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INTERNET AS ONLINE SALES CHANNEL

Submitted ByGroup 4, Sec-2


SLMT
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

NIKE

Largest seller of athletic apparel and


footwear in world
Presence in 190 countries
Products mainly available in sports
category like Running, Soccer,
Basketball, Mens Training, Womens
Training, Action Sports, Sportswear and
Golf
Present in India since 1995
Target Market : professional athletes ,
womens training segment
Expansion by entering in digital sport
category and
e-commerce
Nike practices the Form Follows Value
11/29/15
strategy

Objective of Nike is
to Improve profit margins
Reduce inventories
Minimise price
markdowns
Right product to right
customer
Availability of assortment
on time
SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

DISTRIBUTION &SALES
MODEL
Sales growth at CAGR 10% in last 5 years
DTC revenues accounted for 20% of total

sales

Wholesalers
in U.S.
international
market
wholesalers

11/29/15

Direct to
Consumer
(DTC)
factory retail
outlet
online
website
e-commerce
3rd party
websites

ORDER FULLFILLMENT PROCESS-

WEBSITE

Brand
divisions
Multibranded
outlets
category
specific
retailers-JD
Sports

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ONLINE SALES FULFILLMENT


PROCESS-EBAY

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

SHARE OF INTERNET
CHANNEL TO SALES

Online sales through www.nike.com = 15%


of total NIKE brand DTC revenues in 2014,
compared to 12% in fiscal year2013.

The category grew by 42% in fiscal year


2014, and was up by 70% year-over-year in
1Q15.
The company plans to grow online sales
almost fourfoldfrom $540 million in fiscal
year 2013, to $2 billion by 2017.
$7 billion in e-commerce sales expected by
2020.
The e-commerce accounted for about
15% of total sales compared to 10.7%
of last year. By fiscal 2017, Nike plans
to post annual web sales of at least $2
billion.
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

POINTS OF
DIFFERENTIATION
1. Mass to ME
2. Community building
through website and
social media
3. International ecommerce expansion is
part of Nikes growth
plan.

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

VALUE ADD BY INTERNET


CHANNEL
Real time Communication with value chain players Quickly relay information to customers and suppliers to confirm orders, dispatch
and pick-up payments and so on.

Metrics of Consumers easily available Nike uses its NIKEid to capture personal details of customers in order to predict
future trends. online retail website integrates analytic softwares that track
customer behaviour.

Use of online marketing tools SEO and social media marketing is enhanced

Ease of product search through filters and sorting tools used


in the website
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G STRATEGY
Offline Promotion Strategyin-store promotion via Window
display, shelf talkers, mannequins,
category demarcation and retail
ambience
1. Nike Factory Outlet more
concentrated on value pricing and
volume based sales

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G STRATEGY

2. Nike Brand Store- the


promotion and pricing is
premium and uniquely defined.
More concentration is given on
providing experience to
customers with exposure to all
innovative products.

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G STRATEGY

Online Promotion Strategy- advertise its premiumness through nike.com and


mobile apps and adopt sales promotion in third party e-commerce
1. use of Mobile Application and NIKEid product customization website. This was not
possible in case of retail store.

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

10

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G
STRATEGY
2. Further, Nike had used its own website to promote its Gift card package and
other innovations

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

11

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G STRATEGY
3. used e-commerce websites to declare sales promotions.

4. Nike uses sponsored ads for its e-commerce partners- Jabong, Amazon
and Snapdeal

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

12

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVERTISING/PROMO/PRICIN
G
STRATEGY
5. Nike has created sub-brand webpages under its parent website
to showcase its premium brandsJordan and Hurley.

11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

13

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

ADVANTAGES OF INTERNET
CHANNEL
1. DTC channels growth is driven by the strong online sales which is growing at
the rate of 50% quarterly. Nikes online sales channel is creating positive
disruption for companys overall revenue growth.
2. The Ecommerce platform is giving more cost advantage to the Nike as there is
no middleman involve and it is able to generate higher margins
compared to other channels.
3. This channel also involve direct involvement of the customers to the
companys new innovative products.
4. By increasing the use of Ecommerce, company is able to penetrate into the
wider range of territories and achieving width as well as depth of the sales.
5. One of the biggest advantage of increasing focus on online sales as it requires
less capital expenditure than the opening of new Brick Mortar store.
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

14

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

RETAIL VS E-TAIL
A. Disruptions to other channels:
Nike launched NIKEiD, an online service that will allow customers to create its own gear by
customizing colour, design and performance features.
Customers have to pay $170 extra to avail the facility. These customization also helping
Nike to collect the customer preference data which can further be incorporated into the
product designing and product innovations.
B. Competition With other Channel:
Nikes recent focus on digital initiatives suggest that, its revenue growth will tilt towards
the DTC sales channel and particularly from the online sales.
C. Sales Contribution by Internet Channel over a period of time:
It plans to grow its DTC segment sales by alloys 2.5 times in the next five years from $6.6
Billion in FY 2015 to $16 Billion in FY 2020. These growth will mainly come from the
companys penetration into the emerging market and here Ecommerce will play vital role.
Nike.com sales is expected to be key growth driver for DTC sales channel with $7 billion
revenue coming from the Ecommerce in FY 2016.
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

15

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

INTERNET PORTAL AND


ITS OPERATION
Nike has the dedicated own internet portal www.nike.com .
It doesnt have dedicated third party portal but Nikes products are
being sold on various ecommerce websites like Amazon.com,
Ebay.com, and Flipkart.com etc.
Nike also launched NIKEiD and Nike + to expand is digital space
and build online communities.
The only difference in the operation here is the order fulfilment
process done by a vendor who has listed the product on respective
website.
According to their expansion plan, Nike is planning to launch
websites in other countries also across the globe.
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

16

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

COMPARISON
Sales through

$ 1.2 Billion ( 4% of Total Sales)

online
Internet Portal Own dedicated portal plus third

$ 651 Million (1.1 % of total Sales)


Own dedicated portal and third party

Online

party portal
NIKEiD and Nike +

portal
Digital Newsroom strategy

Communities
Mobile App
Growth Plans
Opportunities
Communicatio

SNKRS App
Make $ 7 Billion revenue
Emerging Markets
All the sports website is integrated

Adidas Confirmed App


Make $3 Billion Revenue
Emerging Market
Individual sport has different website

n to Customer

to nike.com (E.g. Nike Golf)

which is co-branded with other brands

Brand Identity

Distinctive identity for each sport


on website

11/29/15

(Adidas Golf)
Every sport has different URL so
customer cannot access different
sports website from Adidas.com
SALES MANAGEMENT, SECTION 2, GROUP 4

17

Overview

Internet Sales
Channel

Internet Channel
Strategy

Retail vs e-tail

Competitive
Benchmarking

REFERENCES
http://marketrealist.com/2015/10/nikes-projecting-explosive-growth-retail-web-sales/
https://www.internetretailer.com/2014/12/19/web-sales-grow-65-nike
http://www.forbes.com/sites/greatspeculations/2015/07/09/how-nikeid-is-helping-nikes-push-forgreater-profits/
https://www.internetretailer.com/2013/10/21/nike-envisions-2-billion-web-sales-four-years
https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-online-retail
http://www.businesstoday.in/magazine/lbs-case-study/nike-marketing-strategies-globalbrand/story/207237.html
http://www.siegelgale.com/nike-and-adidas-different-strategies-for-telling-their-brand-stories/
http://www.thedrum.com/news/2015/03/28/how-adidas-creating-new-recapture-its-winningstreak
http://www.fool.com/investing/general/2015/11/20/nike-plans-to-increase-online-sales-sixfoldwhy-th.aspx
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

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If you do build a great experience, customers tell each


other about that
Jeff Bezos, Founder & CEO, Amazon

THANK
YOU
11/29/15

SALES MANAGEMENT, SECTION 2, GROUP 4

19

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