Running head: Nike technology

The Evolution of Nikes

E-commerce Strategy

By: Suzette Charlery,

International College of the Cayman Islands

GR:534 Computer Application
Tutor: Lancelot Barnes

The Evolution of Nike technology

Abstract
The Nike Corporation is engaged in the design, development, and worldwide marketing of highquality footwear, apparel, equipment, and accessory products. It is the largest seller of athletic
footwear and athletic apparel in the world. The athletic apparel industry in which Nike is
involved is a major money maker in the United States; consumers are moving away from
physical purchases to various forms of digital spending. To capitalize on this trend, Nike has
been aggressively improving its e-commerce business over the years (Nike. Com, 2015).

Keywords: Nike, Technology, E-commerce.

The Evolution of Nike technology

The Evolution of Nikes

E-commerce Strategy
In 1964, University of Portlands track coach Bill Bowerman and the mid-distance runner Phil
Knight joined up with importing and providing low-cost, high-tech running shoes from a
Japanese manufactory, Onitsuka Company. Operating under the name Blue Ribbon Sports, they
initially sold shoes from the back of their van at a local and regional track meet until the first
retail store opened in the state of California. Inspired by the fashion and designs, Bowerman and
Knight decided to design their shoes and create their company. In 1971, the name changed to
Nike, Inc. (Buchholz and Carroll, 2012).

Nike is the dominant brand around the world; they are the largest and most successful brand of
shoes, sports clothing, equipments and accessories. The impact of e-commerce and increasing
advances in technology has created drastic changes in consumer spending and shopping choices
evident by the evolution of Nike designs (Seeking Alpha, 2014).

Aims and Significance

Since the birth of the internet in 1969 to its commercial adoption in the 1990s, the World Wide
Web has enabled business and consumers to connect with one another to exchange and share
information, anywhere and anytime. The web has provided consumers and business with
enormous advantages by reducing the transaction time and increasing the level of convenience.
(Rigby, 2014).
This case study will focus on the evolution of e-commerce for Nike as technology grow rapidly.
Nikes traditions of clever marketing are well known. Their products are unique, and their ideas

The Evolution of Nike technology

are original. For example, with the assumption that running on air would provide superior
cushioning, they invented shoes with gas-filled sacks for cushioning which are polyurethane
pouches filled with inert gas within the sole of the running shoes. Nike calls this design the Air
Max (Clark, 2015). Some famous Nike products such as the Waffle Trainer, Air Force one, Air
Max 93, Max 95, Air Max 97, Air Jordans and Lebron James are marketed by sports icons and
famous celebrities who promote their products (Nike.com, 2015).

Analysis of e-commerce
According to Laudon (2012), E-Commerce refers to the use of the internet and the web to
transact business. More formally, e-commerce is about digitally enabled commercial transactions
between and among organizations and individuals. This is evident on Nikes website, Nike.com.
The commercial transaction involves the exchange of value (e.g., money) across organizational
or individual boundaries in return for products and services. As technology advances, along with
high-speed internet connection, more companies are establishing an online presence to maintain
their competitive edge domestically and globally (Rigby, 2014).
Nike launched the nike.com website in August 1996 primarily to provide consumers and
business partners with information and e-commerce as their e-commerce strategy aim to increase
sales and products awareness. In 1996, there were no e-commerce capabilities presented.
However, the website served as a brand building tool for the company. In 1999, Nike redesigned
their website with expanded functionality (Rigby, 2014). The internet has proven to be a useful
tool for firms such as Nike by increasing sales and reducing cost.

The Evolution of Nike technology

Advantages of E-commerce
Nikes website has provided an intangible asset as market research, and consumer buying
behaviors are enhanced. With the data retrieved from consumers, firms can analyze and monitor
the buying behaviors of their consumers. The data can also be used to exploit new market
campaigns and promotions. Furthermore, the data collected can be used to produce innovative
designs and improve their research capabilities (Rigby, 2014).

The Nike store open for 24/7, it is the independent of location, and anyone with internet access is
potential customers. There is a reduction in setting up cost, running cost, logistics and transaction
costs. Easiness of buying and selling as well as a selection of products. E-commerce is better
customer service, and there is ease of price comparison during shopping (Basaran, 2013).

Barriers to E-commerce
The major barriers of e-commerce on large firms such as Nike involve the technology range from
infrastructure to security. An ongoing battle the e-commerce industry faces is security. With time
and additional research and resources, this problem will be mitigated. Nike makes great efforts to
minimize their technology risks (Rigby, 2014).
The Internet has redefined competition, therefore, changing the evolution of competition.
Although Nike has engaged in e-commerce, there are apparent gaps in their e-business strategy.
According to Basaran, (2013), disadvantages of e-commerce also include the fact that E-business
depends on loyalty of customers. When the customer has a bad experience on one site, they

The Evolution of Nike technology

might have doubt and fear towards all e-commerce sites. Also, physical shopping is something
social, and leisure and shipping takes time, resulting in impatient customers
Company value chain
According to Laudon (2012), value chain model highlights specific activities in the business
where competitive strategies are applied and where information systems are most likely to have a
strategy impact. This model identifies specific, critical leverage points where a firm can use
information technology most effectively to enhance its competitive position. The value chain
model views the company as a series or chain of basic activities that add a margin of value to the
products or services and are categorized as primary of support activities (Laudon 2012). Nikes
brand image has attained a competitive advantage due to its reputation for quality and
innovation. Regarding e-commerce, Nikes website is user-friendly, highly interactive, secure as
well as the navigation is fairly easy. Nikes continued efforts in innovation coupled with its brand
image is a unanimous leader of the athletic footwear and apparel industry.

Nike E- Commerce Strategies Evolve

Digital innovations dont just change a companys existing products or
services; they allow companies to identify adjacencies that strengthen the
base business and create new revenue streams. It develops innovative
components and weaves them into a holistic system that extends
competitive advantages and accelerates growth. Nike illustrates this
approach. Nike is popular and firmly rooted in the physical world as any
company could be, producing shoes, apparel, and sports equipment to be

The Evolution of Nike technology

sold through retail stores. E-commerce evolved as Nike expand the programs
offered on nike.com (2015).
In 1999, things began to change, starting with the NIKEiD program. Buyers
could visit nike.com and customize certain Nike shoes, choosing their base
and accent colors and adding a personal I.D. to the product. Nike then
began introducing digital innovations at other points in the customer
experience chain.
In 2006, it unveiled the Nike+ app, which connects a shoe that has a built-in
sensor and receiver to an iPod Nano. Runners could see data about their
time; distance, calories burned, and pace on the Nanos screen or hear it
through their headphones. After a workout, they could sync the Nano with a
computer and chart their progress. They could even get personalized
coaching. Today more than 30 million customers use Nike+, tracking and
sharing runs, workouts, and fitness goalsand providing the company with
invaluable data about who its customers are and what they value most.
Nike+ Fuel Band SE electronic bracelets take post-sale involvement further,
measuring all a users movements throughout the day and recording
indicators such as steps were taken and calories burned. As with Nike+,
users can capture this data, track and record their level of activity, and share
the information through social media. The results of all this innovation have
been dramatic. Nike enjoys the highest social media engagement with
customers in its industry. It has recorded an increased market share in key
areas (including Western Europe and soccerboth once dominated by

The Evolution of Nike technology

Adidas), a 42% increase in e-commerce sales from FY 2013 to FY 2014, and

an overall growth rate that significantly outpaces that of key rivals. And it
may be just warming up. Digital sport is incredibly important to us, Nikes
CEO, Mark Parker, told CNBC in April 2014. Youre going to see digital be
more and more integrated into other products that we have. Through its
partnerships with Apple and others, he said, the company hopes to expand
the reach of the Nike Fuel system and other applications to 100 million
users worldwide.

The impact of Nikes E-Commerce.

Nikes e-commerce growth has been progressively growing. In 1964 when the company first
operated, they're first- year sales was $8000 and resulted in a profit of $254. After eight years,
annual sales reached $2 million, and the firm employed 45 people (Buchholtz and Carroll, 2012).
Revenue in 2013 was up to US$25.3 billion and continue to grow to $767 million in the fiscal
year 2014. It is expected that the company will grow to $2 billion by the end of the fiscal year
2017. However, there is still substantial room for growth. As e-commerce only represents 17% of
Nikes total direct-to-consumer business (Seeking Alpha, 2014).

Nike continues to beat analysts estimates both revenue and earnings per share
Nikes womens apparel market and online channel are continuously improving
The Chinese athletic apparel market is expected to reach $32 billion by 2017
(Seeking Alpha, 2014).

Nike Employment

The Evolution of Nike technology

Although there are only 48,000 employed by Nike, Inc. as of the end of the fiscal year 2013,
there are an estimated 2.5 million workers involved in their supply chain. The largest impact is
that there are 1.01 Million workers (in 785 contract factories) involved in manufacturing the
finished products (Nike.com, 2015).
Nike, Inc. aim is to transform the working relationship with contract factories to incentivize
changes that benefit the workers. They aim to instill changes in their code, catalyze innovation,
provide educational opportunities to build management capabilities, address root causes in their
process, and work with the industry and reward factories progressive achievement (Nike.com,
2015).

Plans for Nikes Future

Nike is adapting their stores to link better up with online inventory, and it is pushing to reach
web consumers in more international markets. Earlier in 2014, Nike launched its e-commerce
website in China. The response exceeded the companys expectations. E-commerce is going to
be a key growth driver for the company in the future as online customer engagement increases in
China and elsewhere (Soni, 2014).
Nike also plans to:

Roll out mobile shopping options for smartphone and tablet shoppers in the U.S

and abroad.

Nike is working to expand its online presence to more international markets

Its implementing a set of omnio-channel features that more closely link its stores
to Nike.com.

Conclusion

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10

According to Laudon, (2012), E-commerce remains the fastest growing form of commerce when
compared to physical services and entertainment. The online demographics of shoppers broaden
to match that of the ordinary shoppers. To facilitate growth, e-commerce has been the best tool
for Nikes progress. E-commerce has effectively connected the customers and the producer. They
also accept customers input and personalizes the products (Nike.com, 2015). Being the most
publically traded sportswear ad equipment suppliers in the United States, Nike continues to beat
analysts estimates both revenue and earnings per share.
Nike undoubtedly has evolved and continue to do so today. Technology has brought out
innovations like the current patterns and designs that support comfort and durability. Nike ideas
are very popular and have adopted by all the other athletic brands. The evolution of this company
keeps the brand in demand and maintains a good reputation for Nike, Inc. (Nike.com, 2015). The
blending of e-commerce with day-to-day operations will continue to dominate the multinational
corporations over our economy.

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References

Basaran, O. (2013). E-Commerce for Beginner (Part 2): Organization, Advantages & Disadvantages.
YoungsDay. Retrieved from http://youngsday.com/2013/05/15/e-commerce-as-a-whole-part-2organization-advantages-disadvantages/#

Buchholz, A., and Carroll, A. (2012). Business and Society. Ethics and Stakeholder Management. 8th
Ed. South-Wester. Cengage Learning.
Estes, A. (2015). The Absurd History of Nike Air Technology. Retrieved from http://gizmodo.com/thebrilliant-but-absurd-history-of-nike-air-technology-1741712594
Laudon, K., and Laudon, J. (2012). Management Information Systems. Managing the Digital Firm. 12th
Ed.

Nike.com (2015). Retrieved from http://www.nike.com/language_tunnel

Seeking Alpha. (2014). Nike: Decent Future Outlook. Retrieved from

http://seekingalpha.com/article/2299725-nike-decent-future-outlook

Soni, P. (2014). The Growth Factors Spiking Nike Revenues and Earnings. Market Realist. Retrieved
from http://marketrealist.com/2014/12/growth-factors-spiking-nike-revenues-earnings/

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Rigby, D. (2014). Digital-Physical Mashups. Harvard Business Review. Retrieved from

https://hbr.org/2014/09/digital-physical-mashups

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Charts

Estes, A. (2015).

(Soni, 2014).

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(Soni, 2014)