We all have our opinions. To many, Michael Jordan is Nike’s greatest athlete. To others, it’s Kobe Bean Bryant, Cristiano Ronaldo, Tiger Woods, or Serena Williams. For me, it’s Steve Prefontaine. Nike’s first athlete set the stage for decades of the brand’s rebellious and counterintuitive thinking. The spirit of Pre lives on.
Nike is one part retailer, one part media company, and two parts religion. The company has been covered extensively throughout the 2PM library and for good reason. One of our earliest reports on Nike began:
History has a way of changing things. The way that consumers view things today will be different in a decade or two. By every indication, Nike is working to achieve a few things. The Beaverton, Oregon brand has gone all in on iconography, images of people who become bigger than life. Perhaps, their marketing decisions aren’t for our lifetimes. Perhaps they are for the lifetimes of our children.
Its cultural impact, global reach, and inventiveness have contributed to an evolution from independent running shoe company to an omniversal brand.
Defining an omniversal brand: Nike navigates traditional retail, DTC, and metaverse seamlessly through its physical and digital presences. It promotes commerce and relationship development in an integrated manner, elevating the brand in each format. To achieve this, Nike had to accomplish four separate objectives:
- impact cultural moments
- fortify its DTC channels
- defend its intellectual property through resale
- establish its IP rights through metaverse-adjacent projects
Impacting Cultural Moments
As an apparel retailer: Nike is in a class of its own. The New York Times’ Vanessa Friedman wrote the reflection on Nike’s cultural impact. Her deep dive spanned the early days with Spike Lee, the 1985 tie-up with Michael Jordan (remember, his rookie year shoes were initially banned), its new era of high fashion clout and its growing secondary market resale value. Its competitors can barely reach its stratosphere, though Adidas and Lululemon are trying. It sits on a Mount Rushmore of iconic American brands; its future is brighter because it’s the first of its kind.
It has its founding fathers: Phil Knight, a former University of Oregon runner, and Bill Bowerman, his college coach, who famously poured rubber into his wife’s waffle iron to make a new running sole. It has an anthem: “Just Do It,” introduced in 1988. Most of all, maybe, it has an emblem.
That puts it closer in history to such brands as Coke, IBM, Disney and McDonald’s than any athletic or even fashion name. The only other brand to make the leap so effectively and completely from commodity to identity in the last half-century is Apple.(1)
When a company like Nike, or Disney, or Apple makes a strategic move, it reverberates throughout numerous industries. They each have the ability to exist in every industry at once. Nike wants the resale market, too: a Nike-owned resale site has the potential to capture new ground that Nike has ceded to platforms like StockX.
Fortify its own DTC channels
Nike has proven that it decides its own fate when it comes to distribution. The one piece of the puzzle Nike doesn’t currently oversee? Resale. The sneaker resale market has become a robust secondary trade that marks the most coveted shoes on the internet. Nike accounts for the vast majority of sneakers sold at auction at Sotheby’s, according to the NYT. Companies like Stockx, Stadium Goods and more have built entire businesses around selling after market Nike sneakers. If Nike were to bring sneaker resale under its own hood, that would disrupt the entire sneaker ecosystem. From TechCrunch:
In May 2019, Nike called itself a tech company with the development of Nike Fit, a scanning solution to find Nike app users’ best shoe fit. The product was developed by Intervex, a Tel Aviv-based startup.
A Nike-owned resale marketplace could be an extension of the Nike app as a place to buy and sell used or deadstock, resold Nike sneakers and apparel. Functionally, it would be more similar to GOAT or eBay than Stadium Goods or StockX, which only allow unworn sneakers. (3)
Authentication would be guaranteed under a Nike-owned resale app. Fake sneakers often end up in the after market and those buying from Nike could rest assured they’re buying the real thing. Nike would also benefit from the influx of customer data. They’d know more about the customers most persistently active in both the primary and secondary markets and how to market to the consumers who prefer first market over second market (or vice versa). They could also better control and orchestrate demand without alienating too many customers. From Not Authenticated:
Resale could seamlessly become part of Nike’s popular SNKRS app. It’s also possible to connect the dots between Nike’s metaverse efforts (which we’ll get to later) and resale. You can imagine Nike rewarding NFT holders with access to a resale auction, for instance. If Nike pulls it off, it would be the first major brand to fully close the loop on its resale business – something other companies would then be interested in copying. Nike is the first omniversal brand.
Defend intellectual property
Competition is fierce. Nike is known to throw its weight around in areas it wishes to own. Nike is no stranger to lawsuits: It’s currently embroiled in a battle with Stockx over Stockx selling NFTs of Nike sneakers as well as counterfeit Air Jordans. It’s taken MSCHF to task over its Satan sneakers. It’s on the receiving end, too. Adidas this week filed lawsuits against Nike over its adaptive sneaker patents and its app suite, which have become a defining strategy for Nike. It’s a typical back and forth spar for Adidas and Nike, but in the grand scheme, Adidas is ultimately nipping at Nike’s heels. From Business of Fashion:
Apps have become important tools for brands to reach customers that are increasingly living on their phones, and Adidas’ apps haven’t generally been as popular as Nike’s. Nike’s main retail app is currently the number eight shopping app on Apple’s iOS in the US, according to intelligence platform Apptopia. SNKRS ranks at 27 and Adidas’ equivalent, Confirmed, at 34.
As of February, SNKRS also had more than 2.5x the market share (vs. Adidas) based on monthly active users as confirmed among the leading, direct-to-consumer sneaker apps.
Establish IP rights in the metaverse
The complaint filed by Nike describes NFTs as “part of the future of commerce.” It also warns that the burgeoning technology is susceptible to trademark infringers seeking to reap profits off of rights that does not belong to them.
As the first omniversal brand titan, Nike’s push into the metaverse is one to take seriously. With RTFKT, the digital studio it acquired last year, it released its first digital sneaker, which sold out instantly and has become a collectors’ item in the virtual world. Nike has been working to carry over its cultural clout to the metaverse, by trademarking its name and logo and partnering with Roblox to built out a branded world, Nikeland. It’s claiming its turf now – other brands will find themselves playing catch up.
Nike’s move into the metaverse is so powerful because it has the means to build, test, and acquire new technologies. It has a metaverse team already in play to help it define its presence in the virtual world. The possibilities are near endless and that represents a huge business opportunity for retailers who will follow Nike’s playbook. Recently, it introduced direct-to-avatar purchases with RTFKT. It’s not just a metaverse strategy. From PSFK:
A key component of Nike’s metaverse-fueled direct-to-avatar virtual product sales approach is the launch of its own metaverse, Nikeland. Hosted within the immensely popular Roblox platform and metaverse, Nikeland has already received almost 7 million direct visits from 224 countries since its launch. Nikeland is free to access, and stocked with minigames. Users are encouraged to outfit their avatars with digital versions of the newest Nike product drops, and shoppers are able to purchase Nike CryptoKick and skins directly for their avatars. (2)
The adoption of Web3 principles by traditional retailers will be gradual but Nike has begun to lay an omniversal foundation by building up its direct-to-consumer business and investing in its own apps, trademarks, and intellectual properties, while reducing its dependence on traditional retail channels. Web3 and DTC are natural partners and Nike will be of the first major retailers to iterate around Web3 principles. It’s not just a new revenue stream: it’s community and status. It’s belonging.
As eCommerce becomes ever-present in our lives, that line of demarcation between eCommerce and our physical lives continues to blur. As brands adopt metaverse strategies, physical goods are getting digital versions. In December, we wrote on the CryptoKicks movement:
Nike prides itself on being first in line to new innovations or opportunities. The few times that it hasn’t been, it’s marketed so well that the consumer eventually forgot that another brand beat them to the punch (Nike has owned the mindshare in everything from NBA basketball to pro skateboarding). The retailer will not have to worry about coming in second on its way to the metaverse.
The retailer seems to understand the value of digital real estate, the future of virtual communities, and the importance of investing in the products that bring the two together today. When the late Steve Prefontaine used to run, it was wild and relentless. He ran for legacy and for principle. He made his own rules and established that he was the best at his craft. He would say, “I have to go out hard and lead from the start.”
Nike’s best athlete laid the strategy for much more than the sports icons it sponsored. The first omniversal brand is available anywhere and everywhere shoes are worn.
By the 2PM Team