in his time.  

He despised the title of coach, yet during his 24 years at the University of Oregon, the Duck's track and field team won every season except one, won four NCAA championships, and placed in the top ten in the country 16 times.

He helped Nike transition from being a supplier of other shoe brands to designing their shoes as a co-founder. He designed several of the company's popular products, including the Cortez and Waffle Racer.

Nike - Startup Story

Nike's roots may be traced all the way back to the year 1964 when Blue Ribbon Sports (Nike's former name) was created. Phil Knight had recently finished his bachelor's education at the University of Oregon, followed by a Master's degree at Stanford University, giving him two life-changing encounters.

He ran for the University of Oregon track team, where he met Bill Bowerman, his team's coach. Aside from his extreme rivalry, Bowerman was preoccupied with upgrading his running shoes and exploring various models on a constant schedule after learning from a local shoemaker.

Knight became the first runner to put Bowerman's footwear to the check. Bowerman offered to bring one of his shoes and customise it with his own design, perceiving Phil as a comfortable and modest runner with someone to explore.

Knight accepted the invitation, and the shoes reputedly functioned so well that his colleague Davis grabbed them and won gold in the 400-meters track race in the year 1960 Olympics. According to him, Bowerman made the shoes for Otis Davis. Knight attended Stanford's MBA school after graduating from the University of Oregon, where he wrote a thesis recommending that the manufacturing of running shoes be shifted from Germany to Japan, where labour costs were lower .

Knight put this theory to the test when he went on a trip to Japan shortly after graduation in 1962. He agreed to market the country's famous Tiger shoes in the United States with a group of Japanese entrepreneurs.

Coach Bowerman endorsed Knight's initiative, agreeing to an equal partnership with him for the ownership of their new firm, Blue Ribbon Sports, which was formed on January 25, 1964, in Eugene, Oregon.

After starting Blue Ribbon Sports, Knight evaluated the market for his foreign shoes by distributing them out of his car when he returned to America. Early on, it was clear that there was a demand for these less priced but still high-quality alternatives to Adidas and Puma, the industry's heavyweights.

Nike - Vision, and Mission

Nike's vision statement says, “ To bring inspiration and innovation to every athlete in the world .”

Nike's mission statement says, "Our mission is what drives us to do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work."

Nike - Business Model, and Revenue Model

Nike's business model revolves around creating and distributing athletic and sporting goods, such as footwear, apparel, and equipment – as well as certain services. Everything is under one of the world's most well-known brands.

Customer Segment

Nike sells sports or athletic wear, footwear, and types of equipment. Nike's market is divided into four primary sections, also in order of revenue, geographically:

• North America
• the Asia Pacific and Latin America
• Europe, Middle East, and Africa

Customer-Seller Relationship of Nike

Customers' interactions are almost entirely limited to self-service. The consumer will examine the brand or product online or offline at the store, purchase it, and put it to use. When necessary, there will be some engagement with a salesman. A FAQs section is also available on the official website, as well as customer service through phone, email, or live chat. Nike also offers Nike ID, a customisation service that tailors Nike items to the preferences of clients.

Value Proposition

Nike makes merchandise that encourages people to participate in sports. Their goods are significantly reliant on the brand's quality, inventiveness, and prominence. This is the brand's core, and it's exactly what buyers want when they buy a pair of Nikes.

Nike has a wide range of products for several sports and hobbies. What counts to the audience, though, is getting a product that has been thoroughly researched and developed using the greatest raw materials and technology available. They also want to maintain the brand's excellent reputation, which includes superstars like Michael Jordan , Tiger Woods, and Cristiano Ronaldo .

Cost Structure

Sales costs (mainly inventories and warehouses) account for more than $21 billion in annual expenditures for Nike. A further $3 billion is allocated to marketing, which includes spending for promotion and marketing, sponsor, marketing, brand events, and brand personality display. Over $500 million is spent each year on other general and administrative expenditures.

Nike is the world's largest footwear and clothing retailer, with these sales accounting for the majority of their income. Although its sports footwear is developed with a large investment in technology and high products, the majority of its products are utilized regularly for recreation purposes.

Nike also provides balls, sunglasses, backpacks, gloves, digital gadgets, and other sports equipment and accessories, as well as recreational items for a variety of physical and outdoor activities.

In order of sales, the corporation targets women, men, young athletes, and children. Nike's goods are divided into six groups: running, basketball, Jordan Brand, soccer, training, and sportswear (lifestyle products). Running, Jordan Brand and Sportswear are Nike's most profitable segments.

Nike - Investments

Nike - Acquisitions

Nike - Competitors

Adidas, Skechers USA, Puma, New Balance, Steve Madden, and ASICS America are Nike's competitors.

Nike - Controversies

Child Labour Allegations - Nike was chastised in the 1990s for using child labour in factories it hired to make footballs in Pakistan and Cambodia. Despite taking steps to stop or at least limit the practice, Nike continues to outsource production to firms that operate in locations where child labour is difficult to avoid due to a lack of regulation and oversight. An investigation from 2001 revealed instances of child labour and bad working conditions in a Nike facility in Cambodia. The documentary followed six young women who worked 7 days a week, frequently for 16 hours.

Paradise Papers - Nike was one of the firms that utilised offshore entities to evade taxes, according to the Paradise Papers, a series of private electronic papers linked to offshore investment, released on November 5, 2017.

Strikes in China Factory - One of the largest strikes in mainland China occurred in April 2014 at the Yue Yuen Industrial Holdings Dongguan shoe factory, which produces shoes for Nike and other brands. Yue Yuen underpaid a monthly employee by 250 yuan. Yue Yuen's average monthly wage is 3000 yuan. 70,000 people work at the plant. This practice had been in place for almost two decades.

Nike - Future Plans

Nike has not been spared from the covid outbreak. Revenue decreased by 1% in 2020 after falling by 38% the previous quarter. The company's ability to enhance profit and generate substantial growth in its digital platform, however, has delighted the market.

Nike's success has persuaded investors that the company is gaining market share throughout the pandemic and would come back stronger than its rivals. Those aspects, particularly the company's digital capabilities, reflect well for the firm's competition in the next 5 years.

Nike originally set a goal of $50 billion in annual revenue by the year 2020 in 2015. Due to previous setbacks when it lost momentum to Adidas, it was obligated to postpone that until 2022, but despite the pandemic's setbacks, the business is on the path to meeting that goal. To do so, it would have to increase sales at a compound annual rate of approximately 9% from $39.1 billion in fiscal 2019.

When the pandemic was already over, the company, like the rest of the apparel industry, seemed to be well-positioned to capitalise on demand. Stores were reopened, and there was undoubtedly a surge in spending on streetwear such as Nike's classic sneakers. Nike could be able to reach more than $60 billion in revenue by 2025, three years after surpassing its $50 billion objectives in 2022, thanks to its digital momentum and recovery from the pandemic.

However, the firm's profit ought to increase as more of its sales shift to online and direct, where it has complete leverage over the selling process and isn't required to share income with its partner companies. Nike's Consumer Direct Offense has helped the company gain ground on competitors like Under Armour and Adidas, and this growth is projected to continue in the future years.

Nike seems to have a bright future ahead of them. The stock should continue to be a winner over the next five years, with profit margins improving, a headwind from the end of the covid-19 virus outbreak, and a strong leader in its sector.

Nike - FAQs

What does nike do.

Nike is an American multinational athletic brand that designs, manufactures, promotes, and distributes footwear, clothing, training accessories, and service.

Who founded Nike?

Bill Bowerman and Phil Knight founded Nike in the year 1964.

What was the former name of Nike?

The company was founded with the name, "Blue Ribbon Sports".

How does Nike make money?

Nike's business model is totally based on manufacturing and selling athletic and sporting goods, such as footwear, apparel, and equipment – as well as certain services.

Which companies do Nike compete with?

Adidas, Skechers USA, New Balance, Steve Madden, and ASICS America are among Nike's competitors.

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Nike, Inc. is an American multinational business that designs, develops, manufactures, markets, and sells footwear, apparel, equipment, accessories, and services on a global scale. Nike is a major player in the athletic world. The company pulled in revenue of over US$51.6 billion in its 2023 fiscal year and

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Profitable Business Models > Business models of large companies

Nike: Business Model Canvas and History

• by  Joanne Moyo
• July 31, 2021

From selling shoes from the back of a car to a Sportswear Giant

The Nike swoosh has become a symbol of excellence and success around the world. Standing tall among competitors in the industry, this uncontested giant has built itself up through larger-than-life marketing campaigns, high-profile endorsements, and stylish designs.  

With famous brand ambassadors such as Lebron James, Tiger Woods, and Michael Jordan, the Nike brand was valued at approximately 34.8 billion U.S. dollars in 2020. Named after the Greek goddess of victory, Nike has been the number one sports footwear for decades.

But this high level of success didn’t come from anywhere. In fact, Nike had pretty humble beginnings but what was clear from the start was the drive to offer athletes a better shoe. This core principle has been the basis of all Nike designs from 1962 till today.

So how exactly did Nike become successful? What challenges did it face, and what made it different from other sport footwear manufacturers? Let’s roll it back to the time of bell-bottoms, tie-dye t-shirts, and go-go boots.

1962-1970: The birth of Nike as Blue Ribbon Sports

1962-1962: how the idea of nike was born.

It’s 1960, and Phil Knight, an average track runner at the University of Oregon, has graduated and is looking for his next opportunity. As part of the track team, he had been coached by Bill Bowerman, who was famous for producing star athletes.

Bill had one particular skill that would prove to be crucial to the birth of Nike. He was fascinated by the idea of tweaking and customizing his runner’s shoes for optimum performance. He had learned the skill from a local cobbler. Bowerman was obsessed with the connection between design and speed in all his improvements. His students preferred his custom designs, and Knight was one of them. 

Knight enrolled at Stanford University for an MBA Program and wrote a paper analyzing the production costs of running shoes in Germany. His proposal was based on the theory that production should be moved to Japan, where labor was cheaper.

He had noticed that Japanese camera manufacturers had made some significant improvements to their products. These improvements had made the Japanese cameras so popular they had started to take a considerable chunk of the American market from the dominant German camera brands. Knight figured that Japanese athletic shoes could have the same effect on Adidas which was dominating the U.S. market at that time.

After graduating from Stanford, the idea from his paper kept nagging at him. He had written several letters to different Asian manufacturers with a proposal to become their sole distributor in the U.S. but got no response.

The plane ride that changed the world of sports footwear

As soon as he could, he hopped on a plane to a little town called Kobe in Japan, where he found Onitsuka Co. This company was producing quality and very popular shoes called the Tiger. Knight knew that he had to present a professional front so when he spoke with the owner, he lied that he already had a company called Blue Ribbon Sports. His tactic worked and the owner agreed to make him the sole distributor of the shoes in the U.S.

After returning to America in November 1962 with just 12 pairs of the Onitsuka Tiger, Knight started going to different sporting events to sell the shoes out of his car. He had some success but soon realized that he needed help to make his idea scalable.

He reached out to his old coach Bill Bowerman and pitched his idea. Bowerman was immediately taken in and entered into a 50-50 ownership deal for a distribution company called Blue Ribbon Sports.

1964-1970: Blue Ribbon Sports & the Struggle for Cash

In January 1964, Blue Ribbon Sports was officially incorporated. Bowerman and Knight invested $500 each for their first order and got about 300 pairs of shoes. They knew there was a market for these cheaper high-quality alternatives. However, the market was still dominated by famous brands like Adidas and Puma.

Knight and Bowerman didn’t have enough capital to order the shoes they needed from Japan, so Knight got a loan from his father. Later that year, the two managed to secure their first commercial loan of $3,000 from the First National Bank of Oregon. This line of credit helped them to pre-order enough shoes to meet demand.

Meanwhile, Bowerman decided to use his fascination with speed and design to good use. When their first order arrived, he ripped the Tiger shoe apart to find ways of making it better and more lightweight. He used his University of Oregon track runners to beta test his designs.

Despite these formidable competitors, Blue Ribbon Sports sold 1,300 pairs of the Tiger by the end of 1964.

1965: The Tiger Cortez Design (Nike’s First Shoe) & The First Employee

Knight and Bowerman could see that their idea was taking root. However, both men were fully employed and needed someone to run Blue Ribbon Sports. They settled on Jeff Johnson, who had been at Stanford with Knight. Johnson was a track runner as well, so he was very familiar with the industry. He became the first full-time employee of Blue Ribbon Sports. He proved to be an invaluable resource for the small company.

Meanwhile, Bowerman had finally figured out what was missing in the Tiger shoe. He proposed a new design to Onitsuka Co. that would provide more support for runners. The new shoe called the Tiger Cortez had cushioned insoles, a soft sponge rubber in the forefoot, and at the top of the heel. It also had a hard sponge rubber in the middle of the heel and a firm rubber outsole. All these improvements helped runners perform better.

He didn’t know it then, but Bowerman had officially started what would become one of Nike’s top value propositions: customization. The founding partners hired more salespeople who would park their cars at track events and sell shoes to the athletes. Bowerman enlisted the help of his students at the University of Oregon, who spread the news of the shoes to other runners. 

The company continued to succeed as a distributor. Still, they had been using Knight’s basement as a storage facility and were running out of space. So in 1966, they opened their first retail outlet in Santa Monica, California. The Tiger Cortez model officially made a debut in 1967 and became an instant sensation. It was cheaper and more comfortable than the shoes Adidas and Puma were producing. Bowerman and Johnson also worked on another shoe, the Boston, where they incorporated a cushioned mid-sole throughout the whole length of the shoe.

Due to this success, the company expanded its retail and distribution operations to the East Coast, specifically to Wellesley, Massachusetts. By the end of 1968, they failed to meet demand, which is when the constant battle for cash began.  

1968-1970: The Cash Flow & Demand Battle

The company ended 1968 with $150 000 in revenue. As sales of the Tiger Cortez began to double every year, Blue Ribbon Sports was again failing to meet demand due to a combination of reasons.

Firstly they were battling conservative bank credit that would not loan them more money. Secondly, Onitsuka Co. had a very slow-paced shipment process that required Blue Ribbon Sports to pre-pay orders a few weeks before shipment. This caused a significant cash flow problem for the company.

Knight and Bowerman continued to sell out at an alarming speed and fortunately found a way to offset limited demand. They decided to order double the amount of shoes per shipment. This strategy worked well for a while. By the end of the decade, the company had 20 employees, several stores, and an annual sales revenue of $300,000. 

Blue Ribbon Sports’ Business Model Canvas: The Early Days

At this point, Blue Ribbon Sports’ Business Model Canvas looked like this:

1971-1980: Nike Inc. is born

1971: the birth of nike & expansion.

Unfortunately, Onitsuka’s shipment process began to cause too many issues for Bowerman and Knight. When the two discovered that their Japanese counterpart was feeding their local market first and sending the leftovers to America, this created friction between the two parties.

It was extremely frustrating for Knight and Bowerman because the arrangement kept them in a constant state of negative cash flow. They had very little capital to pay for expansion, so they entered into an agreement with a Japanese trading company called Nissho Iwai Corporation, which loaned them the money they needed.

This allowed Blue Ribbon Sports to manufacture its own line of products using overseas independent contractors. At this time, Bowerman and Knight decided to rebrand, but it was Jeff Johnson who came up with the name Nike. They paid a Portland State University student named Carolyn Davis to provide sketches of the logo and eventually settled on the Swoosh design, which they paid $35 for (today having a worth of $26 billion alone).

Johnson was responsible for the Nike marketing campaign that included brochures, print ads, and catalogs. He was a vital element of the campaign’s early success and was pretty hands-on. He shot the photographs for the catalogs and even designed some of Nike’s early shoes. This early adoption of an aggressive marketing campaign was the foundation that strengthened the Nike brand.

1972: Nike Splits from Japanese Partner, debuts new line of shoes

With their own distribution channels in place and enough capital to manage their operations, Nike split from their Japanese partner. Onitsuka Co. filed a lawsuit claiming that Blue Ribbon Sports (now Nike) was selling their shoes without permission.

The judge ruled that both companies could sell their own versions of the shoe, and Nike concentrated on expanding its brand. The U.S. Track and Field Trials were coming up, and Nike wanted to debut a new footwear line in time for this event.

Bowerman was still trying to create more new designs, and one day as he was having breakfast, inspiration once again struck him. He was looking to design a shoe that would give athletes more traction, and as he looked down at the waffle his wife had made him, he got an idea. He wanted to invert the grooves to give the sole a waffle-like design for better traction without adding weight.

The idea worked, and Nike debuted the Moon shoe just in time for the Track and Field event. But there was one problem. How would Nike get the word out about their new design? Adidas was still the dominant product.

By the end of 1972, the company had made over $1.96 million in sales revenue. It had doubled its staff from 20 to 45 employees and now had enough capital to expand its operations into Canada.

1974: The first official brand ambassador & endorsement & first U.S. manufacturing plant

Nike opened its first U.S. plant in Exeter, New Hampshire, and expanded its staff to 250 employees. The worldwide sales neared $5 million by the end of 1974 due to the company’s aggressive marketing campaigns.

The company looked for an athlete who could endorse and bring awareness to Nike’s new line of track shoes. This was a completely new marketing strategy because up until this point there was no one who was using endorsement

 A young man named Steve Prefontaine agreed to be Nike’s first brand ambassador for $5,000. He was the right man for the job because he had never lost a race in his hometown. He was quickly gaining national exposure due to being on magazine covers like Sports Illustrated.

Nike also signed its first professional athlete, Romanian tennis player Ilie Nastase that year. They created their first promotional tagline, “There is no finish line,” which accompanied every appearance that their athletes made. Prefontaine, in particular, played a crucial role in the success of Nike’s first marketing campaign, sending several pairs of Nike’s shoes to other runners along with personal notes. 

That same year Nike released its version of the Cortez at the Mexico Olympics. By that time, the name Nike was attached to the careers of successful athletes. The message and value proposition was clear.  If you were a serious athlete looking for a shoe to help you perform better, you had no choice other than Nike.

Nike’s aggressive marketing strategy had been consolidated. It was clear from this early campaign that they had to invest in and build their brand using emotional marketing, sports endorsements, and high-quality, innovative products. 

1975-1979: Global Expansion & controversy

Nike’s growth really took off in the late 70s. Aside from its successful advertising campaigns, the company benefited from the rise of jogging in the country, a trend which had started after WWII when there was a move towards non-organized, individualistic physical and recreational activities. Sales revenue by the end of 1976 was sitting at $14 million. It doubled to $28 million in 1977.

Nike opened up several new factories around the world. They added a stitching plant in Maine and several production facilities in Taiwan and Korea. The company ventured into the Asian market and opened new retail and distribution shops in the continent in 1977 and in South America and Europe in 1978. They also added a new line of products for children that same year.

In 1979 Nike had sold almost half of the running shoes purchased in the U.S. and debuted a new line of sports clothing. By the end of the year, Nike had a 50% market share in the U.S.

Nike’s Business Model Canvas: Expansion

At this point, Nike’s Business Model Canvas looked like this:

1980 – 1989:  The Decade of Just Do It!, Michael Jordan, Going Public & Domination of the Sports World

By the 1980s, Nike had over 50% of the market, thanks to its groundbreaking designs and marketing campaigns. It had surpassed Adidas as the leading athletic shoe company in the U.S. In December 1980, Nike listed its IPO, offering two million shares of stock. Now the company had enough capital to keep expanding, especially in the European market.

1981-1982: Nike International Ltd & the European Soccer Market

Despite its success in the U.S., it became evident that growth in that market was slowing down. The jogging craze had waned, and the demand for running shoes was declining. Fortunately, by this time, Nike was well insulated due to its expansion into other sports shoes like basketball and tennis. They also had very successful lines of children’s shoes, work, and leisure shoes and clothing.

Nike incorporated Nike International Ltd to expand into Europe, Japan, Africa, Latin America, and Asia. The expansion was not smooth because they faced competition from Adidas and Puma, especially in Europe, where there was a strong soccer market. Nike opened a factory in Ireland, which helped them cut distribution and importation costs.

In 1982, Nike outfitted Ashton Villa, the team that went on to win the English and European soccer championships. Finally, Nike penetrated the soccer market and successfully reinvented itself as a soccer shoe manufacturer. 

1983-1984: A Slow Decline & A Nation-wide Marketing Strategy

However, the victory was short-lived as the company posted its first-ever drop in earnings during the first quarter of 1983. While the expansion in Japan and Asia did well, Europe was a different story.

 All five Nike subsidiaries in Europe were losing money, and things weren’t going too well back home either. The company’s traditional marketing strategy of supporting star athletes and sporting events seemed not to be cutting it anymore. Moreover, the company’s push into foreign markets and attempts to market its clothing line had cost a lot more than they had anticipated.

They decided to try a more aggressive approach and invested over $10 million in their first National T.V. ad, which was broadcast during the New York Marathon. They also bought advertising space in magazines and launched a ‘Cities Campaign’ using billboards and murals in nine American cities. They had mixed results, and by the time the 1984 Olympics arrived, profits were down almost 30%.

In an attempt to save the company, Nike executives decided to cut costs wherever they could. They started by consolidating their research and marketing departments and closing the Exeter, New Hampshire plant, which had been dedicated to that branch. They also laid off about 400 employees.

1985: Michael Jordan and Nike Air Jordan

Nike was facing significant challenges in 1985. Consumer tastes were changing, and people were moving away from jogging and more towards aerobics. The company created a new line of products to cater to this shift, and in addition, they acquired Pro-form, a small weight-lifting equipment maker.

Nike also did some restructuring by closing its last two U.S. factories and moving all production overseas where it was cheaper.

In a move that has been attributed to saving Nike’s dominance in the U.S. market, they entered into a deal with a young rookie basketball player called Michael Jordan. They designed the ‘Air Jordan’ as an adaptation of Nike’s Air shoe developed four years prior. (We don’t have to tell you how successful that partnership eventually became.)

1988-1989:  Just Do It! Campaign & More Restructuring

In 1988, Nike launched the Just do It! slogan, which eventually became one of their signature tag lines.

However, they were still facing revenue challenges and engaged in restructuring and budget cuts from 1987 into 1988. The only product that was doing well was their Nike Air shoes which Michael Jordan had endorsed in 1985.

Right until the end of the decade, Nike was struggling for air. They expanded into the casual dress and shoe market by purchasing Cole Haan. This proved to be a great strategy as profits and sales began to increase. They also enlisted Bo Jackson, a famous baseball and football player. They launched a new cross-training shoe under the ‘Bo Knows’ campaign.

The ’80s had been a challenging decade for Nike, and while they had managed to survive, they had a lot more trouble coming their way in the 90s.

1990-1999: Opening of the First Nike Shop & Becoming More than Just a Footwear Brand

1990: niketown and new headquarters.

The first half of the 90s was good for Nike. They saw company revenues hitting $2 billion in 1990 and acquired Tetra Plastics Inc., which produced plastic film for shoe soles. That same year Nike opened its first full-range Nike Shop called NikeTown in Portland, Oregon. NikeTown sold all of Nike’s products under one roof. The company also moved to its new eight-building World Headquarters in Beaverton, Oregon.

1991: Reclaiming dominance

Nike’s Air shoes and partnership with Michael Jordan had allowed them to surpass Reebok in the U.S. market. The good news just kept coming when their efforts to penetrate the European market finally paid off. Revenue from sales in Europe peaked at $1 billion, and by the end of 1991, Nike was second in the market only to Adidas.

In 1992 Nike celebrated its 20th-anniversary debt-free and with over $3.4 billion of revenue worldwide. They also opened a second NikeTown retail store in Chicago. Expansion of Niketown continued into 1993, opening chain stores in outlets all across the U.S.

Nike as a Lifestyle Brand

The trouble of the 80s had shown Nike that they had to move beyond being just a sportswear brand. In the mid-90s, as part of its long-term business strategy, Nike partnered with Mike Ovitz’s Creative Artists Agency to create and package sports events under the Nike name. This put Nike in direct competition with sports management giants like ProServ, IMG, and Advantage International.

Nike also began inserting itself into the lives of the athletes it sponsored by negotiating sporting, investment, and apartment contracts. While others in this sports world frowned upon such an invasion, Nike argued that it was part of their campaign to create an image that Nike was more than a product. It was a lifestyle.

1994-1995: Continued Dominance, acquisitions, and Tiger Woods joins Nike

Right up to the end of 1995, Nike was doing well internationally and locally, scoring deals with various companies and individuals. In 1994 they partnered with Canstar Sports Inc., a leading manufacturer of skates and hockey equipment. Canister was renamed Bauer and eventually incorporated into Nike’s new equipment-making division. Nike ventured into protective gear, watches, eyewear, and sports balls.

In 1995 Nike signed Tiger Woods with a $40 million endorsement contract which would later prove Nike’s most lucrative endorsements after Michael Jordan.

1996-2000: Sweatshop controversy, loss of revenue, and reclaiming the top spot

Since the 1970s, Nike had been battling accusations of using sweatshops for manufacturing their products. Because Nike’s business model was built on finding the cheapest cost of labor, they had opened factories in Asia. These factories were prone to child labor and poor working conditions.

These simmering rumors finally came back to bite Nike when a report highlighted that some of Nike’s factories were sweatshops. This changed the public’s perception of the brand and led to a sharp decrease in sales. The Asian financial crisis of 1997 caused a ripple effect that saw sneaker sales plummet. By the end of the decade, Nike was posting losses of up to $67.7 million.

Nike in 1998 established a department called All Conditions Gear (ACG) to reclaim the top spot, which would cater to street fashion and extreme sport consumers. This department would produce clothing and shoes for skateboarders, snowboarders, and mountain bike enthusiasts.

In 1999, Nike began selling its shoes directly to customers using their website. It also purchased 10% of the sporting goods e-commerce site Frogdog Inc, selling Nike’s full line of products online. 

In 2000, Nike also created a new division called Techlab to produce a line of sports-technology accessories. The new products included a high-altitude wrist compass, a portable heart-rate monitor, and digital audio players.

Nike had survived the worst, and with the help of strategic investments, adaptation to technology, and aggressive marketing, they managed to make an impressive comeback. 

Nike’s Business Model Canvas: The 21st Century

What’s fascinating about the Nike journey is their ability to accurately pinpoint problems in their business model and adapt to survive. When cash flow was a problem they solved it by going public. When their customer’s tastes changed, they developed new products, extended their services, and upped their marketing campaigns.

To this day, Nike continues to implement the same strategies. They focus on high-quality marketing campaigns, sports and celebrity endorsements, and innovative technology to make their shoes better and more advanced.

• Tags: adidas , business model canvas , endorsement , japan , michael jordan , nike , shoes , usa

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Exploring the Nike Business Model: How Does It Look Like?

August 18, 2023

In this article, we will delve deep into Nike's business model to understand what makes it so effective and how it has managed to create a lasting impact in the sportswear industry.

The Core Elements of Nike's Business Model

Nike, the renowned sportswear giant, has established itself as a dominant force in the industry through a combination of strategic elements that form the foundation of its business model.

By focusing on product innovation and design, marketing and branding strategy, as well as retail and distribution channels, Nike has successfully captured the hearts and minds of athletes and consumers worldwide.

Product Innovation and Design

At the heart of Nike's success lies its unwavering commitment to product innovation. The company invests heavily in research and development to create cutting-edge technologies that enhance athletic performance.

From the revolutionary lightweight Flyknit material to the responsive Zoom Air cushioning, Nike continuously pushes the boundaries of innovation, setting new standards in the industry.

What sets Nike apart is its dedication to understanding the specific needs of athletes across various sports. By collaborating with top athletes and sports teams, Nike ensures that its products are tailored to meet the demands of the most elite performers.

This collaborative approach allows Nike to create products that excel in terms of performance, comfort, and style, giving athletes the competitive edge they need to succeed.

Marketing and Branding Strategy

Nike's marketing and branding strategy is another critical element of its business model. The company has consistently invested in high-profile endorsements, forging partnerships with the biggest names in sports and entertainment.

From basketball legend Michael Jordan to tennis superstar Serena Williams, Nike has a long history of aligning itself with iconic athletes, cementing its status as a symbol of athletic prowess and excellence.

Beyond traditional endorsements, Nike has leveraged the power of social media to connect with its target audience. Through engaging content and interactive campaigns, Nike has successfully created a community of loyal brand advocates who proudly wear the iconic swoosh logo.

This strong brand loyalty has been instrumental in driving Nike's growth and maintaining its position as a leader in the sportswear market.

Retail and Distribution Channels

Nike's business model also places a significant emphasis on its retail and distribution channels. The company operates both brick-and-mortar stores and an extensive e-commerce platform, catering to the diverse shopping preferences of its global customer base.

With a strong retail presence, Nike ensures that its products are easily accessible to consumers worldwide. In addition to its own stores, Nike partners with a network of authorized retailers and distributors, further expanding its reach.

This broad distribution network allows Nike to penetrate even the most remote corners of the world, solidifying its position as a global leader in the sportswear industry.

Moreover, Nike's e-commerce platform has become an integral part of its business model, offering customers the convenience of shopping from anywhere at any time.

The company's robust online presence not only enhances its accessibility but also provides a platform for personalized shopping experiences and direct engagement with consumers.

In conclusion, Nike's business model is built upon a strong foundation of product innovation and design, marketing and branding strategy, as well as a well-developed retail and distribution network.

By continuously pushing the boundaries of innovation, aligning itself with top athletes, and embracing both physical and digital retail channels, Nike has established itself as a global leader in the sportswear industry.

Analyzing Nike's Revenue Streams

Nike, the global sportswear giant, has established itself as a powerhouse in the industry, dominating various revenue streams and consistently pushing the boundaries of innovation and design. Let's delve deeper into the different avenues through which Nike generates its revenue.

Footwear Sales

Undoubtedly, footwear sales form the cornerstone of Nike's revenue streams. With a vast collection of performance-driven sneakers and stylish lifestyle shoes, Nike has captured the hearts and soles of millions of consumers worldwide.

The brand's ability to cater to the diverse needs of athletes and fashion-conscious individuals has made it a go-to choice for footwear across all demographics.

Nike's constant release of new models and limited-edition collaborations has created a sense of excitement and exclusivity around its products. Sneaker enthusiasts eagerly anticipate each new release, lining up outside stores and refreshing online pages, contributing to the hype and driving sales.

This marketing strategy, coupled with innovative designs and cutting-edge technology, has led to consistently high demand and revenue growth in the footwear segment.

Furthermore, Nike's commitment to sustainability has resonated with environmentally conscious consumers. The brand's efforts to incorporate eco-friendly materials and manufacturing processes into their footwear have garnered praise and support, attracting a new segment of consumers who prioritize sustainability.

Apparel and Equipment Sales

While footwear may be Nike's bread and butter, the brand has also successfully expanded into the apparel and equipment market. Nike offers a wide range of performance apparel, including activewear, outerwear, and accessories, designed to enhance athletic performance and provide comfort.

Moreover, Nike produces a diverse range of athletic equipment, including basketballs, soccer balls, and training gear. By diversifying its product offering, Nike has tapped into additional revenue streams and solidified its presence in the sporting goods market.

Athletes and sports enthusiasts alike flock to Nike for their high-quality apparel and equipment, trusting the brand's commitment to excellence.

In recent years, Nike's foray into the athleisure trend has also contributed to its apparel sales. The rise of casual and comfortable clothing as a fashion statement has allowed Nike to leverage its brand reputation and offer stylish athleisure options that seamlessly blend fashion and functionality.

This strategic move has attracted a new demographic of consumers who seek both comfort and style in their everyday attire.

Licensing and Other Revenue Sources

Aside from footwear, apparel, and equipment sales, Nike also generates revenue through licensing agreements with other brands and through sponsorships of sports events and teams. These licensing agreements allow other companies to use Nike's iconic logo and brand image on their products, thereby extending Nike's reach even further.

Nike's partnerships with renowned athletes, teams, and leagues around the world have also been a major source of revenue. By associating its brand with the biggest names in sports, Nike not only gains exposure but also establishes itself as a symbol of excellence and success.

This, in turn, drives consumer trust and loyalty, resulting in increased sales.

Additionally, Nike's presence in the digital realm has opened up new opportunities for revenue generation. The company offers a range of digital services, including fitness tracking apps and personalized training programs, providing consumers with added value and creating additional revenue streams.

These digital offerings not only enhance the overall Nike experience but also allow the brand to engage with customers on a deeper level and gather valuable data for future product development and marketing strategies.

In conclusion, Nike's revenue streams extend far beyond its iconic footwear sales. The brand's success lies in its ability to cater to the diverse needs of consumers, adapt to market trends, and continuously innovate across various product categories.

With its strong brand image, strategic partnerships, and commitment to sustainability and digital innovation, Nike is well-positioned to maintain its dominance in the global sportswear market.

The Role of Sustainability in Nike's Business Model

Environmental initiatives.

In recent years, sustainability has become a key focus for businesses across various industries. Nike has been at the forefront of this movement, implementing various environmental initiatives to minimize its ecological footprint.

One such initiative is Nike's Move to Zero campaign, which aims to drastically reduce carbon emissions and waste across its supply chain. Nike is committed to using sustainable materials and manufacturing processes to produce its products, ensuring that every step of the production process aligns with its sustainability goals.

Social Responsibility and Community Engagement

Beyond environmental initiatives, Nike also places a strong emphasis on social responsibility and community engagement. The company actively supports initiatives that promote diversity and inclusion, as well as those that provide access to sports and physical activity for underprivileged communities.

Nike's partnership with grassroots organizations and its investment in sports programs for youth have had a positive impact on communities worldwide. By encouraging physical activity and promoting social change, Nike demonstrates its commitment to making a difference beyond the realm of sportswear.

Challenges and Opportunities for Nike's Business Model

Market competition and nike's position.

While Nike has enjoyed a dominant position in the sportswear industry, it is not without its challenges. The market is highly competitive, with rival brands constantly vying for market share. Nike must continuously innovate and stay ahead of competitors to maintain its leadership position.

Furthermore, changing consumer preferences and evolving fashion trends present both challenges and opportunities for Nike. The brand must adapt to shifting consumer demands while staying true to its core values and maintaining its unique position in the market.

Future Growth Prospects for Nike

Despite the challenges, Nike's business model holds promising growth prospects. The increasing adoption of athleisure and the growing global interest in physical fitness offer ample opportunities for Nike to expand its customer base.

Moreover, Nike's focus on sustainability and social responsibility aligns with the growing consumer demand for ethical and eco-friendly products. By staying at the forefront of these trends, Nike can continue to attract socially conscious consumers and tap into emerging markets.

Inside Nike's Business Model: The Blueprint for Athleticwear Success

Blue Ribbon Sports: The Humble Beginning

• Nike's journey started in 1964 as Blue Ribbon Sports, founded by Bill Bowerman and Phil Knight.
• Initially a distributor of Japanese athletic shoes, the brand took its first steps towards greatness.

Nike: A Name of Victory

• In 1971, the company underwent a rebranding and was renamed Nike, inspired by the Greek goddess of victory.
• The new name marked the beginning of a transformational era for the brand.

First Endorsement Deal: Elevating the Brand

• A pivotal moment arrived in 1972 when Nike signed its first endorsement deal with tennis legend Ilie Năstase.
• This landmark collaboration bolstered Nike's visibility and paved the way for future athlete partnerships.

Nike Air Technology: Revolutionizing Performance

• The late 1970s saw the introduction of the iconic Nike Air technology, a game-changer in the sneaker industry.
• Air cushioning in the sole provided athletes with enhanced comfort and support, setting new performance standards.

Strategic Partnerships: Gaining Traction

• Nike's success soared through strategic partnerships and innovative product designs.
• Collaborations with top athletes across sports helped solidify the brand's position as a force to be reckoned with.

The Air Jordan Phenomenon: A Cultural Icon

• The launch of the iconic Air Jordan line in collaboration with Michael Jordan marked a cultural phenomenon.
• This partnership transcended sports and became a symbol of style and self-expression.

Flyknit Technology: Redefining Athletic Footwear

• Nike's commitment to innovation continued with the development of Flyknit technology.
• This revolutionary construction technique changed the game for athletic shoes, offering unparalleled comfort and performance.

Pushing Boundaries: Unwavering Innovation

• Throughout the years, Nike has continued to push boundaries with groundbreaking products and technologies.
• From sustainability initiatives to cutting-edge designs, Nike remains at the forefront of sports and footwear innovation.

From its humble beginnings as Blue Ribbon Sports to its transformation into Nike, the brand's journey has been nothing short of remarkable. By embracing innovation, strategic partnerships, and athlete endorsements, Nike has solidified its place as an industry leader and a cultural icon.

The brand's unwavering commitment to pushing the boundaries of what is possible in sports and footwear continues to inspire athletes and consumers worldwide. As Nike's legacy evolves, one thing remains clear – the spirit of victory and excellence lives on in every stride taken in a pair of Nike shoes.

Nike's Mission and Vision

At the heart of Nike's business model lies its mission and vision. Nike's mission is to bring inspiration and innovation to every athlete* in the world. (*if you have a body, you are an athlete) This inclusive approach has allowed Nike to connect with a wide range of consumers, transcending boundaries and targeting both professional athletes and everyday individuals.

Moreover, Nike's vision is to create sustainable products that not only enhance athletic performance but also minimize the company's environmental impact. This commitment to sustainability has put Nike at the forefront of the industry, allowing it to appeal to socially conscious consumers.

As part of its sustainability efforts, Nike has implemented various initiatives to reduce its carbon footprint and promote responsible manufacturing practices. The company has set ambitious targets to achieve zero waste and carbon neutrality across its supply chain.

Additionally, Nike has been actively investing in renewable energy sources and exploring innovative materials and manufacturing processes that minimize waste and pollution.

Beyond its environmental initiatives, Nike is also dedicated to making a positive impact on communities around the world. Through its Nike Community Impact programs, the company supports initiatives that promote physical activity, education, and equality.

From providing access to sports facilities and coaching programs in underserved neighborhoods to supporting educational scholarships for aspiring athletes, Nike is committed to using its influence and resources to empower individuals and communities.

Furthermore, Nike recognizes the power of diversity and inclusion in driving innovation and fostering a positive work culture. The company actively promotes diversity in its workforce and ensures equal opportunities for all employees, regardless of their background or identity.

By embracing diverse perspectives and experiences, Nike believes it can better understand and serve the needs of its diverse consumer base.

Nike's business model is built on a rich history of innovation, strategic partnerships, and a commitment to sustainability and social responsibility. With its mission to inspire and innovate, Nike continues to shape the athletic footwear and apparel industry, setting new standards and pushing boundaries to empower athletes and individuals around the world.

In conclusion, Nike's business model is built on a solid foundation of innovation, marketing excellence, and a commitment to sustainability. By understanding its history, core elements, revenue streams, and focus on sustainability, we can gain deeper insights into what makes Nike a global powerhouse in the sportswear industry. As Nike continues to evolve and adapt to an ever-changing market, it will undoubtedly continue to shape the future of athletic performance and inspire athletes around the world.

Are you eager to dive deeper into the world of e-commerce?

Here are some highly recommended articles that offer invaluable insights into the online business landscape:

• How to Add Products to Your Shopify Homepage
• Do You Need a Seller's Permit to Sell on Shopify?
• Mastering Order Fulfillment on Shopify for Dropshipping

Exploring these articles will equip you with the knowledge to navigate the ever-evolving e-commerce world with confidence.

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Nike’s business model: How Nike makes money

If you love reading stories on how an underdog overcame all odds and finally emerged as a champion, Shoe Dog is the book for you. It’s a memoir written by Phil Knight, the co-founder of Nike, which takes you through his journey of how he went from a Japanese shoe importer to building one of the largest and most iconic sportswear brands in the world today.

I highly recommend you this page turner. Not only is Knight a great entrepreneur but he is also a gifted storyteller. Through his journey, you get to learn about his thoughts that went into building Nike from the ground up, Nike’s culture, and how things have changed for Nike over the years.

Business model

Nike is primarily in the business of selling footwear and apparel for the following categories — Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training, and Sportswear. The company also owns the Converse brand.

In the past ten years, Nike grew its revenue at a compounded annual growth rate of 7.0% from US$19.0 billion in 2010 to US$37.4 billion in 2020.

The sportswear company places a strong emphasis on innovation — spending a great deal of time and resources working with their stable of athletes to develop technologies to enhance the comfort and performance of their sportswear. Dri-Fit was one of their earliest innovations that is now a part of our daily lives. The fabric is made up of polyester fabric that transports sweat, heat and, moisture away from the skin to the outside of the garment where it evaporates, keeping you dry. Along with that, Nike has also created Nike Air, Zoom, Free, Flyknit, Flyweave, FlyEase, ZoomX, React, and many others.

Once the design is finalized, Nike sends it to independent manufacturers around the world to manufacture them. Their footwear is supplied by 122 factories from 12 countries while their apparels are supplied by 329 factories from 12 countries — mostly from Vietnam, Indonesia, China, and Cambodia. Through their 81 distribution centers worldwide, Nike sells products to wholesalers and consumers on their e-commerce platform.

Economic moat

When we think about sportswear brands, the top three that come to our minds are Nike (revenue: US$37 billion), Adidas (US$20 billion), and Under Amour (US$5.5 billion). Nike’s success since its inception has been built on the company’s brand equity using a combination of innovation, athlete endorsements, and marketing campaigns.

Consumers are willing to pay a premium because of the high perceived value of the brand. Because it generates the most revenue in its industry, Nike has the financial firepower to compete and endorse the top athletes in their respective fields, signing billion-dollar contracts with Cristiano Ronaldo and Lebron James .

Nike will then work with Cristiano Ronaldo to create his signature CR7 boots and create a brilliant marketing and advertising campaign around it to sell their products. Because for most people, it is not just about purchasing a pair of soccer boots. Instead, it’s about the association with the player believing that they could bend it like Ronaldo (sorry Beckham!) in the final minutes of the game and emerge victorious.

It is moments like these that make history (and money) for both Nike and their coveted athletes long after they retire. This is where players become ‘products’, with the potential for Nike to replicate their success with the Jordan brand that raked in US$3.6 billion alone in 2020. Over the years, the Jordan brand has turned into a lifestyle brand that has attracted a cult-like following. Consumers are willing to wait hours for the release of a new pair of Jordans and even pay US$615,000 for the red, black, and white Nike Air Jordan 1 sneakers that were worn by the man himself during a 1985 exhibition game in Trieste, Italy. That, my friend, is the power of a brand!

Counterfeit products could significantly damage Nike’s brand image. Consumers who unknowingly purchased a fake Nike product made up of low-quality materials from retailers might think that the sportwear company is ‘losing it.’

Aside from that, Nike is entrenched in a highly competitive industry that’s subjected to changes in trends. The company has to keep its eyes and ears on the ground and constantly spend money in innovating and designing high-quality products that appeal to their customers.

The fifth perspective

Sport apparel and equipment can be fickle market in part due to fashion trends and consumer behaviour (anyone remember Reebok?). But Nike has managed to remain on top of the roost for more than 30 years due to its innovative products, brand power, and exceptional marketing.

As long as people around the world continue to witness the glory of sport and worship its heroes, Nike is likely to remain one of the biggest players in due to its dominance among top-tier athlete endorsements that their financial might gives them.

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Complete Business Model of Nike | IIDE

By Aditya Shastri

Nike’s journey from a Japanese shoe importer to building one of the largest and most iconic sportswear brands in the world today. The Journey has been so stimulating and phenomenal. Nike is the leading brand of athletics shoes, apparel,  sports equipment, and sports-related services. It has a market share of $39.1 billion making it the largest sports brand in the world.

Nike, one of the most valued apparel brands, has always kept its customer on their toes with its captivating advertisements and athlete endorsements with the best-known sportspersons like Cristiano Ronaldo.  Thus this makes us eager to know the business model of Nike.

In this Case Study, We will be discussing the business model of Nike and its marketing strategies. 

But, before we go through its business model let us know about Nike as a company.

About Nike 

Founded in 1964 as Blue Ribbon Sports by the Coach and Student duo, Bill Bowerman and Phil Knight who are currently the co-founders of the company. It became Nike in 1971 which was named after the Greek goddess of victory.

The company’s world headquarters are situated near Beaverton, Oregon, (USA). It employs over 75,500 people around the globe. In 2020 the brand alone was valued at around $32 billion, making it the foremost valuable brand among sports businesses.

Nike is well known for its ‘Swoosh’ logo and its “Just Do It” slogan. Other than its own brand, Nike also markets its product offerings under the brand names Nike Pro, Nike+, Nike Golf, Nike Blazers, Air Jordan, Air Max, and others as subsidiaries including brands Jordan, Hurley Int. and Converse.

Now having known so much about the company, let’s understand how does this valuable brand make money by looking at its detailed business model.

Business Model of Nike 

The business model is used to determine a company’s plan for generating revenue. It determines the products or services the business plans to sell, its identified target market, and any anticipated expenses.

Let’s take a look at all the elements of Nike’s Business model one by one.

Let us start with Nike’s product offerings.

1. Nike’s Product Offerings 

Nike is predominantly into the business of selling footwear and sports apparel in the following product categories — Running, Nike Basketball, the Jordan Brand, Football (Soccer), Training, and Sportswear. The company owns the Converse brand as well. 

Let us now see Nike’s customer segments.

2. Nike’s Customer Segments 

Nike markets itself to anyone who wants to purchase athletic and sports apparel, footwear, and equipment. Geographically speaking, Nike’s customer market is split into 4 main divisions, in order of revenue the regions being-  North America, EMEA (Europe, Middle East, and Africa), Greater China, and APLA (the Asia Pacific and Latin America).

Let us now see Nike’s value proposition.

3. Nike’s Value Proposition 

Nike offers a diverse variety of products to inspire anyone to become an athlete. Their products heavily rely on the quality of their products, innovation (R&D), and status of the brand. This is the foundation of the Nike brand and it’s exactly what the customers seek when they buy a Nike product. 

Let us now check the marketing channels of Nike.

4. Nike’s Marketing Channels 

Nike uses many different channels for marketing. Its main marketing channel is its brick-and-mortar stores, especially the Nike-branded ones. The company has a scattered sales network, with 1,152 physical stores throughout the globe. Nike also has an e-commerce platform, which serves in over 45 countries.

Besides these channels, Nike also employs other channels, such as social media, digital, print, TV advertising, brand events, and heavy sponsorship of athletes and teams.

Now we shall see Nike’s customer relationship.

5. Nike’s Customer Relationships 

The relationship with the purchasers is practically restricted to self-service. The customer can check the merchandise in the store (online or offline), buy and use it. Nike also assigns each of its customers a unique Nike ID which is a personalization service that brings Nike products closer to customer’s desires.

Let us now see Nike’s revenue stream.

6. Nike’s Revenue Streams

The revenue of the company is derived from the sales of its products: footwear, apparel, equipment, and accessories. In the past ten years, Nike has successfully managed to grow its revenue at a compounded annual rate of growth of 7.0% from US $19.0 billion in 2010 to US $37.4 billion in 2020. 

Nike makes money by merchandising footwear via wholesale customers that distribute the Nike brands across the world.

Let us now see the key resources of Nike.

7. Nike’s Key Resources 

It has five physical distribution centres all over the world. It also has a team sports research lab and it has the third-largest design patent portfolio within the United States.

Let us now see what are the key activities of Nike.

8. Nike’s Key Activities 

The main key activity of the corporate is designing and developing the products. In order to achieve that, other activities are involved, such as negotiation with the suppliers, marketing, sales, and advertising are essential.

Let us now see the key partners of Nike.

9. Nike’s Market Share 

Nike Waffle Shoes sold for $475,500, becoming the most expensive sneakers ever auctioned while Nike at present has 1,152 brand stores worldwide. Nike’s market share stood at around 27.4% during 2019, before its industry rivals Adidas and Reebok, making Nike the world’s largest company in the global footwear market.

Let us now see Nike’s competitor’s analysis.

10. Nike’s Competitors Analysis 

Nike is amongst the largest and top three sports apparel companies i.e. Nike, Adidas, and Reebok and which makes the other two companies the top competitors of Nike Inc.

Adidas & Reebok

In 2005, Adidas acquired Reebok for $3.8 billion. After the businesses, Reebok and Adidas have acquired a robust position to compete with Nike. Adidas group consists of three subsidiaries i.e. Reebok, Runtastic, and TaylorMade. 

Accordingly, Adidas and Reebok are the strongest competitors of Nike with Adidas being the second-largest shoemaker in the world. Adidas’s brand valuation is $14.3 billion and revenue amounted to 21.218 billion (Euro), whereas Reebok’s revenue amounted to 1.41 billion (Euro).

Let us see the cost structure of Nike.

11. Nike’s Cost Structure 

The largest expense for Nike is the cost of goods sold (mostly inventory and warehousing), that account for over $21 billion per year. In addition, around $3 billion are spent on marketing, including advertising and promotion costs, sponsorship, media, brand events, and retail brand presentation. The rest of the general and administrative expenses account for over $500 million expense each year.

After having understood the business model of Nike, let’s dive into the digital marketing that contributed to the success of the company. 

Secrets behind the Digital Marketing Strategies Adopted by Nike 

Nike has successfully transformed the athletic industry with its technological innovations, but today many of us know the corporate by its flashy ads and sports celebrities.

Well most definitely Nike can be termed as a marketing-oriented company, and their product is their most vital marketing tool. In digital marketing, when the term monsters are used, it basically refers to those giant companies whose success is immense, and every action within their online strategy implies multimillion-dollar profits. Nike is one among the other representatives of this category and a king in Marketing.

Let’s look into the Secrets Behind Digital Marketing Strategies Used by Nike.

1. Focus should always be on Telling a story instead of the brand itself

Nike believes that Gone is the era in which the marketing strategies were linked to giving characteristics of the company’s products only, in today’s date brands have to sell a story to keep people hooked for a longer-term. 

Nike implemented this by shifting its focus from object-based ads to create a story around inspiration. ‘Just Do It’, Nike’s well-known slogan that invites a lifestyle that revolves around overcoming difficulties and invites people to reach their own potentials.

Let us now see the platforms that Nike uses.

2. Using the Platforms that the Customer Use

Nike found out that its target audience preferred youtube as its customer channel rather than television.

Nike believed that a brand must not be the one that just waits for the customer to find them. Instead, it should be the ones who must do the work of reaching its target audience. As a result of this, Nike’s latest video ads have had more airtime on YouTube than on television. 

3. Always Allow the Target Audience to create their own content 

Nike believes that a brand must give its customers the opportunity to customize its products according to their needs and preferences. For this Nike gave the customers the option of customizing the design of sports shoes in accordance with their style. This strategy makes users feel like a valuable subject for the company. 

Source: www.medium.com/@OnTechedge

4. Develop Viral Content that people will love to read and share 

The history of Nike advertising has witnessed many ups and downs, but most of the time, the trend has been phenomenal. Nike has always believed that creating viral content is the key to grab your target market’s attention. 

Implementing this they have always innovated and proposed new ways of distributing new ideas. And as a result, Nike’s advertising became popular all around the world which isn’t so easy to achieve for a sports shoe manufacturing company.

5. Always Be Aware of the Current Social Issues 

It is very important for any brand to be aware of the current social issues surrounding the world. It should have few campaigns addressing them, for this Nike always tried to project a picture of authenticity and choose such protagonists for its advertisements characters that symbolized nascent social and cultural movements. 

In the following years, Nike has developed its tactics by placing a greater emphasis on the spokesperson of its products and combining them into a successful strategy, by signing contracts with the most popular athletes. Which made it an “Athlete’s Brand”. 

With this, our case study on Nike’s business model has come to an end. So let’s conclude this case study.

On the analysis of the business model of Nike, we can see that it has implemented its business model splendidly.  Its product offerings, customer segmentation, value proposition, customer relationship, key activities, etc are on point.

The evolution of Nike’s advertising campaign proves that the digital marketing strategies were a hit. The success story of Nike is halfway based on constant innovation and timely investments, which have resulted in Nike making a profit of over millions of dollars each year.

The success of the business model of Nike relies on the sum of innovation and marketing. The company faces some serious competition in the market – such as Adidas or Reebok. Honing their digital marketing strategy, Nike is making master moves to ensure that they are at the forefront of digital marketing and giving customers what they want, easy and fast. 

Wasn’t it interesting to know the business model of Nike? Learn how to grow your business using digital marketing, check out our website for more information .

You can also check out Free Digital Marketing Masterclass by IIDE to understand what digital marketing is all about.

If you are interested in digital marketing and wish to be in touch with our academic counsellors then connect with them at [email protected] for a free counselling session.

Hope you liked this case study and found it informative and insightful! 

Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

Amazing content, keep it up, you gained a fan! I hope you create more content like this.

Wow! This case study dives deep into Nike’s business model, showcasing its key success factors and strategies. Amazing!

With amazing products and smart marketing, they’re sprinting ahead in the sportswear race. Nike’s business model is great!

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Nike Business Model (2024) | How Does Nike Make Money

6 minutes read

When it comes to athletic shoes, sports apparel, and related products, Nike stands out as one of the foremost brands that readily comes to mind. While numerous factors have fueled the company’s success, a standout reason behind Nike’s enduring market dominance is its meticulously designed business model.

In this article, we will delve deeper into the components of Nike’s business model and grasp its pivotal role in propelling the company to the zenith of success.

A Brief History of Nike

When you think of athletic footwear and sports apparel, the Nike brand would immediately come to mind. Named after the Greek goddess of victory, the company was originally called B lue Ribbon Sports when it was born in 1964. Its founders were track athlete Phil Knight from the University of Oregon, and his coach Bill Bowerman.

At the time, they were just a distributor of Onitsuka Tiger, a popular Japanese shoe brand. They sold over 1300 pairs of shoes in the first year, and business rapidly grew. In 1971, BRS and Onitsuka Tiger had a falling out after the Japanese company attempted a buy-out. This led BRS to create its own footwear line. It was also during this time that the company was officially renamed as Nike, and the world-renowned Swoosh logo was born.

During their first year in business, Nike earned approximately $8000 in sales. Today, the brand has a net value of $191.79 billion and has retail outlets in 170 countries. Based on trends from the last few years, there is no doubt that the company’s net worth will continue to grow in the years to come.

Nike Business Model Canvas

The Nike business model clearly demonstrates how the company makes money. It begins by creating value for its target consumers and then proceeds with describing how to deliver this value to the buying public in the form of products and services. The business model comprises numerous vital elements, all of which contribute to the company’s triumph, ranging from value propositions to revenue streams, and much more. We will closely examine each of these elements shortly.

Nike Business Model Canvas as Created in Boardmix

It is much easier to analyze the Nike business model if it is laid out in a clear and organized manner, just like in the example below. This Nike business model canvas was created using Boardmix , and gives us a better perspective for our evaluation.

Value Propositions of Nike

The Nike brand is centered on athletic products, primarily footwear, as we can clearly see in the Nike business model canvas. But Nike does not simply provide shoes to athletes. Rather, they send the message that anyone can be an athlete with the help of the superior quality and innovative products that Nike has to offer.

For years, Nike has been successfully offering and delivering value to their target market. In addition to using only the finest raw materials and the highest level of craftsmanship and technology, they have also partnered with popular sports personalities to further elevate their brand.

Customer Segments of Nike

Nike’s remarkable success can be attributed to its products’ broad appeal. The company targets not only professional athletes but also a wide-ranging audience seeking their products for various purposes, including casual wear, not just sports.

Nike has four divisions around the world that cater to their different geographical markets. The main operations are in North America, and there is also the EMEA which consists of Europe, the Middle East and Africa, Greater China, and finally, Asia Pacific and Latin America.

Key Partners of Nike

Nike has forged partnerships with several other companies to ensure the smooth and continuous flow of operations. A large percentage of these partnerships have to do with manufacturing, since Nike does not have their own facilities but instead, outsources the work to contractors. To date, there are over 145 factories making their footwear and over 400 factories producing their clothing. Most of these partner manufacturers are outside the US.

Moreover, Nike engages in collaborations with esteemed research partners, such as prominent universities in the US, Europe, and Asia, to ensure the development of premium products. Rigorous research efforts are undertaken to elevate the planning, design, and development phases.

Key Activities of Nike

As many would assume, the biggest key activity of Nike is the creation of their extensive line of products. However, there are also a lot of other key activities that are crucial to the process. As mentioned earlier, this includes considerable research. In addition, the company also regularly engages in negotiation with suppliers, developing marketing strategies, and creative advertising.

Customer Relationships of Nike

As Nike primarily operates in the retail sector, customer relationships are predominantly self-service. While salespersons are available to assist customers when needed, whether online or in physical stores, most customers tend to independently select and make their purchases, resulting in a relatively indirect relationship between customers and the company.

Key Resources of Nike

Key resources refer to the assets that Nike uses to deliver value to their customers. This includes the five distribution centers that they have in Memphis and California, from where the products are sent to thousands of outlets around the world. There are also the very important researchers, who tirelessly come up with new innovations that make the brand current and relevant.

The intellectual property of Nike is one of its most valuable key resources. This includes copyrights for the Nike brand a nd logo, and all the patents for the designs of every single shoe and apparel that they have created. So far, the brand’s patent portfolio includes a little over 34,000 items , and they are showing no signs of slowing down.

Channels of Nike

We can clearly see in the Nike business model canvas that the company’s largest marketing channel is its traditional stores. Despite the rapid rise of eCommerce, Nike knows that when it comes to footwear, a lot of consumers still prefer to actually fit it before buying. This is why they invest heavily in physical stores, of which they now operate 1,032 around the world .

They do have a robust online presence as well, not to mention the multiple channels they have for marketing and advertising. These include social media, TV, print, and a range of digital advertising. They also maintain a vast sponsorship portfolio for athletes and sports teams, which take up a large percentage of the company’s overall spending.

Cost Structure of Nike

Considering the large volume of products that the company keeps in stock, it is no surprise that most of its expenses go into warehousing and inventory, as we can see in the Nike business model canvas above. This alone accounts for about $21 billion of the company’s expenses per year. This is followed by marketing and administrative expenses which total $3 billion. Administrative expenses take up about $500 million annually.

Revenue Streams of Nike

Nike’s only revenue-generating activity is the sales of its extensive range of products. Footwear sales account for the majority of sales, which exceeded $29 billion in 2024. This is followed by apparel sales of $13.5 billion. Equipment sales generated a revenue of more than $2.35 billion, while more than $1.6 billion came from sales of the Converse brand.

How Does Nike Make Money

Taking a look at all these elements of the Nike business model, it is easy to see how Nike generates the kind of income that they have had for decades. Nike has clear  STP marketing strategy . It started when they were able to successfully create value for their target market by manufacturing top-quality athletic products through independent contractors. Although these products were designed mainly for sports, the buying public has embraced the products so well that they are now being used for casual purposes as well. The brand gets most of its income from its own retail outlets or through its thousands of distributors located all around the world.

Key Takeaways

The Nike business model serves as a compelling example of effectively delivering value to customers while maximizing revenue potential. Since its inception, the company has prioritized marketing and innovation, a strategy that has consistently propelled Nike to its position as the leading sports brand globally for many years.

To perform your analysis of the Nike business model canvas independently, you can utilize the pre-designed Business Model Canvas template on Boardmix . This template provides a structured overview of each element, facilitating a comprehensive evaluation.

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Features of Creating Business Model Canvas on Boardmix

Developing a Business Model Canvas is a strategic activity often undertaken by startups and established businesses to identify and plan out different business aspects. Boardmix online whiteboard has numerous features that make this process more intuitive, efficient, and collaborative. 

1. Interactive Whiteboard Interface

Boardmix's digital whiteboard allows users to visually layout and connect various components of the Business Model Canvas, like Key Partners, Value Propositions, Customer Segments, etc. The ability to write, draw, or annotate on the board facilitates clear expression of ideas.

2. Real-time Collaboration  Boardmix’s collaboration feature enables teams to work on the same Business Model Canvas simultaneously. This real-time interaction allows for immediate feedback, brainstorming, and iteration, which can significantly enhance the canvas’s quality and relevance.

3. Drag-and-Drop Functionality 

Reorganizing ideas and elements is made easy with Boardmix’s drag-and-drop functionality. This feature helps to effortlessly structure or restructure the canvas, making the modeling process flexible and adaptive to evolving business strategies.

4. Multimedia Integration 

Supplement your Business Model Canvas with rich multimedia content. Integrate images, documents, or even video clips directly into the canvas to provide additional context or explanation, enhancing comprehension and engagement.

5. AI-Enhanced Brainstorming 

Boardmix’s AI enhancement feature can stimulate brainstorming by suggesting related concepts based on the inputs you provide for your Business Model Canvas. This innovative feature can contribute to the development of a comprehensive and robust business model.

6. Ready-to-use Templates 

Boardmix offers pre-made Business Model Canvas templates, accelerating the modeling process. These templates provide a well-structured format that can be readily filled in with business-specific details.

7. Secure Cloud Storage

With Boardmix , you never have to worry about losing your work. Your Business Model Canvas gets auto-saved and stored securely in the cloud. This means you can access your canvas from anywhere and at any time.

By utilizing these features of Boardmix Online Whiteboard, developing a comprehensive and visually engaging Business Model Canvas becomes an enjoyable and effective process.

References:

https://en.wikipedia.org/wiki/Nike,_Inc .

https://fourweekmba.com/nike-revenue-breakdown/

https://iide.co/case-studies/business-model-of-nike/#Business_Model_of_Nike

Join Boardmix to collaborate with your team.

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Careers at Nike

Nike’s mission is to bring inspiration and innovation to every athlete in the world.

Business segments

Nike is a producer of athletic footwear, apparel, equipment, accessories, and services. The company operates six reportable segments based on geography: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets.

In 1962 Stanford Business School graduate Philip H. Knight was traveling through Japan when he took a liking to the athletic shoes he saw there. He contacted a Japanese shoe manufacturer, Onitsuka Tiger Co., and convinced it to import some of its products to the U.S. He believed that the running shoes could challenge the dominance of German-made counterparts in America. The businessman founded the company Blue Ribbon Sports (BRS) to oversee the distribution of the products.

In 1963 Knight received 200 pairs of Onitsuka’s Tiger athletic shoes. He kept them in his father’s basement and sold them at track meets in the neighborhood. His business became a partnership when his old track and field coach, William Bowerman, invested $500 in the venture. Bowerman had spent much time studying new designs for running shoes. When BRS began designing prototypes, he used his knowledge (along with insights from runners) to make enhancements.

BRS got off to a strong start, selling 1,300 pairs in 1964, and acquired its first retail space in 1966. Bowerman’s expertise paid off when a shoe he designed called the Cortez became a top seller in 1968. He continued developing innovative products, including a shoe with a nylon upper portion and a shoe that had a cushioned midsole through its entire length. By the end of the decade, Knight’s operation had expanded to 20 employees and many stores, with annual sales approaching $300,000.

In 1971, with financing from a trading firm, BRS began using independent contractors to manufacture a line of products. The company chose a swoosh symbol as its logo and gave it the name Nike, after the Greek goddess of victory. One year later, BRS separated from Onitsuka following a distribution disagreement. With a fresh start, it began marketing the new line at the 1972 Olympic trials as a shoe for serious athletes. It also created a promotional tagline, “There is no finish line.”

The new offering was a major success. In their first year, the products generated $1.96 million in revenues, enabling staff and store expansion to Canada (its first foreign market) and Australia. The next few years saw major milestones. BRS opened its first U.S. plant in New Hampshire. Its shoes were worn by numerous athletic stars at the 1976 Olympic trials. In 1978, it added a childrens’ line, and officially changed its name to Nike. The firm’s success enabled it to go public in 1980.

Benefits at Nike

Business model of Nike

Customer segments.

Nike has a mass market business model, with no significant differentiation between customers. The company targets its offerings at any consumer who is interested in athletic footwear and apparel.

Value Proposition

Nike offers four primary value propositions: accessibility, innovation, customization, and brand/status.

The company creates accessibility by offering a wide variety of options. It has acquired numerous footwear and apparel firms since its founding, including Converse and Hurley International. These actions have enabled it to expand its product lines, giving consumers more to choose from.

The company places a strong emphasis on innovation. It maintains the Nike Explore Team Sport Research Lab at its headquarters, a research facility focused on designing cutting-edge products. It also operates the Nike Advanced Product Creation Center, focused on technology incorporation.

The company enables customization through its service NikeID. It allows customers to personalize various aspects of their shoes, including sport style, traction, and colors. Socks can also be tailored.

The company has established a strong brand as a result of its success. It is the top seller of athletic footwear and apparel globally. It has partnered with several of the world’s leading athletes to promote its products, including Michael Jordan, Cristiano Ronaldo, and Tiger Woods. Lastly, the company has won many honors, including recognition as the “World’s Most Innovative Company“ by Fast Company (2013) and the “Most Admired Company in America“ for apparel three years in a row.

Nike’s main channel is physical retail stores, including its Nike-branded stores. It also acquires customers through its website and a combination of independent distributors and licensees worldwide. The company promotes its offering through its social media pages, online/print/TV advertising, brand events, and sponsorships of athletes and professional/college sports teams.

Customer Relationships

Nike’s customer relationship is primarily of a self-service nature. Customers use its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone, e-mail, and live chat support.

Key Activities

Nike’s business model entails designing and developing its products for customers.

Key Partners

Nike utilizes independent contractors for manufacturing purposes. The items are produced in 146 footwear factories located primarily in Vietnam, China, and India, as well as 408 apparel factories located mostly in China, Vietnam, Sri Lanka, Thailand, Indonesia, Malaysia, and Cambodia.

The company’s aforementioned Nike Explore Team Sport Research Lab maintains research partnerships with several leading universities and institutions in North America, Europe, and Asia. The alliances provide it with access to top athletes as well as cutting-edge science findings.

Key Resources

Nike’s main resources are its physical and human resources. Its Nike Explore Team Sport Research Lab, which creates innovations, has state-of-the-art research equipment. It also features over 40 researchers, many of whom have earned Master’s degrees and doctorates in various disciplines including biomedical engineering, biomechanics, kinesiology, mechanical engineering, physics, physiology, and systems science. The company maintains advisory boards and research committees consisting of athletes, trainers, coaches, orthopedists, podiatrists, equipment managers, and other experts who provide guidance in the product design and development process. Nike has five distribution centers in Memphis, TN as well as centers in California. Lastly, it places a high priority on its intellectual property, maintaining the third-largest design patent portfolio in the U.S.

Cost Structure

Nike has a value-driven structure, aiming to provide a premium proposition through frequent enhancements to its products. Its biggest cost driver is cost of sales, a variable expense that primarily includes inventory and warehousing costs. Other major drivers are in the areas of overhead, sales/marketing, and administration, all fixed costs.

Revenue Streams

Nike has one revenue stream: sales of its athletic footwear, apparel, equipment, and accessories.

info: Philip earned a Bachelor’s degree at the University of Oregon and an MBA at Stanford Business School. He previously served as President of Nike, as a CPA at PricewaterhouseCoopers & Lybrand, and as a professor at Portland State University.

info: Mark earned a B.S in Political Science from Pennsylvania State University. He previously held numerous executive roles at Nike, including Vice President of Global Footwear, Vice President of Consumer Product Marketing, and Co-President of the Nike Brand.

info: Andy earned an MBA from UCLA and a J.D. and LL.M. in Taxation from the University of San Diego School of Law. He previously served as SVP of Strategy, Finance, and Investor Relations and as VP of Global Planning and Development at Nike.

info: Hilary earned a B.A. at Stanford University and a law degree from The University of Chicago Law School. She previously served as SVP, General Counsel and Corporate Affairs at Levi Strauss.

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Nike’s New Business Model Focusing on DTC: What Business Students Stand to Learn

If all companies’ business models stayed the same, they would fail. In recognition of the need to evolve and increase profits, Nike has undergone a dramatic change to how they do business

Just a few years ago, Nike announced a dramatic change to its overall business model. The change to the model, along with its resounding success, is an excellent example of the importance of innovation in business. It also highlights Nike’s extraordinary ability to create a world-recognized brand and maintain its status as an industry leader.

The Changes to the Business Model – In Summary

Historically, Nike has had some direct-to-consumer (DTC) sales but went on to focus primarily on wholesale. Recently, however, the company announced a planned shift to focus primarily on DTC sales.

A Closer Look at the Changes to the Business Model

For most of the company’s history, Nike has worked primarily with wholesalers. The brand had a fairly typical business model. They sold the products to wholesalers, who then displayed the products in their stores and sold them to customers. Wholesale partners included department stores, sporting goods stores, mom-and-pop shops, and more.

Now, it is incredibly difficult for wholesalers to work with Nike. The brand has gone all-in on a direct-to-consumer strategy which means that even wholesalers who worked with them for years can no longer buy the products. This has led to a significant shift in how people buy Nike shoes. Now, Nike primarily sells shoes to consumers via digital channels, such as its various apps and website. The company also has branded immersive stores.

Nike Combines DTC Experiences 

Examining Nike’s DTC approaches shows a significant amount of overlap. Like most brands, there are both digital solutions, like the website and apps, and physical locations. But Nike has taken the integration of technology and the digital experience in stores to the next level.

Specifically, Nike gives in-store shoppers multiple ways to use their phones to improve the shopping experience. They can start a dressing room or pull up products on their phones. To streamline the new customer experience, Nike also has signs throughout its stores highlighting the various smartphone-connected in-store features.

How Wholesalers and Stores Are Adapting 

Stores that used to rely on Nike for a significant amount of their income had to think quickly to determine a way to keep selling the products or fill the gap. For many stores, the only option to stock Nikes became doing so “on consignment.” With this model, the stores themselves do not own the shoes. They are owned by someone else who consigns the shoes to the store. When sold, the store takes a cut of the profit, but the owner of the shoes makes the bulk of the money. There are obvious complications with this new consignment option. For one, it makes it much more challenging for stores to offer Nikes at all, let alone a variety of them. Stores may have to work with multiple people who want to consign their shoes and those people can’t buy the shoes wholesale either.

On top of that, the process cuts into the profit margins of the stores. They can still ultimately control their profits via the price of the shoes, but they have to increase the prices to make the same profit they had previously made as wholesalers. The owner of the shoes who consigns them to the store is essentially another middleman in the process, meaning another cut of the profit is taken out.

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The Role of Influencers 

With the new DTC approach, social media influencers play a larger role in Nike’s overall approach. They become a key part of the brand’s marketing as influencer-created content reaches consumers. On top of that, Nike works with some social media influencers like they previously worked with wholesale retailers. For that part of the relationship, Nike largely determines which influencers to sell to based on audience size and reach.

The Effect on Prices 

For consumers who buy shoes directly from Nike, as is the brand’s goal, there is not necessarily a dramatic change in the prices. However, many shoes are now in high demand. This lets Nike sell them for more, but it also means that shoppers must act fast if they want a particular shoe.

That scarcity, combined with the consignment model many stores are using, has driven prices up. The fact that shoes in stores now feature an extra middleman (the owner who consigns them) has also driven prices up. In fact, some basic models can now reach $1,000 or multiples of that for a single pair. It is not hard to find a pair selling for $10,000 or more.

The Effect on Shoppers

In addition to the rising prices, this change means that Nike buyers will find themselves with limited options for trying the shoes on. This is especially true given that in many stores that sell the shoes on consignment, the sneakers are wrapped in plastic.

Other Key Elements of the Consumer Direct Offense

The Consumer Direct Offense strategy from Nike is a well-rounded approach that involves more than the transition to DTC. It also includes accelerating innovation and the creation of products. It features expanding operations in 12 strategic cities in ten countries as a way to move physically closer to consumers. Finally, it aims to deepen the one-on-one connections with customers by creating more interactive experiences.

Consumer Direct Acceleration Further Emphasizes the DTC Priority

Nike followed up its Consumer Direct Offense in 2020 with the Consumer Direct Acceleration. This began with the creation of a connected digital marketplace for a seamless brand experience. It includes Nike’s store concepts, including the Nike House of Innovation, Nike Unite, Nike Live, and Nike Rise. The common theme is that Nike aims to connect digital services with offline ones.

This Consumer Direct Acceleration also includes more straightforward categories for kids, women, and men. It also features aggressive digital investment. Since announcing the initiative, Nike has invested in demand sensing, inventory management, and insight gathering.

The Extent of the Shift from Wholesalers to DTC

Simply stating that Nike has decided to shift its business model to focus more on DTC than wholesalers is not enough. It doesn’t accurately show the extreme degree to which the shift occurred. The changes began in 2017 when the brand announced a “consumer direct offense.”

A better point of comparison is to look at Nike brand sales in 2011 and again for the 2021 fiscal year. In 2011, 84% of the sales were to wholesale customers. The remaining 16% were direct to customers in Nike stores and via its website. By the end of the 2021 fiscal year, direct sales (from the main Nike brand) were up to 39%. Wholesale sales were at around 61%.

More recent figures show that the focus on DTC continues to be a success. Figures from the most recent three-month period ending on February 28th confirm this. During that time, Nike had a 17% increase in direct-to-consumer sales. Those DTC sales accounted for 42.3% of Nike’s overall revenue for the fiscal third quarter.

Nike Is Still Working with Certain Wholesalers

While Nike has shifted its focus on direct-to-consumer sales, the brand still works with some wholesalers. According to Nike, the focus is on “compelling local neighborhood partners” with connections to sports performance and lifestyle. This includes some of the brand’s larger strategic partners, such as JD Sports, Foot Locker, and Dick’s Sporting Goods. The brand also still works closely with local skate shops.

In practical terms, Nike is only working with retailers that feature it prominently and make the brand seem special. Even then, Nike will not work with every retailer that does this.

The Future of the Transition

If Nike’s plan remains on track, direct sales will account for 60% of its business by 2025 . This figure will include digital sales.

For reference, the original goal was to hit 30% digital penetration by 2023. In this case, digital penetration refers to 30% of the total sales being e-commerce revenue from Nike. But the brand achieved that in 2021. This was then replaced with a goal of 50% digital penetration for 2022.

Reasons for the Shifting Business Model

When Nike announced its “consumer direct offense” in 2017, it highlighted some of the reasons it chose to change strategies.

Direct Sales Boost Profits

One of the likely reasons for the push on direct sales is that it improves the profit margins. With direct sales, there is no middleman taking a cut of Nike’s profits.

The fact that direct-to-consumer sales boost profits is well-known. This is why so many startups follow the model.

Connections to Customers and Customer Data

By focusing on direct sales, Nike also collects data on its customers directly. This can be useful for marketing. Direct sales also mean that Nike has direct contact with customers, something that can also be helpful for marketing as well as customer service.

Nike Has More Control

The other key factor is that focusing on direct sales lets Nike control its brand. By contrast, Nike doesn’t have much control over what retailers do with its products after buying them. They could just place Nike shoeboxes with competitors or in a way that the brand doesn’t prefer. Some experts believe that this lack of control is why Nike decided not to continue working with Amazon.

DTC Trends During the Pandemic

Estimates indicate that the pandemic caused an overall market shift toward direct-to-consumer sales. Of course, these were not on the same level as Nike’s efforts. Research from McKinsey and the World Federation Sporting Goods Industry reported on the shift. Researchers suggest companies aim for at least 20% of their business to be direct-to-consumer. Nike was clearly ahead of the curve with this trend.

Other businesses have since started following the trend led by Nike. For example, Under Armour wants half of its sales to be direct-to-consumer by 2025. Under Armour is on a similar track, closing relationships with thousands of wholesalers.

The Successful Change Highlights Nike’s Brand Power

Sales figures show that the changing strategy has worked well for Nike. According to Nike, digital sales via websites and apps increased by 22%. This included a 33% growth within North America, which led the area. This is especially impressive when compared with the growth figures for other brands and retailers.

Another indication that Nike is on the right track with its innovative strategy is its overall sales. Sales in 2021 for DTC reached $16.4 billion. The trailing 12 months saw $46.2 billion of total sales.

To provide a point of comparison between Nike’s success and that of other brands, consider the figures at the end of fiscal 2020. Nike had revenue of $35.6 billion, $37.4 billion across the company. By contrast, Under Armour only made $4.5 billion in that time, and Adidas made $23.8 billion.

The impressive growth that Nike has achieved with the change highlights not only the company’s innovation but also its brand power. A direct-to-consumer approach cannot take advantage of the marketing from retailers; it must rely on the brand’s own marketing and name power. Nike certainly has this, as it is among the best-known and most popular sneaker companies in the world.

What Nexford MBA Students Stand to Learn

Whether you are studying for a Nexford MBA or an undergraduate business degree , there are some important insights to learn from Nike’s successful changes.

Reinvent to Adjust to Market Conditions

Nike examined the market and noticed that it was time for a change. The company recognized that the demands of consumers were changing, as were the technologies and opportunities available. Nike adapted to these changing market conditions.

Business students of Nexford University can learn the same thing. You must be willing to reinvent yourself when necessary to adjust to changes in the job market. Reinventing yourself and searching for improvement provides a way to stand out from other candidates in a job search.

How to Translate Reinvention into Your Business Life

For Nike, reinvention and adaptation meant changing the balance between wholesale and DTC sales. For business students or anyone in search of career advancements, this can be continuous learning. Lifelong learning at Nexford allows you to improve your skill sets . Each new skill set that you acquire is a way to reinvent yourself and stand out in the market.

Several years ago, Nike announced a transition from focusing on wholesale customers to direct-to-consumer sales. The transition has gone smoothly and is leading the brand to success. MBA students at Nexford can use Nike as inspiration and work to constantly improve themselves. Expanding your skill sets is your personal version of Nike adapting to the changing market demands.

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Nike Strategy

Nike leverages both a wholesale and direct distribution strategy . Indeed, while still in 2023, most sales come from wholesale distribution , in reality, since 2020, Nike has been ramping up its direct distribution through its NIKE stores and e-commerce platform (SNKRS).

Nike’s business model and strategy is based on creating demand for its products. Indeed Nike combines product development and demand creation to build a footwear empire that generated over $46 billion in revenue in 2022.

Yet, this was based on a demand creation strategy , in which Nike spent over $3.8 billion in deals with athletes and demand creation to generate demand.

Nike’s Distribution and Revenue Generation Highlights:

• Wholesale and Direct Distribution: Nike utilizes a dual distribution strategy , with both wholesale and direct distribution channels , including NIKE stores and its e-commerce platform, SNKRS.
• Shift Towards Direct Distribution: Since 2020, Nike has been increasing its focus on direct distribution through its own stores and online platform.
• Demand Creation Strategy: Nike’s business model centers on creating demand for its products by combining innovative product development with effective demand creation.
• Revenue Breakdown: In 2022, Nike’s revenue composition includes over $29 billion from footwear, $13.5 billion from apparel, $2.35 billion from equipment, and over $1.6 billion from the Converse brand .
• Athlete Partnerships: Nike invests significantly in athlete endorsements and partnerships, spending over $3.8 billion on deals with athletes and demand creation to stimulate demand for its products.
• Revenue Generation: Through its demand creation strategy , Nike achieved impressive revenue of over $46 billion in 2022, demonstrating the success of its approach.
• Footwear Focus: Nike’s revenue is largely driven by footwear sales, highlighting the brand ’s strength in the athletic footwear market.
• Diverse Product Line: Beyond footwear, Nike’s revenue streams are bolstered by sales of apparel, equipment, and the Converse brand .
• Integrated Strategy: Nike’s strategy integrates product development, brand promotion, and athlete partnerships to create a cohesive and powerful revenue-generating approach.
• Investment in Marketing: Nike’s substantial investments in athlete endorsements and demand creation initiatives highlight its commitment to driving consumer engagement and product desirability.
• Consumer-Centric Approach: By focusing on creating products that resonate with consumers and leveraging influencer partnerships, Nike cultivates consumer demand.
• Global Footprint: Nike’s distribution and demand creation strategies are implemented on a global scale, solidifying its presence in various markets.
• Continued Growth: The combination of effective product development and demand creation underpins Nike’s consistent revenue growth and market leadership .

Related to Nike

Nike Business Model

Nike Revenue

Nike Financials

Nike Mission Statement

Nike SWOT Analysis

Nike Competitors

Jordan Business Model

Converse Business Model

More Resources

About The Author

Gennaro Cuofano

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Why nike's business model is so successful.

Nike business model canvas

Nike’s Company Overview

Fleet-of-footwear NIKE, named for the Greek goddess of victory, is the world's #1 shoe and apparel company. NIKE designs, develops, and sells a variety of products and services to help in playing basketball and soccer (football), as well as in running, men's and women's training, and other action sports. Under its namesake brand, NIKE also markets sports-inspired products for children and various competitive and recreational activities, such as golf, tennis, and walking, and sportswear by Converse and Hurley. NIKE sells through more than 1.000-owned retail stores worldwide, an e-commerce site, and to thousands of retail accounts, independent distributors, and licensees.

Country: Oregon

Foundations date: 1964

Type: Public

Sector: Consumer Goods

Categories: Retail

Nike’s Customer Needs

Social impact:

Life changing: self-actualization, heirloom, motivation, affiliation/belonging

Emotional: attractiveness, design/aesthetics, rewards me

Functional: Quality, variety, sensory appeal, integrates, organizes, saves time, avoids hassles

Nike’s Related Competitors

Nike’s business operations.

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.

3D printing:

3D printing, so-called additive manufacturing (AM), relates to methods used to build a three-dimensional item by forming successive layers of material under computer control. It has already transformed prototyping, and we are beginning to see the technology's promise in mass customization, medical, and home usage. Engineering, architectural, medical, industrial design, and construction are just a few industries that utilize 3D printers.

Culture is brand:

It requires workers to live brand values to solve issues, make internal choices, and provide a branded consumer. Developing a distinctive and enduring cultural brand is the advertising industry's holy grail. Utilizing the hazy combination of time, attitude, and emotion to identify and replicate an ideology is near to marketing magic.

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Channel per purpose:

Creating separate channels for selling and purchasing current goods and services. A marketing plan is a vendor's plan for distributing a product or service to the end consumer through the chain of commerce. Manufacturers and retailers have a plethora of channel choices. The simplest method is the direct channel, which involves the seller selling directly to the consumer. In addition, the vendor may use its own sales staff or offer its goods or services through an e-commerce website.

Brands consortium:

A collection of brands that coexist under the auspices of a parent business. The businesses in this pattern develop, produce, and market equipment. Their strength is in copywriting. Occasionally used to refer to a short-term agreement in which many companies (from the same or other industrial sectors or countries) combine their financial and personnel resources to execute a significant project benefiting all group members.

Demarketing:

Excluding current clients that are unprofitable or who do not adhere to company principles. Efforts directed towards reducing (not eliminating) demand for a product that (1) a company cannot provide in sufficient quantities or (2) a firm does not want to sell in a particular area due to prohibitively expensive distribution or marketing expenses. Increased pricing, less promotion, and product redesign are all common demarketing tactics.

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Cross-subsidiary:

When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Digital transformation:

Digitalization is the systematic and accelerated transformation of company operations, processes, skills, and models to fully exploit the changes and possibilities brought about by digital technology and its effect on society. Digital transformation is a journey with many interconnected intermediate objectives, with the ultimate aim of continuous enhancement of processes, divisions, and the business ecosystem in a hyperconnected age. Therefore, establishing the appropriate bridges for the trip is critical to success.

Corporate innovation:

Innovation is the outcome of collaborative creativity in turning an idea into a feasible concept, accompanied by a collaborative effort to bring that concept to life as a product, service, or process improvement. The digital era has created an environment conducive to business model innovation since technology has transformed how businesses operate and provide services to consumers.

Direct selling:

Direct selling refers to a situation in which a company's goods are immediately accessible from the manufacturer or service provider rather than via intermediate channels. The business avoids the retail margin and any extra expenses connected with the intermediaries in this manner. These savings may be passed on to the client, establishing a consistent sales experience. Furthermore, such intimate touch may help to strengthen client connections. Finally, direct selling benefits consumers by providing convenience and service, such as personal demonstrations and explanations of goods, home delivery, and substantial satisfaction guarantees.

Ingredient branding:

Ingredient branding is a kind of marketing in which a component or ingredient of a product or service is elevated to prominence and given its own identity. It is the process of developing a brand for an element or component of a product in order to communicate the ingredient's superior quality or performance. For example, everybody is aware of the now-famous Intel Inside and its subsequent success.

Spectrum retail:

Utilizes a multi-tiered e-commerce approach. The firm first focused on business-to-consumer connections with its customers and business-to-business ties with its suppliers. Still, it later expanded to include customer-to-business transactions after recognizing the importance of customer evaluations in product descriptions. It now also enables customer-to-customer transactions by establishing a marketplace that serves as a middleman for such transactions. The company's platform enables nearly anybody to sell almost anything.

Regular replacement:

It includes items that must be replaced on a regular basis; the user cannot reuse them. Consumables are products utilized by people and companies and must be returned regularly due to wear and tear or depletion. Additionally, they may be described as components of a final product consumed or irreversibly changed throughout the production process, including semiconductor wafers and basic chemicals.

One-off experience:

The one-off experience business concept aims to facilitate the interaction between consumers in abundant marketplaces and their experience-seeking counterparts. This business model can only succeed if social media firms collaborate with physical event organizers, online pop-up shops, and e-commerce merchants. Developing software and participating in continuous dialogue with their consumers is insufficient. This business model provides consumers with unique experiences at a particular location during a specific event.

Experience selling:

An experience in the sales model describes how a typical user perceives or comprehends a system's operation. A product or service's value is enhanced when an extra customer experience is included. Visual representations of experience models are abstract diagrams or metaphors derived from recognizable objects, actions, or systems. User interfaces use a range of experience models to help users rapidly comprehend what is occurring in the design, where they are, and what they may do next. For example, a software experience model may depict the connection between two applications and the relationship between an application and different navigation methods and other system or software components.

Membership club:

Belonging to a group, either individually or collectively. Certain memberships may charge a fee to join or participate, while others are free. Others have particular skill criteria that must be met before membership is granted. Members are entitled to specific benefits or advantages, but not all members may enjoy the same rights and privileges. Another method is taken by a members-only luxury lifestyle management business that offers concierge services such as vacation reservations, restaurant suggestions, and event access.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

Orchestrator:

Orchestrators are businesses that outsource a substantial portion of their operations and processes to third-party service providers or third-party vendors. The fundamental objective of this business strategy is to concentrate internal resources on core and essential functions while contracting out the remainder of the work to other businesses, thus reducing costs.

A formal agreement in which the owner of the copyright, know-how, patent, service mark, trademark, or other intellectual property grants a licensee the right to use, manufacture, and sell copies of the original. These agreements often restrict the licensee's scope or area of operation, define whether the license is exclusive or non-exclusive, and stipulate whether the licensee will pay royalties or another kind of compensation in return. While licensing agreements are often used to commercialize the technology, franchisees also utilize them to encourage the sale of products and services.

Fashion sense:

In any customized sense of style, the golden guideline is to buy garments that fit correctly. Nothing ruins an ensemble more than an ill-fitting jacket, shirt, or trouser, regardless of the dress code or the cost of the clothing. Personal Values Sharing as a Brand Identity A significant component of developing a company that fits your lifestyle is growing a business grounded in your beliefs.

Fast fashion:

Fast fashion is a phrase fashion retailers use to describe how designs travel rapidly from the catwalk to catch current fashion trends. The emphasis is on optimizing specific supply chain components to enable these trends to be developed and produced quickly and affordably, allowing the mainstream customer to purchase current apparel designs at a reduced price.

Make and distribute:

In this arrangement, the producer creates the product and distributes it to distributors, who oversee the goods' ongoing management in the market.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

User design:

A client is both the manufacturer and the consumer in user manufacturing. For instance, an online platform could offer the client the tools required to create and market the product, such as product design software, manufacturing services, or an online store to sell the goods. In addition, numerous software solutions enable users to create and customize their products to respond to changing consumer requirements seamlessly.

Online marketplace:

An online marketplace (or online e-commerce marketplace) is a kind of e-commerce website in which product or service information is supplied by various third parties or, in some instances, the brand itself, while the marketplace operator handles transactions. Additionally, this pattern encompasses peer-to-peer (P2P) e-commerce between businesses or people. By and large, since marketplaces aggregate goods from a diverse range of suppliers, the variety and availability are typically greater than in vendor-specific online retail shops. Additionally, pricing might be more competitive.

Experience:

Disrupts by offering a better understanding that customers are willing to pay for. Experience companies that have progressed may begin charging for the value of the transformation that an experience provides. An experienced company charges for the feelings consumers get as a result of their interaction with it.

Shop in shop:

A store-within-a-store, sometimes known as a shop-in-shop, is an arrangement in which a retailer leases out a portion of its retail space to another business to operate another independent store. This arrangement is prevalent with gas stations and supermarkets. In addition, numerous bookstores collaborate with coffee shops since consumers often want a spot to relax and enjoy a beverage while browsing. Frequently, the shop-within-a-store is owned by a manufacturer who operates an outlet inside a retailer's store.

Sponsorship:

In most instances, support is not intended to be philanthropic; instead, it is a mutually beneficial commercial relationship. In the highly competitive sponsorship climate of sport, a business aligning its brand with a mark seeks a variety of economic, public relations, and product placement benefits. Sponsors also seek to establish public trust, acceptability, or alignment with the perceived image a sport has built or acquired by leveraging their connection with an athlete, team, league, or the sport itself.

Electronic commerce, or e-commerce (alternatively spelled eCommerce), is a business model, or a subset of a larger business model, that allows a company or person to do business via an electronic network, usually the internet. As a result, customers gain from increased accessibility and convenience, while the business benefits from integrating sales and distribution with other internal operations. Electronic commerce is prevalent throughout all four main market segments: business to business, business to consumer, consumer to consumer, and consumer to business. Ecommerce may be used to sell almost any goods or service, from books and music to financial services and airline tickets.

Niche retail:

A marketing strategy for a product or service includes characteristics that appeal to a particular minority market segment. A typical niche product will be distinguishable from other goods and manufactured and sold for specialized purposes within its associated niche market. Niche retail has focused on direct-to-consumer and direct-to-business internet sales channels. The slogan for niche retail is Everything except the brand.

Product innovation:

Product innovation is the process of developing and introducing a new or better version of an existing product or service. This is a broader definition of innovation than the generally recognized definition, which includes creating new goods that are considered innovative in this context. For example, Apple launched a succession of successful new products and services in 2001?the iPod, the iTunes online music service, and the iPhone?which catapulted the firm to the top of its industry.

Supply chain:

A supply chain is a network of companies, people, activities, data, and resources that facilitate the movement of goods and services from supplier to consumer. The supply chain processes natural resources, raw materials, and components into a completed product supplied to the ultimate consumer. In addition, used goods may re-enter the distribution network at any point where residual value is recyclable in advanced supply chain systems. Thus, value chains are connected through supply chains.

Mass customization:

Mass customization is a strategy that entails using modular goods and manufacturing processes to allow efficient product individualization. Mass customization refers to producing customized output using flexible computer-aided manufacturing systems in marketing, manufacturing, contact centers, and management. Mass customization is the next frontier for manufacturing and service sectors alike. Beyond the physical product, mass customization is utilized by a diverse variety of software products and services with the goal of developing strong connections with customers via personalization and suggestion.

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How Nike Makes Money? Understanding Nike Business Model Core Elements

This article is about how NIKE makes money. Firstly, we explain the key business segments of Nike and how the company generates revenue from each of those segments. Then, we discuss key elements of NIKE business model. Finally, we share the revenues, the profits, and the profit margins of NIKE for 2015.

NIKE is one of the world’s largest supplier of athletic shoes and apparels and a major manufacturer of sports equipment, with revenues in excess of US$30 billion in its fiscal year 2015 (ending May 31, 2015).

NIKE Business Segments

NIKE reports its revenues for the following business segments:

• Footwear.  NIKE’s athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. NIKE Brand serves eight key categories: Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear and Golf Sportswear. Running, Basketball, and Football (Soccer) are currently NIKE’s top-selling footwear categories.
• Apparel.  NIKE sports apparel cover most of the above-mentioned categories, which feature the same trademarks and are sold predominantly through the same marketing and distribution channels as athletic footwear . Sportswear, Men’s Training, Running, and Football (Soccer) are currently top-selling apparel categories. NIKE also markets apparel with licensed college and professional team and league logos.
• Equipment.  NIKE sells a line of performance equipment and accessories including bags, socks, sports balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities. NIKE also sells small amounts of various plastic products to other manufacturers through its wholly-owned subsidiary, NIKE IHM, Inc.
• Jordan Brand Designs distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on Basketball using the Jumpman trademark.
• Hurley designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley trademark.
• Converse designs distribute, and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks. Operating results of the Converse brand are reported on a stand-alone basis.

Key Elements of NIKE Business Model

NIKE  has maintained its leadership position in the highly competitive sportswear equipment and apparel market with a business model design that focuses on:

• Core activities like design, development, and marketing
• Outsourcing of non-core activities like manufacturing to contract manufacturers
• Building a truly global brand

NIKE Focus On Design & Development

NIKE has maintained its leadership position due to its continued focus on design, research, and development. NIKE filed for 541 patents in the year 2014. Along with 281 patents filed for shoes, it also filed 70 patents for technology and 39 for manufacturing. Some of the NIKE innovative products across its product line are NIKE Air, Lunar, Zoom, Free, Flywire, Dri-Fit, Flyknit, Flyweave, and NIKE+. The company has invested heavily in partnerships with leading organizations globally for innovative technologies. Following partnerships are helping NIKE in building a sustainable business:

• DyeCoo: To advance waterless textile dyeing
• Bluesign: To provide information about more sustainable materials and chemistries to its suppliers
• Plant PET Technology Collaborative (PTC): Together with Coca-Cola Company, Ford Motor Company, H.J. Heinz Company, and Procter & Gamble, NIKE is working on accelerating the development and use of 100% plant-based PET (Poly Ethylene Terephthalate) materials and fiber.

NIKE Focus On Contract Manufacturing

NIKE doesn’t own any manufacturing site and produces all its products through independent contractors. All footwear and apparel products are manufactured outside the United States, while equipment products are produced both in the United States and abroad. This strategy has helped NIKE improve its profit margins, reduce inventories, minimize price markdowns, and ensure that the customer receives the right product assortment on time.

NIKE Focus On Building Global Brand

NIKE is the world’s number one sports brand. Its brand value was estimated at $19 billion by Forbes magazine in 2014. It’s up from $15 billion in 2012 and $17.3 billion in 2013. Walt Disney Company’s ESPN was second with a brand value estimated at $16.5 billion, followed by Germany’s Adidas AG, the United Kingdom’s Sky Sports and fast-growing US brand, Under Armour Inc. Nike has built its brand over years using sponsorship agreements with celebrity athletes, professional teams, and college athletic teams. Recent branding efforts also include using digital technologies to engage directly with the younger customer and receiving direct feedback about the overall customer experience. The nike+ running sensor developed in collaboration with Apple Inc. and Nike FuelBand are the examples of these digital initiatives.

How NIKE Generates Revenues?

NIKE generates its revenues by directly selling to customers or through dealers.

NIKE sells directly to customers through:

• NIKE brand and category experience stores
• Online sales through www.nike.com and
• NIKE factory stores

NIKE also reaches out to its customers through its widespread dealer networks that include Footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts.

NIKE Revenues By Business Segment FY 2015

In FY’15 (fiscal year ending May 31, 2015), NIKE generated $30.6 billion of total revenues. Of these total revenues, NIKE generated:

• $18.3 billion revenues, 59.7% of the total, from the footwear segment
• $8.6 billion revenues, 28.1% of the total, from the apparel segment
• $1.9 billion revenues, 6.5% of the total, from the Converse brand
• $1.6 billion revenues, 5.3% of the total, from the equipment segment and,
• $0.1 billion revenues, 0.4% of the total, from the other global brands business

NIKE Profit Margins FY 2015

Of the $30.6 billion of NIKE total revenues in FY’15, $16.5 billion were the cost of sales. This resulted in $14.1 billion of gross profit and a gross margin of 46.0%. NIKE operating costs were $9.9 billion. These include Selling (demand creation) and administrative (operating overhead) expenses. This resulted in $4.2 billion of operating profit and an operating margin of 13.7%. After interest and other non-operating income and expenses and income taxes, NIKE had a net profit of $3.3 billion and a net margin of 10.7%.

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Case Study | Inside Nike’s Radical Direct-to-Consumer Strategy

• Chantal Fernandez

In October 2020, in the middle of a global pandemic that had infected 188 countries, causing record sales damage across the retail sector, Nike’s share price hit an all-time high.

Like other retailers, Nike had been forced to close most of its network of more than 900 stores across the world, as had its key wholesale partners like Nordstrom and Foot Locker.

But the American sportswear giant’s performance during the pandemic, when its online sales spiked, signalled to many that Nike had the competency to prosper long term, in a future that will be increasingly defined by e-commerce and digital brand connections.

It was a validation of a strategy that Nike prioritised three years ago, dubbing it “Consumer Direct Offense,” but the seeds of the approach go back almost a decade.

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Above all, Nike is a marketing company. It doesn’t just sell sneakers; it sells the brand aspiration that imbues those sneakers with meaning. But to achieve the reach required to scale its business, Nike’s distribution strategy had long-relied on third-party retailers to sell its products, even if the consumer experience offered by those partners diluted its brand.

But in a future increasingly defined by e-commerce, fast-moving trends and, above all, the rising power of branding to drive consumer preference when competitors are just a click away, Nike realised that in order to thrive, it needed to take control of its distribution to better manage its brand and deepen its connection with consumers.

It was definitely architecting a new retail, and a bold, retail vision for Nike.

Such an evolution is easier said than done, especially for a business as large as Nike in a category as competitive as sportswear. But by radically cutting back on its wholesale distribution and raising the bar for brand experience with the third-party partners that remained; expanding its focus on content, community and customisation to keep customers close; investing in its data analytics and logistics capabilities; and rethinking the role of the store as a brand stage, Nike drove a veritable direct-to-consumer revolution.

When the pandemic hit, these shifts went into overdrive.

“It was definitely architecting a new retail, and a bold, retail vision for Nike,” said Heidi O’Neill, Nike’s president of consumer and marketplace, and one of the most prominent executives leading the brand’s new strategy in recent years. “But it started with our consumer, and we knew that consumers wanted a more direct relationship with us today.”

In this case study, BoF breaks down Nike’s pioneering direct-to consumer strategy and how it has worked to the brand’s advantage, propelling its share price to new heights during the global crisis of 2020.

Click below to read the case study now.

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Resources » Blog » Inside Nike’s Business Model: Lessons E-commerce Owners Can Learn

Inside Nike’s Business Model: Lessons E-commerce Owners Can Learn

Traditionally the lifeblood of B2B brands, in recent years, the subscription industry has exploded in the B2C eCommerce space.

The subscription takeover has been so successful that 75% of direct-to-consumer businesses are expected to offer subscriptions by 2023, and the subscription industry could hit a whopping $478 billion by 2025 .

With such a solid upward trend, it’s no surprise that sportswear megabrand Nike stepped into the ring to deliver a knockout subscription to its fans. Nike dug deep into its data and analytics to uncover a sub-niche it could serve with subscriptions to boost its revenue. It landed on kids’ shoes and the rest is history.

But it’s not just Nike that gets to have all the fun — you can follow in the sportswear giant’s footsteps too. 

To give you some solid inspo for your store’s own subscription boxes, we’ll break down all the things Nike did right in its subscription takeover, along with some actionable tips for success. 

Let’s jump in.

Nike Business Model: What We’ll Cover

• Why Nike Used Subscriptions to Capture Its Audience’s Hearts and Pockets
• 6 Key Takeaways from the Nike Business Model Switch-Up
• Go where the money is
• Dare to go against the grain
• Tap into your loyal customer base and provide an unbeatable customer experience  
• Build a community around your subscription(s)
• Use exclusivity and rewards to supercharge engagement and sales
• Apply personalization to drive customer loyalty

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Why Nike Chose Subscriptions to Capture Its Audience’s Hearts and Pockets 

Nike has used a range of strategies and tactics to stay relevant over its 57-year reign —

but the most innovative addition to the Nike business model has to be its subscription boxes. 

There are lots of likely reasons Nike chose to take on this challenge (and why you should too). Let’s zoom in on a few:

• ‘One-up’ competitors : Subscriptions gave Nike the competitive boost it needed to contend against other titan brands like Adidas, which has historically reported stronger growth rates and profit margins. In 2020, Nike finally jumped ahead of its rival, totaling a smart $37.4 billion against Adidas’ $19.84 billion .
• The subscription market is booming: The subscription market has grown 300% in just 7 years , so tapping into this incredible strategy was a no-brainer, especially since Nike’s competitors were yet to jump on board. 📈
• Regular cash month after month: One of the main incentives to add subscriptions to the Nike business model was consistent income and sales. For example, Nike specifically aimed its Nike Adventure Club subscription box at kids aged 2-10 who are notorious for ruining or growing out of shoes regularly. The subscription (no longer available) had 3 pricing tiers ranging from $20-$50, which adds a healthy and regular boost to Nike’s bottom line.
• Rich, actionable insights: The subscription models’ added benefit is the data goldmine it creates, which can help businesses better understand ever-changing customer needs and wants. So, you can bet top dollar Nike is using these insights to get ahead. 

Feeling inspired by the Nike Business Model? Find out how SellersFi can help you fund a revamp.

6 Key Takeaways from the Nike Business Model Switch Up

There are a million and one things eCommerce sellers can learn from a Goliath brand like Nike. It’s survived the test of time, modernizing and adapting along the way with great precision. But their decision to enter the subscription market was a brave step, at a time when sneaker subscriptions weren’t common.

Fast forward to today, and just a short glance through subscription industry stats shows exactly what a great idea it was. Here are just a few statistics that highlight the subscription boom:

• 54% of people have a subscription box membership. 🎁
• The number of Americans with multiple subscriptions is 69%.
• In just one year (2017- 2018), 15% of people surveyed signed up to a subscription.

Subscriptions are so popular they’re even native in Shopify now. The opportunity is huge, and there’s a lot to take away from Nike’s journey that can help you upgrade your eCommerce store with subscriptions:

One of the first things Nike did right was to choose a sub-niche with excellent growth potential . The Nike Kid’s line had been scaling at 11% , so the market already had proof of concept and success, but there was still room for improvement.

Nike made another notable move to use high-quality goods at affordable prices ($20 -$50), proving subscription boxes don’t need to be dirt cheap to get signups. This strategy undoubtedly helped Nike boost their revenue and profits. 💰

Here are some things you can do to dive into the subscription sales format: 

• Narrow your segment: Kickstart subscriptions in a defined niche that contains your super fans. Their enthusiasm for the brand makes them more likely to advocate for you, which will help pull in more like-minded shoppers.
• Analyze your data : Look through your store’s data, find your best performers and profit-makers, and then test these products on a subscription model. You can also bundle related products to increase your average order value. 
• Price your subscriptions to suit your dream customers: Create a variety of tiers to serve the different needs and budgets of your target audience. For example, within your sub-niche, you may have some customers who would only be interested in a lite plan, whereas others may be more willing to fork out for a premium plan.

‘Zig while everyone zags’ is a common phrase in the business world, yet it’s easy to get caught up in chasing the latest eCommerce trends to make a quick buck (remember Fidget Spinners? 😅). 

But Nike is the exception. The Nike business model has always had innovation at its core, and the subscription service was just one of its ground-breaking moves to solidify its title as one of the most iconic brands of all time.

Here’s how to follow in Nike’s footsteps to help your store rise above the subscription showdown:

• Sell what makes your store unique: To figure out what makes your store different, revisit your unique selling proposition (USP). Your brand’s unique style and products are what will keep shoppers hooked. 
• Assess your territory and plan to make an impact: Scope out the markets you trade in. If there aren’t many stores using subscriptions in your niche, this could be the perfect opportunity to create one and blow your competition out of the water.💥 
• Target products your competitors aren’t serving: If subscriptions are common in your field, don’t despair. Reach out to your customers for ideas on what they’d like to see in a subscription from your store. Pick out the suggestions your competitors aren’t covering, and you may find an unfulfilled need to cater to with subscriptions. 🔥

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There are very few places in the world where Nike isn’t a household name. The sportswear giant knows its clout and decided to capitalize on its popularity. 

Nike used the subscription model to drive stronger connections with its audience by solving their pain points and ensuring their customer experience was second to none. 

For example, in addition to the subscription service, Nike offered outdoor children’s games and guides to help parents manage kids’ technology usage. Nike’s subscription box customers liked it so much that 70% of parents said they’d pay for the guides. 

Here are a few simple ways to build an unforgettable customer experience: 

• Make customer experience a priority: Just as it is in the Nike business model, your customer experience should be a key strategic area. Research what your customers want out of their shopping experience, then go above and beyond to give it to them. For example, if your customers like to be well-informed before making a purchase, set up blog posts, videos, and social media posts that educate your audience on your products every step of the way.
• Find your fans and sell to them: Pinpoint die-hard tribe members and create a subscription service tailored to their struggles, likes, and dislikes. This tactic may seem basic, but it’ll help build stronger ties with your biggest supporters, encouraging them to stick around even longer. 🤝🏻
• Help customers reach their goals: Find out what lifestyle your audience wants to achieve with your products and use your subscription boxes to help them get it.
• Lean on tech to do the heavy lifting: These days you can use tech to facilitate better customer experiences throughout the customer journey. E.g., chatbots, apps, autoresponders, AI-driven personalization tools, etc.

It’s one thing to build a community around your store, but it’s a whole other genius level to build an active and engaged community around your subscriptions.

Nike did just that by making their subscriptions a right of passage for future Nike fans. Since the kids using their subscription boxes will grow up wearing Nike, their affinity with the brand will be deeper than those who only connect with the brand later in life.

Nike also tapped into another niche audience by seeking to make a positive impact with its subscriptions. They encouraged subscribers to return worn shoes to them, which would either be recycled or donated — a clever way to get signups from people who want their purchases to make a difference in the world.

Here are some action steps to activate your community:

• Build a community your audience will be proud of: The community you create should help members reach their goals and improve themselves. You’ll then be able to sell products that support your customers’ journey and attain higher conversion rates.
• Make drool-worthy offers: Every day, shoppers get requests to sign up to mailing lists and tap into discounts. The outcome? They just aren’t exciting anymore. To close more sales, provide deals that are irresistible to your target customer.
• Focus on helping your customers win: Aim to outdo the competition by consistently adding value to your subscribers’ lives. For example, skincare company Versed built an engaged community to help each other with their skin concerns and share beauty routines. Think of ways you can do the same for your subscription line.
• Use exclusivity and rewards to supercharge engagement and sales 

If there’s one thing the newest addition to the Nike business model has nailed, it’s rewards.

When Nike Adventure Club was still around, it was able to keep members excited and engaged through things like:

• Early access to products
• Member-only products
• Special offers for customer birthdays
• Free delivery on purchases
• Complementary resources

These exclusive drops and rewards feed perfectly into today’s FOMO dilemma, making this trick a marketing goldmine.

Here are some pointers for amping up exclusivity in your subscriptions: 

• Create awe-inspiring products for your subscription boxes: Your subscription-made products should be so good they make your members squeal with happiness when they see the exclusive items. This will keep them excited and anticipating your next drop. 🤩
• Keep exclusive products exclusive: It’s crucial to ensure subscription box products stay off-limits to unsubscribed shoppers. This will help existing subscribers rationalize their membership and keep your subscription boxes’ unique appeal alive. 
• Throw in free products and gifts: Providing special treats for subscribers can go a long way to make them feel valued. These don’t need to be expensive — in fact, you can partner with brands who stock items your audience would be interested in and work out a promotional agreement using their products.

Nike knows its customers incredibly well and uses this information to adapt its infamous Nike business model and products — which is crucial in today’s ultra-competitive market. It’s also how Nike was able to use personalization as a broad differentiation strategy to get their subscribers’ votes. 👌🏽

For example, Nike knew how frustrating it was for parents to constantly search for and replace shoes for their fast-growing kids, and sought to take the pain out of the experience. This detail contributed to their subscription boxes’ success as it solved a current problem.

Here are some tips to win over customers with personalized subscriptions:

• Personalize your subscription shopping experience: From tailoring product suggestions and tweaking products, there are endless ways to adjust the shopping experience for your customers. It could prove to be a very profitable move as 28% of people use subscription boxes for a personalized experience.
• Eliminate friction in your customers’ lives: Adjust your subscription services to suit different buyers to increase customer loyalty, slash churn rates, and drive repeat purchases.
• Solve genuine customer problems: Use subscription boxes to help customers work through and fix annoyances in their life. For example, if you have a fresh food box but shoppers hate chopping, you can offer the option to buy pre-cut ingredients.

The decision to switch up the Nike business model and take on a growing industry was a bold move, even for a giant like Nike. 

But the footwear megabrand has proved subscription boxes can work for pretty much every eCommerce business (with a little creativity). 

To make your foray into subscription boxes, explore different angles to make your boxes noteworthy. Test before you invest to get proof of concept, and tweak your subscriptions along the way using the data you collect. And don’t forget to look up other subscription boxes to see how they engage audiences and drive sales for all-important inspo.

The subscription box market is an exciting place to be right now for brands and shoppers — so seize this opportunity and reap the rewards for years to come.

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Purpose at work: how nike inspires and innovates with employees and consumers.

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This is the second post in a series of interviews with impact driven business leaders. Interviews were conducted around the Social Innovation Summit in Los Angeles. The Summit is a gathering of some of the world’s most influential social impact entrepreneurs. Representatives from companies like MLB, Lyft, TOMS and more congregate to share best practices, ideas and challenges about leading with purpose. For this article I spoke with Jorge Casimiro, NIKE, Inc.’s Chief Social and Community Impact Officer.

Photo from Nike

Nike has a history of leveraging its brand for impact. From its recent, highly debated Colin Kaepernick commercial to the programmatic use of recycled materials in its products, the company has built its brand around purpose. As Jorge Casimiro, NIKE, Inc.’s Chief Social and Community Impact Officer, shared, “Nike’s mission statement is to bring innovation and inspiration to every athlete in the world. And if you have a body, you’re an athlete. The innovation is the work and partnerships that we’re doing. The inspiration is something we do when Nike shows up to talk about work.”

Nike’s iconic products and branding have inspired athletes for decades. One of the ways Nike has taken the work further is with its Social & Community Impact Team and the Nike Foundation. It focuses on empowering young girls, and youth in general, around the world. One of Nike’s latest projects is its Made to Play program. “Nike focuses on the kids that face the greatest barriers,” Casimiro says. “Girls all across the world are dropping out of sport and play at two times less than the rate of boys.”

“ Something we’re doing about that right here in Los Angeles, for example, is we kicked off a partnership with Mayor Garcetti and the city of Los Angeles on Women Coach LA to train more female coaches.” Jorge states. “So that girls can actually see a role model, see someone that looks like them.” Of the 6 million coaches in the U.S., only a third are trained to work with youth and less than 25% are women, he explains. 

Nike’s Los Angeles initiative is one of many similar projects all around the globe. So how does a brand like Nike scale its impact? How does it ensure that the good work it is doing will make a lasting contribution?

“Working with partners is how we do this work, that’s how we take it to scale,” Casimiro explains. “It’s all about how we integrate our work with those partners, so that one day when we’re no longer working with those partners, they continue it on themselves. To achieve this successfully, it’s important to be very clear up front and managing those expectations is key. The partners know that this is not a forever deal, but rather a partnership to empower their independent impact,” Jorge says.

This is a crucial lesson for brands thinking about how to optimize impact in a meaningful way. Identify ways that you can leverage your business to catalyze a change in influencers and partners with a shared vision. Then enable your collaborators to do the best they can to create meaningful and lasting impact themselves.

Finding the right partner for the job is no easy task. “This is where some of that private sector expertise really helps in the equation,” Casimiro says. “At Nike, we put the consumer, the athlete, at the center. We obsess over the athlete. We obsess over the consumer.”

“We do the same thing with kids. We go into a city, we go into a community, we obsess over the kids. What are their barriers? What is that kid’s life like? And then we obsess over the partner. What partner are we going to work with? We’re not going to do this by ourselves, and in some cases, it might be government. In some cases, it might be a nonprofit, in some cases it might be someone experienced in play and sport and physical activity. We also consider what can they learn from us?”

With the same rigour used in targeting a niche market for a new product launch, Nike selects partners that would best suit the niche of young kids interested in sport in any given region. 

“We want to create a better world through the power of sport. We want to do that through community and programs like ‘Made to Play.’ We want to do that through diversity and inclusion until we all win. We want to do that through our environmental sustainability ,” Casimiro says.

“What does that look like in Portland? What does that look like in Los Angeles? What does that look like in London? What does that look like in China? All very different.”

A great example of Nike’s impact is work it’s done in the United Kingdom. After the 2012 Olympics, Nike started working with the Parliamentary Commission on Physical Activity. “We’ve advocated for more funding to primary schools to focus on physical education,” Jorge says. Nike also collaborated with schools and nonprofits to improve physical activity programs in 33 boroughs throughout London. 

To expand their work, Nike partnered with Discovery Education . “We worked with them to create curriculum, open-source information that would work for primary audience teachers, head teachers, and also for parents,” Casimiro says. “Putting our efforts into this platform allowed the information to go at scale to the entire U.K.”  

That work is the innovation. Nike’s storytelling is what drives the inspiration. “For example, how do we hero-ize that staff member who is playing a leadership role at schools across the 33 boroughs?” Casimiro asks. “The Active School Hero Award was created to hero-ize those individuals. Not only hero-ize them within their school and within their borough, but invite them to the Muller Anniversary Games and offer them professional development training.”

Nike is doing similar work in China. The company partnered with the Ministry of Education to develop teacher training, to direct programming investments and to create the Active Schools Innovation Awards . “ We receive recommendations for more than a thousand local youth physical activity leaders, and we honor a hundred of them. The first year we brought them to Beijing, to the iconic Water Cube and we brought our athletes, Cristiano Ronaldo and others,” Casimiro says. “They’re so excited because these teachers are from, say, Gansu Province, or they’ve never been to Beijing or had the chance to meet these athletes.” Now in its third year with a ceremony in Shanghai, the awards have attracted close to 3,000 applications from PE teachers across the country.

In addition to engaging community leaders, Nike works in house to inspire a culture of purpose. “If your employees don’t understand and buy into your purpose, it’s going to be very difficult for your consumers to do it,” Casimiro says.

Nike encourages its employees to participate in making a positive impact. “We do what we call Give Your Best ,” Jorge says. “An employee might want to connect to their purpose by volunteering at their kid’s school. Or it might be a homeless shelter. We have 74,000 employees and we say to all of them, ‘if you want to do something there, we’re going to support you.’”

Nike matches employee donations and offers volunteer pay, which means Nike gives the employee $10 per hour for hours volunteered that they can donate to the organization they choose. And it gives retail store employees time on the clock to serve as weekly volunteer coaches in their communities. “That stability of those employees going every week is sometimes the only stability these kids have in their lives,” Casimiro shares. Not only does it help the kids and support Nike’s mission, it also builds a sense of purpose in the employees.

As for the business case for doing such work, Casimiro explains, “We’re past having to make the business case for these kinds of things. If you need convincing, numerous studies like those outlined in the Harvard Business Review provide plenty of statistics for financial and performance benefits. “Most importantly, what you do need to do is make your efforts sustainable in the long term for brands. It’s got to be authentic to who you are.” 

In fact, the business and impact case are perfectly aligned. As Jorge explains, “Nike has always been about sport. We want to make sport a daily habit. You can’t fulfill that if kids are dropping out of sport, physical activity, and play. At the end of the day, you can’t have a thriving, successful business if you don’t have a thriving and successful community or world.”

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Nike’s Culture & Its Characteristics: An Analysis

Nike Inc.’s organizational culture supports business resilience and capability. Organizational culture is the combination of traditions, habits, values, and behavioral expectations among the company’s employees. Nike’s workers are given a set of instructions, rules, and expectations on how to do their jobs, with consideration for their relations with customers and other employees. This approach maintains the corporate culture, which partly contributes to the success of the business and the fulfillment of strategic goals based on Nike’s mission statement and vision statement . As one of the giants in the global athletic shoe, apparel, and equipment market, Nike Inc. continues its policies and strategies to promote an organizational culture that reinforces business resilience and competence.

Nike has an organizational culture that encourages human resources to behave in ways that address business objectives. Training programs are designed to uphold such a corporate culture that aligns with the Nike brand image for sportswear. In this regard, the company culture reinforces the business strengths shown in the SWOT analysis of Nike , such as the brand and product innovation capabilities. This support from the work culture enhances the company’s advantages over competitors, such as Puma and Adidas.

Features of Nike’s Organizational Culture

Nike’s organizational culture is centered on creativity and innovation to provide products that suit current consumer preferences and market trends. The company is known for cutting-edge sports shoes, apparel, and equipment. The following main characteristics of Nike’s corporate culture sustain business and market competence:

Talented . Nike Inc. understands that talent and innovation go hand-in-hand. This feature of the organizational culture emphasizes the need to provide human resource support for product development and internal services in the corporation. As such, Nike uses training programs to maintain employee talent. The company also has coaching and mentoring programs. These approaches are based on a strategy that develops and enables leaders within the organization for the company’s global growth. The purpose of this characteristic of Nike’s corporate culture is to sustain talent and infrastructure necessary for producing some of the world’s most popular sporting goods.

Diverse . Diversity is continually developed in Nike’s organizational culture. The company believes that this feature of the corporate culture leads to a dynamic workforce. Diversity promotes Nike’s creativity, innovation, brand image, and competitive advantage. The company maintains diversity through HR programs, such as the Speak Up! program, which facilitates the sharing of ideas among workers. This feature of the corporate culture maximizes Nike’s product development cycles, especially in creating new designs for its products. Diversity also aligns the work culture to social trends relevant to the sporting goods business, such as the market trends shown in the PESTLE/PESTEL analysis of Nike .

Inclusive . Nike Inc. emphasizes inclusiveness in its organizational culture. The purpose of this cultural characteristic is to minimize barriers to employee performance. The sporting goods company’s strategy uses inclusiveness as a tool for optimal performance, diversity, and talent development. The company supports this feature of the corporate culture through a team-based approach to management. In addition, Nike employs a number of programs, such as Bias to Breakthrough (a program for removing barriers to creativity) and NCourage (a set of employee networks for cultural awareness and community building). This feature of the organizational culture minimizes problems in the company’s workforce and supports streamlining sporting goods design and production processes. This aspect of the company culture helps satisfy Nike’s corporate social responsibility to its human resources, who are stakeholders in the business.

Nike’s Culture: Advantages, Disadvantages, Recommendations

An advantage of Nike’s organizational culture is its support for new product development. The characteristics of this culture ensure that the company continues its competitive advantage in the global sports shoes, equipment, and apparel market. Also, the diversity and inclusiveness features of Nike’s corporate culture help develop employee morale. However, a disadvantage is the potential reduction in managerial efficiency. The organizational culture facilitates employee involvement, although it also increases the workload of the company’s managers. A suitable recommendation is for Nike to increase its investment in managerial personnel to balance the effects of its corporate culture.

• Karneli, O. (2023). Analysis of motivation, work culture, and work environment on the level of employee integrity in the company. International Journal of Environmental, Sustainability, and Social Science, 4 (2), 547-551.
• Life at Nike .
• Ng, K. Y. N. (2023). Effects of organizational culture, affective commitment and trust on knowledge-sharing tendency. Journal of Knowledge Management, 27 (4), 1140-1164.
• Nike, Inc. – Diversity, Equity & Inclusion .
• Nike, Inc. – Form 10-K .
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Nike plots $100 sneaker line as shares plunge in worst-ever drop

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Ananya as the U.S. Consumer and Retail Sector Specialist covers breaking and business news on major firms including Walmart, Nike, Procter & Gamble, PepsiCo and Coca-Cola among other U.S. listed Cruises, Apparel Makers, Discount Stores, Beverages, Second-hand Retailers, Restaurants, Luxury companies. She writes long-form initiative stories supported by data sets explaining the current consumer demand trends in the U.S. and the impact of macroeconomic conditions on retailers and companies. As a sector lead, she mentors and trains newer members of the team bringing them up to speed with sector knowledge.

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Wall Street stock indexes closed firmer on Friday, with the tech-heavy Nasdaq and benchmark S&P 500 hitting record highs, as new data showing U.S. labor market weakness boosted expectations for interest rate cuts as early as September.

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Why Nike Plans To Make Less Of Its 3 Most Popular Sneakers

Pat benson | 6 hours ago.

This post contains affiliate links, where we may receive a percentage of any sale made from the links on this page. Prices and availability are accurate as of the time of publication.

Nike has been caught in a whirlpool of negative headlines over the past year. However, the impact of these headlines became a stark reality last week after the company suffered its worst day on the stock market in history.

The iconic American sportswear brand known for its unforgettable advertisements has already rolled out its latest marketing campaign. The advert is called "Win On Air," and it is timed to coincide with the Summer Olympics.

More importantly, Nike is taking an aggressive approach to right the ship. The company plans to make less of its three most popular sneakers: the Nike Dunk , the Nike Air Force 1 , and the Air Jordan 1 . The three old-school sneakers are the triumvirate of the brand's basketball shoe heritage.

Nike's plan is called "franchise management," and Brendan Dunne of Complex explained the strategy via an in-depth video on Instagram. Sneakerheads can watch the video below and read our synopsis.

View this post on Instagram A post shared by Complex Sneakers (@complexsneakers)

Dunne broke down the term "franchise management" as the brand wants fewer of its most popular sneakers on the market before they start making them uncool.

This plan has been in the works since March when Nike CFO Matt Friend said the sneakers had been involved in too much "promotional activity," which means being discounted online. The pullback will mostly effect Nike's website, and not retail partners.

Instead of pushing out more of the fan-favorite franchises, Nike will open its archives of other retro sneakers and highlighting its new models. Online shopping might become more difficult for consumers wanting the brand's most recognizable silhouettes.

Dunne emphasized that this plan is not anything new, as Nike and other brands have used this strategy in the recent past. It is more of a concerted effort to maintain the long-term health of Nike's most popular sneakers.

The sneaker community can count on Sports Illustrated for all their most important footwear news from the sports world and beyond.

Further Reading: Randy Moss reimagined popular Nike sneakers in an outdoors-inspired colorway.

Pat Benson covers the sneaker industry for Sports Illustrated's FanNation. Previously, he has reported on the NBA, authored "Kobe Bryant's Sneaker History (1996-2020)," and interviewed some of the biggest names in the sports world. You can email him at [email protected].

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Nike ‘s biggest competitor is picking up wins as the Swoosh struggles to regain momentum.

In a Friday note to investors, Wedbush analyst Tom Nikic said that Nike’s recent pitfalls “could be a major opportunity for Adidas ,” which has only recently started recovering from its own challenges after the fallout of its Yeezy business in 2022.

“With industry leader Nike struggling deeply and preparing themselves for significant revenue declines over the next six to 12 months, this could be a major opportunity for Adidas,” Nikic wrote, adding that the Three Stripes is already “starting to regain momentum” from the recent success of its retro styles like the Samba and Gazelle.

Futura Is Collaborating on Nike's Breakdancing Shoe as a Nod to the Four Original Pillars of Hip-Hop

Nike is bringing back the air safari sneaker in its og colorway for the first time in six years, nike announces it's retiring its adapt self-lacing technology and app.

Nike last week  cut its outlook  for the upcoming fiscal year of 2025 after it reported a sales miss in Q4. The sportswear giant said that declines in lifestyle sales, foreign exchange headwinds and macroeconomic uncertainty have contributed to slower sales trends, which could persist throughout the next year as it scales back distribution for popular models like Jordans and Dunks. And according to analysts , it’s unclear if Nike will be able to achieve even its revised outlook as it seeks to overcome an innovation lag and  increased competition from other brands in crucial categories like running.

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Meanwhile, Adidas is on the upswing. In April, the brand raised its guidance for the year after it reported better-than-expected preliminary results for the first quarter of 2024. Adidas also noted that it continued to shed its existing Yeezy stock in Q1, with the latest drop generating revenues of around 150 million euros and an operating profit of around 50 million euros in the period.

As Nikic pointed out, Adidas now stands to win over more consumers who will not be able to spend as much on Nike amid planned product reductions from the brand.

“Given that Nike will be pulling back distribution of the styles that cater to the shoe-obsessed ‘sneakerhead’ community (a customer sub-segment [Adidas] struggled to address ex-Yeezy), [Adidas] could potentially pick up wallet share among these consumers now that Nike’s Jordan and Dunk styles are declining,” Nikic wrote in his note.

Analysts have previously noted how Nike’s challenges could spell positive signs for its biggest rival. In April,  Morgan Stanley analysts  said in a note that Adidas could stand to benefit specifically from Nike’s slowdown in the innovation department and its distribution scale back.

“We see scope for Adidas to opportunistically benefit from the current lull in  Nike’s product innovation , as well as benefiting from a more rational pricing approach as Nike looks set to return to more of a scarcity model with key franchise products,” read the note from analysts, which included Edouard Aubin and Grace Smalley.

And in a June 19 note, Williams Trading analyst Sam Poser said that Adidas’ upcoming planned launches in running and basketball for 2024 will be ” well-received” and that its retro products are also performing well.

“While Nike regroups, Adidas is getting its act together,” Poser wrote. “Adidas is now beginning to strategically redeploy its Originals (the Samba, Campus, Superstar, Gazelle, Stan Smith, and others) in, what appears to be, a strategic manner.”

That’s a stark contract to rival Nike, which has been largely criticized for its lack of innovation.

“Unlike Adidas, which allowed its heritage Originals to become stagnant and is now reviving them, Nike is pulling back on core heritage product, and does not have much compelling new product in its pipeline,” Poser wrote.

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Nike, inc. reports fiscal 2024 fourth quarter and full year results.

BEAVERTON, Ore.--(BUSINESS WIRE)-- NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2024 fourth quarter and full year ended May 31, 2024.

• Full year revenues were $51.4 billion compared to $51.2 billion in the prior year, up 1 percent on a currency-neutral basis*
• Fourth quarter revenues were $12.6 billion, down 2 percent on a reported basis and flat on a currency-neutral basis
• NIKE Direct revenues for the fourth quarter were $5.1 billion, down 8 percent on a reported basis and down 7 percent on a currency-neutral basis
• Wholesale revenues for the fourth quarter were $7.1 billion, up 5 percent on a reported basis and up 8 percent on a currency-neutral basis
• Gross margin for the fourth quarter increased 110 basis points to 44.7 percent
• Diluted earnings per share was $0.99 for the fourth quarter

"We are taking our near-term challenges head-on, while making continued progress in the areas that matter most to NIKE's future – serving the athlete through performance innovation, moving at the pace of the consumer and growing the complete marketplace," said John Donahoe, President & CEO, NIKE, Inc. "I'm confident that our teams are lining up our competitive advantages to create greater impact for our business."**

Matthew Friend, Executive Vice President & Chief Financial Officer, NIKE, Inc. said, "We are driving better balance across our portfolio. While we are encouraged by our progress, our fourth quarter results highlighted challenges that have led us to update our Fiscal '25 outlook. We are taking actions to reposition NIKE to be more competitive, and to drive sustainable, profitable long-term growth."**

Fourth Quarter Income Statement Review

• Revenues for the NIKE Brand were $12.1 billion, down 1 percent on a reported basis and up 1 percent on a currency-neutral basis, with currency-neutral growth in Greater China, APLA and EMEA, partially offset by a decline in North America.
• NIKE Direct revenues were $5.1 billion, down 8 percent on a reported basis and down 7 percent on a currency-neutral basis, due to declines in NIKE Brand Digital of 10 percent and NIKE-owned stores of 2 percent.
• Wholesale revenues for the fourth quarter were $7.1 billion, up 5 percent on a reported basis and up 8 percent on a currency-neutral basis.
• Revenues for Converse were $480 million, down 18 percent on a reported basis and down 17 percent on a currency-neutral basis, primarily due to declines in North America and Western Europe.
• Gross margin increased 110 basis points to 44.7 percent, primarily due to strategic pricing actions, lower ocean freight rates and logistics costs, and lower warehousing, partially offset by lower margin in NIKE Direct and unfavorable changes in net foreign currency exchange rates.
• Demand creation expense was $1.1 billion, flat compared to prior year as lower sports marketing expense was offset by higher advertising and marketing expense.
• Operating overhead expense decreased 9 percent to $3.0 billion, primarily due to lower wage-related expenses. Included in Operating overhead expense was $39 million of restructuring charges.
• The effective tax rate was 13.1 percent compared to 17.3 percent for the same period last year, due to changes in earnings mix, partially offset by decreased benefits from stock-based compensation.
• Net income was $1.5 billion, up 45 percent, and Diluted earnings per share was $0.99, including $0.02 of restructuring charges, net of tax benefit. Excluding these charges, Diluted earnings per share would have been $1.01*.

Fiscal 2024 Income Statement Review

• Revenues for the NIKE Brand were $49.3 billion, up 1 percent on a reported and currency-neutral basis, with currency-neutral growth in Greater China and APLA, partially offset by a decline in North America.
• NIKE Direct revenues were $21.5 billion, up 1 percent on a reported and currency-neutral basis, led by NIKE-owned stores growth of 6 percent, partially offset by a decline in NIKE Brand Digital of 3 percent.
• Wholesale revenues were $27.8 billion, up 1 percent on a reported basis and up 2 percent on a currency-neutral basis.
• Revenues for Converse were $2.1 billion, down 14 percent on a reported basis and down 15 percent on a currency-neutral basis, primarily due to declines in North America and Western Europe.
• Gross margin increased 110 basis points to 44.6 percent, primarily due to strategic pricing actions and lower ocean freight rates and logistics costs, partially offset by higher product input costs, lower margin in NIKE Direct and unfavorable changes in net foreign currency exchange rates.
• Demand creation expense was $4.3 billion, up 6 percent compared to prior year, reflecting an increase in advertising and marketing expense.
• Operating overhead expense was $12.3 billion, flat compared to prior year as lower wage-related expenses and lower technology spend were offset by restructuring charges.
• The effective tax rate was 14.9 percent, compared to 18.2 percent for the same period last year, due to changes in earnings mix and one-time items including the benefit provided by the delay of the effective date of US foreign tax regulations in the first quarter of fiscal 2024.
• Net income was $5.7 billion, up 12 percent, and Diluted earnings per share was $3.73, including $0.22 of restructuring charges, net of tax benefit. Excluding these charges, Diluted earnings per share would have been $3.95*.

May 31, 2024 Balance Sheet Review

• Inventories for NIKE, Inc. were $7.5 billion, down 11 percent compared to the prior year, reflecting a decrease in units.
• Cash and equivalents and short-term investments were $11.6 billion, up $0.9 billion from last year, as cash generated from operations was partially offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns

NIKE continues to have a strong track record of consistently increasing returns to shareholders, including 22 consecutive years of increasing dividend payouts.

In the fourth quarter, the Company returned approximately $1.6 billion to shareholders, including:

• Dividends of $560 million, up 7 percent from prior year.
• Share repurchases of $1.0 billion, reflecting 11.1 million shares retired as part of the four-year, $18 billion program approved by the Board of Directors in June 2022.

In fiscal 2024, the Company returned approximately $6.4 billion to shareholders, including:

• Dividends of $2.2 billion, up 8 percent from prior year.
• Share repurchases of $4.3 billion, reflecting 41.4 million shares retired as part of the four-year, $18 billion program approved by the Board of Directors in June 2022.

As of May 31, 2024, a total of 84.9 million shares have been repurchased under the current program for a total of approximately $9.1 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on June 27, 2024, to review fiscal fourth quarter and full year results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com . For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, July 11, 2024.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.'s earnings releases and other financial information are available on the Internet at http://investors.nike.com . Individuals can also visit http://news.nike.com and follow @NIKE.

View source version on businesswire.com : https://www.businesswire.com/news/home/20240627955686/en/

Investor Contact: Paul Trussell [email protected]

Media Contact: Virginia Rustique-Petteni [email protected]

Source: NIKE, Inc.