business plan nike

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-

Also, check out our most loved stories below

Why did Michelin, a tire company, decide to rate restaurants?

Is ‘Michelin Star’ by the same Michelin that sells tires, yes, it is! But Why? How a tire company evaluations became most coveted in the culinary industry?

Johnnie Walker – The legend that keeps walking!

Johnnie Walker is a 200 years old brand but it is still going strong with its marketing strategies and bold attitude to challenge the conventional norms.

Starbucks prices products on value not cost. Why?

In value-based pricing, products are price based on the perceived value instead of cost. Starbucks has mastered the art of value-based pricing. How?

Nike doesn’t sell shoes. It sells an idea!!

Nike has built one of the most powerful brands in the world through its benefit-based marketing strategy. What is this strategy and how Nike has used it?

Domino’s is not a pizza delivery company. What is it then?

How one step towards digital transformation completely changed the brand perception of Domino’s from a pizza delivery company to a technology company?

BlackRock, the story of the world’s largest shadow bank

BlackRock has $7.9 trillion worth of Asset Under Management which is equal to 91 sovereign wealth funds managed. What made it unknown but a massive banker?

Why does Tesla’s Zero Dollar Budget Marketing Strategy work?

Touted as the most valuable car company in the world, Tesla firmly sticks to its zero dollar marketing. Then what is Tesla’s marketing strategy?

The Nokia Saga – Rise, Fall and Return

Nokia is a perfect case study of a business that once invincible but failed to maintain leadership as it did not innovate as fast as its competitors did!

Yahoo! The story of strategic mistakes

Yahoo’s story or case study is full of strategic mistakes. From wrong to missed acquisitions, wrong CEOs, the list is endless. No matter how great the product was!!

Apple – A Unique Take on Social Media Strategy

Apple’s social media strategy is extremely unusual. In this piece, we connect Apple’s unique and successful take on social media to its core values.

-AMAZONPOLLY-ONLYWORDS-END-

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.

Related Posts

How does Instacart work and make money: Business Model

What does Zscaler do | How does Zscaler work | Business Model

What does Chegg do | How does Chegg work | Business Model

What does Bill.com do | How does Bill.com work | Business Model

What does Cricut do | How does Cricut work | Business Model

What does DexCom do? How does DexCom business work?

What does CarMax do? How does CarMax business work?

What does Paycom do? How does Paycom work?

What does FedEx do | How does FedEx work | Business Model

How does Rumble work and make money: Business Model

Dollar General Business Model & Supply Chain Explained

What does C3 AI do | Business Model Explained

What does Aflac do| How does Aflac work| Business Model

How does Booking.com work and make money: Business Model

What does Okta do | How does Okta work | Business Model

What does Alteryx do | How does Alteryx work | Business Model

Write a comment cancel reply.

Save my name, email, and website in this browser for the next time I comment.

• Advanced Strategies
• Brand Marketing
• Digital Marketing
• Luxury Business
• Startup Strategies
• 1 Minute Strategy Stories
• Business Or Revenue Model
• Forward Thinking Strategies
• Infographics
• Publish & Promote Your Article
• Write Article
• Testimonials
• TSS Programs
• Fight Against Covid
• Privacy Policy
• Terms and condition
• Refund/Cancellation Policy
• Master Sessions
• Live Courses
• Playbook & Guides

Type above and press Enter to search. Press Esc to cancel.

Presentations made painless

• Get Premium

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.

Want to create a presentation now?

Instantly Create A Deck

Let PitchGrade do this for me

Hassle Free

We will create your text and designs for you. Sit back and relax while we do the work.

Explore More Content

• Privacy Policy
• Terms of Service

© 2023 Pitchgrade

Search form

M-Prize Winner

This story is one of ten winning entries in the Long-Term Capitalism Challenge, the third and final leg of the Harvard Business Review / McKinsey M Prize for Management Innovation .

Story : Nike’s Gameplan for Growth that’s Good for All

Innovation is a cornerstone of the Nike brand. Our company was founded by two visionaries, Bill Bowerman and Phil Knight, who set out to reinvent athletic footwear. Over the past decade, our drive to design and produce better, faster, lighter products has evolved into an even more ambitious agenda – to embed long term sustainability into our business. This broader vision calls for new approaches to design, management, partnership and new tools and metrics to support integration and adoption throughout Nike.  Many of Nike’s management innovations for sustainable growth started internally, with the Corporate Responsibility and Considered Design Teams. As internal efforts took hold, the focus expanded externally. Nike is now reinventing its supplier, industry and business relationships. It is leading industry efforts for systemic change and pursuing an agenda of truly disruptive innovation.

Nike Dare to Dream video: http://vimeo.com/11680452

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. Wholly-owned NIKE subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro International Limited, which designs, distributes and licenses athletic and casual footwear, apparel and equipment, primarily for global football (soccer).

In 2011, NIKE Inc. earned $20.9 billion in revenues. NIKE Brand Footwear revenues in 2011 represented 55% of total NIKE, Inc revenues, followed by NIKE Brand apparel with 26%, and 5% for NIKE Brand equipment. Approximately 36% of NIKE, Inc. revenues were derived in North America, while the remainder are from across the globe.

After decades of phenomenal growth and becoming one of the world’s top brands (Interbrand 2010), Nike intentionally shifted its strategy to integrate sustainability as a vehicle for growth. We have come a long way, from our association with the discontent of globalization in the late1990s (and subsequently establishing one of the first corporate responsibility (CR) departments), to setting the bar in embedding sustainability into business practice. We no longer view sustainability as option. Rather it is a business imperative, an innovation opportunity and a potential competitive advantage. As CEO Mark Parker notes:

“The age of abundance is over. The definition of business performance is expanding. Innovation is being redefined. Expectations are being redefined. At Nike, we believe the world must innovate faster for growth that is good for all.”

Innovation is our core competency. Starting in 1964, Nike’s founders, Phil Knight and Bill Bowerman, looked for ways to improve upon the Onitsuka Tiger running shoes they were selling. They weren’t just distributors, they collaborated on design ideas. The legacy of innovation in search of better, lighter, faster product performance evolved and deepened over time. It drives every department, process and person in our company – from the product design process, through production, marketing and distribution. Phil and Bill had a vision that sparked and guided their innovation and approach. While the business has evolved and grown exponentially, that single-minded vision continues to feed innovative thinking, design and business practices today.

In addition, several significant events in the 1990’s and early 2000’s prompted a shift in Nike’s vision and approach: the labor crises related to sourcing and manufacturing practices; and scenario planning, which surfaced potential vulnerabilities across the business.  The company also went through a reorganization to align more closely to consumers. Within this change, the company moved to embed sustianbility across the company with finance and product teams taking a greater role in the process alongside our VP of CR.

In the early 1990s, public reaction to labor practices in factories from which we sourced production triggered innovations in how we oversee and manage our supply chain. We took responsibility and developed stringent standards for our manufacturing partnerships - the Code of Conduct (CoC).  While the CoC became a significant priority for us and our business partners, it was clear that there still was more to be done to oversee and manage our supply chain. We formed the CR committee of the Board. We disclosed our factory locations. We took measures to share information about our expectations and our progress against strict operational guidelines. These moves signaled our seriousness about the issue and our desire to move quickly and find solutions.  The action with the greatest impact has been transparency. It has enabled us to better comprehend the problems and shape more approriate solutions..

We also recognized that corporate responsibility had to be a part of Nike’s business. We consolidated CR functions under the the newly created VP of CR position, led by Maria Eitel, which brought together our labor and environment strategies.  By 2001, we established Nike’s Board of Directors’ CR Committee,  set long-term environmental goals, and jointly published worker survey findings with the Global Alliance.  These two important management shifts – the installment of an internal governance model and formalization of CR Reporting put us in the position to proactively manage our whole sustainability agenda.  Nike was embarking on a journey to understand the true power of transparency, collaboration and governance. 

In December 2004, Hannah Jones, became our second VP of CR reporting to Mark Parker, who was then co-president of the Nike brand.  Mark Parker soon become CEO of NIKE, Inc.  In assuming the CEO position, he brought a passion and commitment for sustainability.  Concurrent with these management changes, we entered into an internal cultural shift, recognizing that we cannot solve these challenging issues alone.  The commitment to transparent, operation-wide sustainability morphed into embedding sustainability as a future business driver for growth. 

In 2007,  Nike conducted (along with SustainAbility, a consulting firm) a scenario planning on global trends such as water, health, and energy, alongside increasing worldwide concern about climate change. This was not just about our sustainability strategy – it was part of our business strategy. We became acutely aware of our dependence on oil for materials and fossil fuel energy. We were vulnerable, as many companies are, to escalating oil prices and looming carbon restrictions from anti-climate change regulation.  The waste production, use of materials and water by contract manufacturers also posed major risks.  All of these issues were deemed significant and highlighted the areas of our value chain and our business that had the most potential for innovation.  It eventually led us to our long-term vision to build a sustainable business and create value for Nike and our stakeholders by decoupling profitable growth from constrained resources.

The labor crises, the management shifts and the scenario planning exercise were all pivotal moments. Collectively, they triggered a commitment to drive sustainability into every aspect of Nike’s business.  We have a new vision; we’ve redefined goals as in Nike terms, there is no finish line. It requires innovation in our design process, our production, our sourcing, our tools and metrics, and our whole team structure. Fortunately, innovation is in our cultural DNA and provides a strong foundation. Even so, embedding sustainability thinking in our strategy and then educating every person and evolving the process in the company is a challenge that takes time, continual reassessment, and unerring commitment.  Early on, we missed some signals and now we have much stronger tools, teams and a culture that is structured to make progress against our bold sustainability goals.  "It is clear to us that our long-term potential, and the long-term potential of virtually every other major company in the world, will be severely pressured by [these] external factors", Parker contends.

Innovation is at the very heart of our culture at Nike. One of the cornerstones of innovation is a willingness and desire to learn. And, while we have learned much from our past and others have learned much from our experience, we believe the next era in the evolution from an industrial economy toward a sustainable economy will teach greater lessons than learned before. This evolution requires us to innovate faster, more radically, more disruptively inside of Nike and throughout out our whole ecosystem. It is a top to bottom, bottom to top, inside out and outside in innovation.

In 2008, we produced a video for our design team. ‘Considered Design’ lays out a vision for the products we strive to produce.  On screen, you see a close up of a runner’s shoes, pacing through puddles and mud.  It evolves into a poetic series of athletes in action.

Considered Design video: http://www.youtube.com/watch?v=1WuyE_x8Vs8

The accompanying voiceover:

“This is not a shoe, it is an ethos, a shoe reborn as a tennis court, or basketball or … a better shoe…Why do [products] have a shelf life? What if ... there was a closed loop cycle? …A shoe can’t change the world, but an ethos can.”

The video was intended to inspire. It also set forth a mandate and a vision. How could Nike design products that have no shelf life? How can we reuse and reinvent products? How could we work towards a closed loop vision? This vision was the first important step in driving a new era of innovation.

Our CEO Mark Parker has a vision to embed sustainability as an ethos, as a a catalyst of innovation to deliver product and services that deliver superior athletic performance and lower enviromental impact and ultimately drive profitable and sustainable growth for the company “It’s not about a few people making sustainable products,” says Nike Considered GM, Lorrie Vogel.  It’s about making sure that every person in the system adopts a different world view, sense of purpose and approach to their job.” 

In order to embed sustainability and make it central to our ethos, we have made significant organizational changes, developed new tools and performance metrics, and redefined our relationship with suppliers and industry peers. We started with a focus on our own internal capabilities, knowledge and practices - our internal innovation phase. Over time, we have expanded our focus to include suppliers and industry peers - our external innovation phase.

Internal Innovation Phase – Corporate Responsibility and The Considered Group

In 2004, Nike’s various sustainability initiatives (including environmental responsibility) had not really worked their way into daily business decisions.  CR was perceived as a risk management function not a valuable market opportunity. It was isolated from Nike’s business units as an add-on or layer to the business strategy and not as a core driver. The good news was that business unit managers spoke aspirationally about the potential of effective CR.

Our team set the conceptual metric of return on investment squared or “ROI 2 ” as CR’s new strategic compass, emphasizing that business decisions included both financial and corporate responsibility returns – people, planet and profit. If CR delivered ROI 2 , it was helping the business succeed and improve its social and environmental footprint. We took a strategic approach to CR that emphasized value creation, collaboration with business units and proactive strategic planning.

“We wanted to show how we could help them deliver returns on investment to our shareholders. The end goal for us had to be that businesses institutionalize CR into the DNA of the company so that CR is a living, breathing approach to how one does business.  By organizing CR around ROI 2 , we hoped it would evolve from being seen as a cost to being an intrinsic part of a healthy business model, complete with profitability and sustainable growth. 

ROI 2 is Nike’s measure of creating an exponential return from integrating corporate responsibility into our business.  Take waste, for example. In FY05-06 we carefully documented and measured the amount of waste generated across our entire supply chain. In one year, the cost of waste across footwear alone was estimated at $844 million.  Everyone is involved in initiatives to reduce our waste across the supply chain: from designers to chief financial officer to business partners. Less waste is better for margins and better for the environment.  By using design to reduce our waste, we’re tapping one of our greatest resources - innovation – and fueling other insights and successes.  This provided the backdrop to our evolution and to the targets we set over the course of the next five years.

“Under our CEO’s guidance and influence, the team began exploring where best to start integrating this strategy into Nike’s ecosystem. We focused on our product creation process and honed in on product design as a key intervention point.  Due to its position at the beginning of the supply chain, the design function offered great opportunity to design out environmental issues. We wanted to help Nike “design the future...as opposed to retrofit the past.” According to one of my colleagues the choice to work with designers was natural: “The designer’s job is to design the future. It’s natural that they would be huge champions of sustainability and they thrive on daunting, new problems. Also, because design is situated at the beginning of the supply chain, the design function is an opportune intervention point.”

In late 2005, the Considered Design ethos was formally embedded within our business strategy, with a focus on high-performing, aesthetically pleasing greener products. The Considered Group is a think tank, tool box, internal consultancy, competitive catalyst, and an antenna to the outside world. It serves as the hub of the Considered design ethos – consider the choices, consider the impacts. Their mandate is to provide inspiration, education, and the tools to drive sustainability best practices deep into Nike’s product creation units and processes.  The team’s objectives include helping Nike assess the entire product lifecycle.

The whole structure of Considered Design is thoughtfully designed to cultivate innovation. Instead of commanding and controlling how the business units implement sustainability, the team places responsibility for sustainability in the hands of designers.  The team is a centralized hub with reach into key Nike functions. The hub’s spokes are product creation units, to which Considered disseminates knowledge, tools, and support.  The team has both environmental and product creation expertise and collaborates closely with the related product engines. Considered’s GM, Lorrie Vogel, explained the organizing philosophy: “If you don’t know how to translate environmental knowledge into products and processes, you’ll always be outside of the product creation engine.”

The Considered team was surprised by how difficult it was to create usable metrics for the product teams. They developed a holistic, predictive way to score products at different intervals throughout the development process. After 18 months of extensive work on developing the right metrics for the tools, the Considered Index was introduced in September 2007.

The Index provided predictive metrics that would work uniformly across Nike’s varied footwear line.  It evaluated a product’s bill of materials (BOM), a roster of all materials specifications for a shoe’s components, using Nike’s Materials Assessment Tool, an abbreviated life cycle analysis for raw materials. The Index scored environmentally preferred materials (EPMs) on multiple criteria including toxic hazard, energy and water usage, recycled content, recyclability, and other supply chain responsibility issues.

As a learning and motivation tool for Nike’s product teams, the Index included a “Change Agent” category. Teams could win points for up to three new significant footprint-reducing product or process ideas. Lesser awards were also given to teams that adopted other teams’ recent innovations.

The Index was carefully calibrated to reward only those products that performed above Nike’s historical averages, with Bronze representing baseline sustainability and Silver and Gold both qualifying as “Considered”; the distinction was purely internal. The Considered team planned to toughen the Index’s scoring over time.

As one manager noted, “The intention is that we just keep raising the bar. As we do, business units will have to improve.”

The Considered team trained product teams how to use the Index. It built a network of Considered “super-users” who served as internal category experts on Considered questions and provided feedback to the Considered team. Through super-users, Considered would provide updates on noteworthy examples of inspirational implementation and innovation.

The Index ran on an intranet calculator. Product teams could self-score their products in a minute by entering their product’s BOM number and clicking checkboxes for design and process options. While teams scored their product at the end of the development process to receive an official Considered rating, many product teams used the Index at interim product gates. The very fact that the information and scoring was public was motivating. It cultivated peer competition and energized the pace of adoption and innovation.

From the beginning, the team had visible CEO level support. As Vogel explained, “CEO Mark Parker believes that sustainability is the future of Nike. He also wanted to see the scores up on the wall so that we could really track and learn from the process.” 

Since Nike began setting targets years ago, we have learned the greatest opportunity to drive change is in the areas where we have the most impact.  Materials create Nike’s greatest environmental impact.  Nike also controls the design and became the area of focus to roll out the Considered Design ethos in 2009.  This same methodology and rigor has been applied to design sustainability into the way we source and manufacture our products. 

Nike’s effort to drive further innovation throughout the company and integrate sustainability into the very core of our efforts is multifaceted.  We have scripted a new vision. We changed the organizational structure and introduced a whole new department. We provided training and leveraged technology. And, we encouraged healthy competition and celebrated successes.

Even the best strategy comes to nothing without the commitment, people and processes to make it happen.  Continuing to integrate sustainability into our business, rather than layering it on top of how NIKE, Inc. and our brands currently operate, will increase and accelerate progress, drive scale and the proliferation of sustainable innovation, and enable broad employee engagement.

At Nike, dedication to and accountability for sustainability begins at the top. In 2001, we formed a Corporate Responsibility (CR) Committee as part of our Board of Directors committee structure. The CR Committee has oversight of environmental impact and sustainability issues, labor practices and corporate responsibility issues in major business decisions.

In FY06, we created a management framework to ensure executive accountability for corporate responsibility across the company. The Vice President for Sustainable Business & Innovation (SB&I) reports directly to President and CEO Mark Parker, and co-manages dedicated teams with business and functional executives to develop and review policies with Board oversight, approve investments and evaluate and refine our approach and direction.

The SB&I team acts as a catalyst for sustainability companywide. Made up of about 130 people, the team leads sustainability strategy development; provides content expertise and consulting to teams companywide; collaborates with sustainability specialists in other parts of the organization; drives sustainability integration; leads engagement with stakeholders; works to mitigate risk and facilitate compliance; and reports on our progress to scale the impact of sustainable innovation beyond Nike.

Our new executive-level Committee for Sustainable Innovation also steers our efforts specific to innovation.  In 2011, we launched an executive-level Committee for Sustainable Innovation. This group is chaired by our CEO and oversees our innovation pipeline and portfolio. It helps to fully capitalize on opportunities by accelerating adoption and bringing these activities to scale.

Ultimately, the greatest measure of our success can be found in the finer detail of Nike’s culture.  The very vocabulary of Nike designers has changed. We now hear team members say ‘ that’s an inconsiderate design’ in commenting on a product that does not meet the new criteria.

External Innovation Phase – Materials Sustainability Index, GreenXchange, Sustainable Apparel Coalition

As Nike advanced through a company-wide adoption of the Considered ethos, it became clear that for true, holistic change, we needed to focus beyond our own internal operations. To drive adoption and scale at an industry level, to ultimately change the marketplace for the better, Nike recognized the potential benefit in sharing knowledge, information and tools with suppliers, peers and other stakeholders.

Four key initiatives show what we are doing to cultivate innovation outside the business: the Nike Material Sustainability Index (MSI), the GreenXchange, the Sustainable Apparel Coalition, and the DyeCoo waterless dying strategic partnership.

Nike Material Sustainability Index (MSI)

The materials in just our NIKE Brand footwear and apparel products come from 900 different material vendors (i.e., supplier companies). We do not source directly with these vendors; they are independent companies that sell materials to our contract finished-goods manufacturers based on our design specifications. To drive sustainability improvements in materials, we focus on the part of the value chain over which we have the most control: product design.

Decisions made in the product design phase determine the majority of a product’s environmental impacts. Nike teams design products with very detailed material specifications, and by providing those teams with the information they need to choose better materials from better vendors, we can improve the sustainability of our products.

We are now working to take the Considered Indexes to the next level. We have been on a multi-year journey to refine the footwear and apparel Considered Indexes based on feedback from product creation teams.  In addition, we have significantly upgraded the materials rating tool embedded in the Indexes and are calling the new tool the Nike Materials Sustainability Index (Nike MSI). The Nike MSI is embedded in the Indexes that our designers and developers use to assess potential products, and it plays a pivotal role in product design.

One major improvement in the Nike MSI is that it rates material vendors in addition to materials themselves, providing strong incentives for the vendors to become more environmentally sustainable. We score material vendors on criteria such as whether they are complying with the Restricted Substance List (RSL) testing requirements and the Nike Water Program requirements; if they take part in materials certification processes, such as the Global Recycle Standard; and whether they have ISO 14001 certification or operate out of certified “green” buildings. Rating higher on these types of criteria will increase a vendor’s overall Nike MSI score.

The Nike MSI does more than rate our material vendors, however. It also scores materials according to (among other things) the chemicals required to make or process them. These scores enable our Nike product-creation teams to make more sustainable, less-toxic choices during product design.  It also assigns sustainability scores to materials based on multiple criteria, including how much water is required to produce them and the water stewardship of vendors that process them. The Nike MSI creates a strong incentive for material vendors to enroll in the Nike Water Program and reduce their water-related impacts by recycling process water or implementing innovative low- or no-water coloring processes – as these activities help to increase their MSI scores. Water-efficient materials from water-efficient vendors receive more points on the MSI, and, therefore, stand a better chance of being selected by our product creation teams than other similar materials. 

Materials are a substantial cost, so identifying long-term access to affordable materials that meet our environmental standards is key to our ongoing success and our ability to decouple materials from scarce resources.

GreenXchange

Over the past ten years of working on sustainability, we have come to understand the value of collaboration and shared knowledge. Without it, companies replicate efforts, reinvent wheels and often only make incremental progress.

Nike worked with the collaboration nonprofit, Creative Commons which also believe in the power of open innovation. Nike and Creative Commons share a vision of creating a digital platform that promotes the creation, sharing and adoption of technologies that can potentially solve important global or industry-wide challenges.

GreenXchange, a web-based marketplace we founded with several other companies, was born in conversation leading up to the World Economic Forum in Davos in 2009, and launched in 2010.  By using a set of standardized, free, legal tools, patent owners can make portions of their intellectual property portfolio available under a set of terms between the current choices of "all rights reserved" and "no rights reserved."  With GreenXchange patent licensing tools, patent owners open up a wide swath of technologies for research, development and innovative commercial uses.  Patent users receive the rights they need to innovate, and patent owners receive credit for their works - as well as the option to receive annual licensing payments.

GreenXchange builds on a culture to create common spaces for innovative reuse, as well as standardization efforts for biological materials and scientific data. It also bridges some key gaps in the way that green technologies are developed and utilized.

Many active R&D companies create green technologies that are not core to their business: they may represent good practices shareable across a large set of companies - sometimes even including competitors - but lack the business infrastructure to make those patents available for wider use.

GreenXchange was our first foray into open innovation with other businesses, set up to allow organizations to collaborate and share intellectual property. We have gained significant insights from this collaboration which continue to inform our strategy to bring sustainability innovations to scale.  The very concept of GreenXchange is a management innovation. Instead of taking a proprietary, short term approach to developing and controlling important information and sources, we have done the opposite. Nike continues to urge its  peers to collaborate, and is leading the way through its own commitments. 

Sustainable Apparel Coalition

Complementing our work to improve factory conditions, Nike is exploring ways to evaluate and communicate the environmental and social performance of individual products. We are doing this in cooperation with the Sustainable Apparel Coalition (SAC), a group of which we were founding partners.

The SAC is an industry-wide group of leading apparel and footwear brands, retailers, manufacturers, NGOs, academic experts and the U.S. Environmental Protection Agency, working to reduce the environmental and social impacts of apparel and footwear products around the world.

The SAC believes a common approach for measuring and evaluating sustainability performance is essential for driving a “race to the top” in the apparel supply chain. Apparel retailers and brands can compare the performance of products and upstream supply-chain partners, and those partners will have a single standard for measuring and reporting performance to their downstream customers. Eventually, this approach can provide a foundation for reporting to consumers on the environmental and social footprint of the products they purchase.

Through multi-stakeholder engagement, the Coalition seeks to lead the industry toward a shared vision of sustainability built upon a common approach for measuring and evaluating apparel and footwear product sustainability performance that will spotlight priorities for action and opportunities for technological innovation.

The Sustainable Apparel Coalition’s vision and purpose are based on a set of shared beliefs:

• The environmental and social challenges around the global apparel supply system affect the entire industry.
• These challenges reflect systemic issues which no individual company can solve on their own.
• Pre-competitive collaboration can accelerate improvement in environmental and social performance for the industry as a whole and reduce cost for individual companies.
• This collaboration enables individual companies to focus more resources on product and process innovation.
• Credible, practical, and universal standards and tools for defining and measuring environmental and social performance support the individual interests of all stakeholders.

DyeCoo waterless dying strategic partnership

Nike recently entered into a strategic partnership with DyeCoo Textile Systems B.V., a Netherlands-based company that has developed and built the first commercially available waterless textile dyeing machines. By using recycled carbon dioxide, DyeCoo’s technology eliminates the use of water in the textile dyeing process. With no water consumption or auxiliary chemical use, a reduction in energy use, elimination of drying and improving the process, the technology can enhance the quality of the dyed fabric and potentially revolutionize textile manufacturing.  Our VP of Merchandising and Product, Eric Sprunk further explains, "Waterless dyeing is a significant step in our journey to serve both the athlete and the planet, and this partnership reinforces Nike’s long-term strategy and deep commitment to innovation and sustainability.  We believe this technology has the potential to revolutionize textile manufacturing, and we want to collaborate with progressive dye houses, textile manufacturers and consumer apparel brands to scale this technology and push it throughout the industry."

In earlier years, we were about innovating solely to deliver optimal performance to our athletes, and strong financial returns to our stakeholders. We also had to react to risks and constraints in our ecosystem. Organizationally, the initial charge resided with the Vice President of the Corporate Responsibility Group. Over time, we made further changes to support, iterate and integrate the leadership vision thoughout the company. It meant an evolution in our approach. Now, our long-term vision is to deliver growth that is good for all – our athletes, our consumers, our investors, our suppliers, our partners, and the world in which we operate.  We are using sustainability to redefine business performance and look to show the industry how we can embed sustainability into our approaches to product and manufacturing, and solve challenges in business and sustainability for the world.  To enable adoption, our innovation strategy focuses on utilizing better processes, making better choices and bringing those choices to scale. We develop certain tools, such as the Considered Index, to drive our internal integration. We set targets that align to and support our strategy and have expanded our focus to our supply chain and industry peers. We work to optimize and improve our impact, and, at the same time, we innovate with a focus on changing the future.

1964  Blue Ribbon Sports founded by runners and revolutionaries - Bill Bowerman and Phil Knight  -as a distrbutor for the Onitsuka Tiger footwear brand (now ACIS)

1971  Swoosh logo designed for $35.  The Nike swoosh the spirit of the winged goddess who inspired the most courageous and chivalrous warriors at the dawn of civilization

Year-end revenues reach $1million.

1972   BRS founds Nike

 late 1970s  Nike establishes headquarters in Beaverton, Oregon, expansion internationally.

1985  Sock Racer championed Bowerman’s minimalist values with a breathable four-way-stretch upper, instead of layers of fabric, reducing weight and using less materials.

1988  Launch of ‘Just Do It” campaign and the reputation for unique and inspiring ads.

Revenues exceed $1.2 billion

1990  Niketown stores launched; Labor practices questions

1992  Nike’s first Code of Conduct published to guide practices in contract factories

1993  Nike launched its Reuse-A-Shoe program, allowing consumers to drop off any brand of worn out athletic shoes. Nike grinded the shoes and used the recycled material and manufacturing scrap in new sports surfaces. Since its launch, Nike has recycled more than 25 million pairs of athletic shoes.

1995  Nike began the journey of phasing out volatile organic compounds (VOCs) or petroleum-derived solvents (PDS) from its footwear production, reducing the use of VOCs 90% in just over five years to 2001.  Nike also started to manufacture its shoeboxes with 100% recycled cardboard.

1997  Nike committed to fully phasing out SF6, a global warming gas used in Air-Sole cushioning units. In 2006, Nike completed the phase out of all F-gases in Nike-branded footwear.  Nike began to blend organic cotton into a range of t-shirts.

2000  Nike Woven started the conversation about using less adhesives and less waste while maintaining comfort, performance and breathability.  The Standoff Singlet worn in Sydney was the first time Nike used 75% recycled polyester in a performance product.

2001 CR Committee of Board established.  Nike also established its first comprehensive list of restricted substances (RSL) to guide suppliers in the production of safe and legally compliant product. The RSLs were based on the most stringent worldwide legislation and also included substances that Nike had voluntarily decided to restrict.

2004  Hannah Jones assumes role as VP, Corporate Responsibility. 

That year, Nike also developed an environmentally preferred rubber that contained 96% fewer toxins by weight than the original formulations.  Also, Nike’s first retail introduction of apparel, the Men’s Fitness recycled polyester track suit, was made from 100% recycled polyester in a range of men’s fitness jackets and pants.

2005  Considered Design was formed as an ethos of the company to create products that address environmental impact by reducing waste, increasing the use of environmentally preferred materials and eliminating toxics. Nike introduced the Considered Boot, using a single shoelace woven between the leather parts of the upper, minimizing adhesives and allowing for easier disassembly.

2006  Mark Parker becomes CEO

2007 Considered Index introduced.  Also, the Nike Long Ball Slip-On was a unique performance-based shoe constructed without the use of solvents to hold it together.

2008  Nike launched the AIR JORDAN XX3, incorporating sustainability without sacrificing performance. That same year, the Air Pegasus 25, one of Nike’s most iconic running shoes, was designed to maximize efficiency.

2010  GreenXchange launched and some of the world’s leading football (soccer) players wore the most environmentally friendly and technologically advanced jerseys on the pitch.

Also, Nike’s EADT software application enabled designers to make the most sustainable choices right at the start of the product creation process, in real time. The tool was created based on Nike’s internal Considered Index, tested and utilized since 2006, and released to the industry to support transparency and collaboration.

2011  Sustainable Apparel Coalition launched.  Also, using a new fabric that’s both thick and soft, the women’s Nike Legend Pant was made from recycled polyester, material made from recycled plastic water bottles.  The Nike Legacy GS Boardshort brought performance and innovation to the next level for the competitive surfer, while also lowering environmental impact.

2012  Implementation of Nike Materials Sustainability Index began.  And, NIKE, Inc. announced a strategic partnership with DyeCoo Textile Systems B.V., developer and builder of the first commercially available waterless textile dyeing machine. The technology eliminates the use of water in the textile dyeing process.

Challenges and Fixes

Nike has faced a number of challeges in its efforts to integrate sustainability within product design and innovate a redefined future but it has led to us iterating, innovating and finding new ways to operate more efficiently, effectively and creatively:

Uneven adoption of the Index and new vision.

Even though corporate leadership held all categories accountable for achieving Considered targets, there was considerable variation in how quickly different groups have integrated the Considered Index and how well they operationalized the tool. Some businesses have faced greater challenges. Some businesses had a more entrenched resistance.  Since then, Nike has integrated sustainability principles into its innovation processes, governance and portfolios to generate innovation that delivers products and services that combine performance, innovation and sustainability.  Additionally, Nike has set a vision for what changes are needed in innovation, with its people and culture and in the way it works in two areas– in product and in manufacturing – that build on past achievements and on processes established to drive change.

Perfromance risks in the adoption of new materials.

There were a number of performance and aesthetic risks that Nike footwear faced in using EPMs such as synthetic leather. There was a potential performance risk, for example, that using recycled content could degrade physical properties like material durability, threatening Nike’s strict quality standards.  One of the product creation directors in footwear described that with some EPM synthetic leather alternatives, the options weren’t very attractive: “Leathers look boardy and dry, and the textiles aren’t very interesting.”  Today, rising input costs mean the need for innovation and technology has never been greater.  Through innovative design, science, technology and process changes, our long term vision is to progressively design out waste, eliminate hazardous chemicals and non-renewable energy consumption. Innovation also allows us to design in new materials and new approaches to products.

This vision has been built on years of assessing trends and materiality for Nike and the changes that are impacting our business, our value chain, our consumers and the world. In 2007, we undertook an assessment with SustainAbility some meta trends that have only become more relevant as we’ve shaped and defined our strategy. These meta trends highlight the areas of our value chain and our business that have the most potential for innovation. We use these filters in our work, our assessment of opportunity and the way we approach reporting.

Added complexity.

In most cases, Considered made the design process more complex.  While designers liked to iteratively find the right design, Considered required thinking about pattern efficiency much earlier in the process.  It required more planning, often took longer, and it was often harder to find designs that both looked “cool” and were efficient. “On most product decisions, it’s not lower in cost, better in performance, and more sustainable,” explained one category product director.  “If it was that easy, that’d be great!  So usually on every component of a shoe, there are tough decisions to be made.”  A designer within the Cleated category noted, “We try to make designs look cool first, then run it by other filters like cost and Considered.  We design in response to a lot of constraints, like price and performance requirements, and goals like cool looks and feel.  More constraints makes the process harder and, maybe, slower.”  Different from then, sustainable innovation is now increasingly at the core of the business.  To hedge against the complexity, we needed to focus on identifying disruptive solutions in order to manage environmental impact and business risk.  So, what does this mean in terms of the sustainability of our products? The truth is, it’s a challenge to figure out how to measure that. Rather than working toward a certain percentage of, say, recycled content in a finished product, we have worked to improve our base materials, and we are now creating systems that allow us to better assess the impacts of the resulting products. That said, we do already have some ways to measure our success. For example, over the past five years we have achieved a 19 percent reduction in waste related to the production of footwear uppers. Considered Design contributed to that gain, along with manufacturing process optimization and other best practices. That’s the same as not producing 15 million pairs of shoe uppers over that time period. Our use of Environmentally Preferred Materials (EPMs) – ones that have lower environmental impacts throughout their lifecycles in terms of chemistry, water, energy use and waste – provides another strong indicator of our progress. We also learned that addressing symptoms doesn’t embed change so it focuses in on the earliest stages of the product life cycle. 

Given the extremely fast pace of product development in response to consumer trends and ongoing organizational change efforts, product creation employees didn’t have a lot of time for implementing Considered.  We now recognize that integration is an imperative to address process changes so we redefined reporting structures, design and sourcing processes and created materials to help us better achieve superior products with lower environmental impact. 

Higher Costs

The potential additional costs for developing greener footwear was another challenge facing Considered.  Alongside the increasing cost of petroleum, adding EPMs made Considered design potentially even more expensive.  Large product category teams had some success negotiating price reductions based on volume, but smaller categories struggled to overcome margin pressures.  Because Nike is a growth copany, sustainability, today, becomes increasingly important to our growth strategy. As we have learned over the years, sustainability is not just a strategy for growth, but a competitive advantage.

Supply Chain Partners

Some contract manufacturers have been highly responsive to category requests for help implementing Considered, but others, either because of their size, prior capital investments in less-efficient machinery, management focus, or lack of technical capacity, were not able to nimbly and successfully execute the Considered design requirements.  

Because we now know that early intervention is key, educating factories on why a stable, competitive, well compensated workforce makes good business sense.  Nike focuses on training, incentivizing and holding contract manufacturers accountable to its Nike standards and continues to raise the bar with each iteration of the Indexes.  Nike’s new rating system, the Manufacturing Index, looks comprehensively at a contract manufacturer’s total performance and includes a deeper look at how a factory approaches sustainability. This Index elevates labor and environmental performance alongside traditional supply chain measures of quality, cost and on-time delivery.

Considered faced several challenges with consumers. For one, many consumers were skeptical that a running shoe made from EPMs would in fact perform as well as a shoe that was not. For example, one focus group initially was very receptive to a Considered running shoe, but after being told it was unusually “green” started viewing it as a lower performance product.  Today, Nike is meeting consumer demands through performance, innovation and sustainability which drive superior product.  The Flyknit technology is a good example of where performance meets sustainability.  Nike Flyknit, which uses precisely engineered yarn and fabric variations to create a featherweight, formfitting and virtually seamless upper.  It’s a new way to knit the multiple pieces of a shoe upper out of what is essentially a single thread.  It’s great for the athlete because it is lighter and offers a more custom fit.  It’s good for the planet because it drastically reduces waste from the upper production process.  And shareholders stand to benefit from the reduced cost of production and potential for increased margins over time as the the innovation grows to full scale.  It’s a nascent technology that holds tremendous opportunity.

Nike FlyKnit video: http://nikeinc.com/news/nike-flyknit

Nike had not yet figured how to market performance, aesthetics and sustainability in one complete package. There was internal debate as to whether Considered should become its own brand within Nike, or simply a new dimension of the Nike brand.  Ultimately, Nike decided that there would be no compromise to performance, no 'green' line of products and that sustainability should not be a constraint but an innovation challenge for designers.

We know where we’ve been, and we know where we want to go. And we know that there is substantial work ahead. We continue to set the bar higher for ourselves and our business.  We have evaluated our business model and our impacts across our value chain, have assessed the coming scenarios and challenges, taken account of our progress against past performance, and worked across our business to set targets embedded deeply into the way we operate.

Many of the sustainability issues we seek to solve are still undergoing innovation. Others are firmly in place and moving forward with needed changes.

We deliver on our vision in two ways:

• Make today better by taking account of our impacts, driving efficiency and optimization
• Design the future by unleashing innovation, embedding sustainability into our approaches to product and manufacturing, and solving challenges in business and sustainability for the world

Accelerated innovation. Our sustainability vision both inspired and drove us to reinvent our creative process. It accelerated and strengthened innovation as a core competency.

Abillity to attract the best talent. Our success in pioneering sustainability in a holistic way, and to continue to deliver “the cool factor” and superior performance means we can attract the very best designers, engineers, strategists and marketers.

Brand value and goodwill. After our CR challenges in the late 90s we have not only worked hard to regain the trust and respect of customers and industry peers, we have set forth a strategy to lead. We are proud to be a respected brand, design company, innovator and among those recognized as a leader in sustainability.

Reduced costs of sustainable sourcing. By sharing best practices and providing open access to our tools and sourcing information, we are driving industry peers to adopt similar processes, materieals and metrics. This means we have the volumes to drive down the costs of what has been a more sustainable, but more costly source.

Lead with a vision.  Every person in the organization must understand and embrace a very specific idea of what the future beholds.  Provide a specific example that illustrates the vision and engenders passion and a sense of purpose.  As Lorrie Vogel says of the Considered Change video: “ We created a concrete vision of what we wanted to be and we got that in front of every person in the company.”

Secure Executive level support.  To fully integrate changes throughout an organzation, it must be very apparent that the initiative has CEO level support – not just through words, and verbal endorsements, but through the actions and interactions that CEO has inside and outside the company.

Set clear targets and metrics to measure success and track progress. Even if the initial measures are imperfect, its important to start to have some means of tracking progress and reinforce the learning. “If you don’t measure it, it doesn’t happen,” says Lorrie Vogel.

Provide the tools to facilitate the adoption process  Very few individuals and organzations take to change easily.  It’s human to be comfortable with what is known and to resist change that challenges the status quo.  It is critical to provide the education, training and toolsets to engage people more easily and affect change.  We embedded our training and tools within the existing system, leveraging existing processes as much as possible.  We provide our product creation teams with extensive training in how to use the Considered Indexes and on the importance of focusing on the sustainability of materials. The teams are given scoring targets for each season of products they design. In the current version of the Considered Indexes, materials make up 35 percent of the score for footwear and 60 percent of the score for apparel, so it’s clear to the design teams that focusing on materials is an effective way to meet their goals.  While the Considered Indexes have been used primarily by the NIKE Brand, our Affiliate brands have also begun introducing and using them to evaluate their product designs and have committed to adopt the indexes by the end of FY15. For example, Hurley International scored selected apparel designs in FY11. The designers and team members did not need to learn a new system in order to get the information they needed.

Celebrate and reward success.  The creation of incentives is another critical aspect of driving change.  It is very important to incentive the right behaviors to make sure we achieve the change we want to see.  Nike assigned innovation points to drive competition, and managed these through a living index, a forum that was pubic and enabled team members to gauge their success.  It also fed a healthy competition between teams and efforts.

Collaborate with others. Engage outisde experts to help formulate a vision and maintain an objective peer review. As Lorrie Vogel shares: “We engaged Natural Step to help develop our ‘North Star’.

It is in the spirit of transparency and collaboration that we share our journey and hope that the the definition of business performance is expanding.  We will constantly need to deliver innovations that evolve our approach at Nike and share our lessons with the industry to affect the positive change.  We hope the world innovates faster than expectations. We cannot achieve our bold goals for sustainability simply by delivering incremental improvements.  Sustainability will be the catalyst in transforming business economies and markets, and we will continue to evolve our business to ensure we are able to grow profitably, and to lead.

Nike 2011 Sustainable Business Performance Summary: www.nikeresponsibility.com

MIT Case Study: Nike Considered: Getting Traction on Sustainability by Rebecca Henderson, Richard M. Locke, Christopher Lyddy, Cate Reavis : https://mitsloan.mit.edu/MSTIR/sustainability/NikeConsidered/Documents/08.077.Nike%20Considered.Getting%20Traction%20on%20Sustainability.Locke.Henderson.pdf

FY10-11 Sustainable Business Performance Summary: www.nikeresponsibility.com

Nike Dare to Dream video: http://vimeo.com/11680452   

Nike Considered Design history, ethos with Bowerman, how we work: http://www.nike.com/nikeos/p/gamechangers/en_US/considered

Nike Better World: http://www.nikebetterworld.com/

Nike Better World Innovation Timeline: http://nikeinc.com/system/assets/8684/NBW_Innovation_Timeline_SU12_v3_original.pdf?1332281984

Considered Design video

http://www.youtube.com/watch?v=1WuyE_x8Vs8   

Nike FlyKnit video:  http://nikeinc.com/news/nike-flyknit

FY10-11 Sustainable Business Performance Summary –  www.nikeresponsibility.com

Nike Dare to Dream video

http://vimeo.com/11680452    

Nike Considered Design history, ethos with Bowerman, how we work

http://www.nike.com/nikeos/p/gamechangers/en_US/considered   

Nike Better World

http://www.nikebetterworld.com/   

Nike Better World Innovation Timeline

http://nikeinc.com/system/assets/8684/NBW_Innovation_Timeline_SU12_v3_original.pdf?1332281984

You need to register in order to submit a comment.

• Join the MIX now

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.

Try For Free

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.

Microsoft Value Chain Analysis: A Comprehensive Breakdown

Google Value Chain Analysis

KFC Value Chain Analysis: A Comprehensive Guide

• Search Search Please fill out this field.
• Company Profiles
• Consumer Discretionary

How Nike Makes Money

Nike North America is the company's largest geographic segment

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. The majority of Nike's products are manufactured by independent contractors and are sold either direct-to-consumers through Nike retail outlets and digital platforms, or through independent distributors, licensees, and sales representatives.

Nike, which is based in Oregon, has a large number of major global rivals, including Adidas AG ( ADDYY ), ASICS Corp. ( 7936 ), Lululemon Athletica Inc. ( LULU ), Puma SE ( PUMSY ), and Under Armour Inc. ( UAA ).

Key Takeaways

• Nike designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories.
• Nike's business results and operations continue to be impacted by the pandemic and its effects on global supply chains.
• Most of Nike's sales are generated by selling footwear to wholesale customers in North America.
• Nike announced in January that it was taking steps to improve its supply chains, including new distribution centers and using technology like AI and machine learning within its distribution centers.

Nike’s Financials

Nike announced in March financial results for Q3 of its 2024 fiscal year (FY) , the three-month period 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 individual business segments, dropped 5% YOY to $1.4 billion.

Nike said in its financial statement filings for the quarter that the COVID-19 pandemic and its related impacts continue to affect global supply chains and create volatility in the company's global business results and operations. In Greater China, the company continues to experience heightened levels of temporary store closures due to a resurgence of coronavirus cases. The availability of the company's products also continue to be impacted by lengthy inventory transit times, which are due to port congestions, transportation delays, and labor and shipping container shortages.

Nike’s Business Segments

Nike breaks its financial metrics into three categories: NIKE Brand; Converse; and Corporate. The NIKE Brand also is further broken down into geographical segments: North America; Europe, Middle East & Africa; Greater China; Asia Pacific & Latin America; and Global Brand Divisions. The NIKE Brand segment comprises over 95% of the company's total revenue.

Nike also breaks out revenue, but not profits, for its major product lines and distribution channels. The share of revenue generated by each of Nike's product lines in Q3 FY 2024, for example, 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 both revenue and EBIT for its individual business segments. The data reported in the pie charts above and in the share percentage calculations in the breakdowns below exclude negative revenue and EBIT amounts.

NIKE Brand: North America

Nike's North America segment posted $5.1 billion in revenue in Q3 FY 2024, comprising nearly 41% of total revenue. EBIT came in at $1.4 million, comprising about 99.7% of the total. The segment's revenue grew 3.2% while EBIT grew 18% compared to the year-ago quarter.

NIKE Brand: Europe, Middle East, and Africa

Nike's Europe, Middle East & Africa segment posted $3.1 billion in revenue during Q3 FY 2024, comprising about 25% of total revenue. EBIT was $734 million, about 52% of the total. Revenue and EBIT for the quarter dropped 3.3% and 6.5%, respectively.

NIKE Brand: Greater China

Nike's Greater China segment posted $2.1 billion in revenue in Q3 FY 2024, about 17% of total revenue. EBIT was $722 million, comprising more than 50% of the total. Revenue and EBIT grew 4.5% and 2.8%, respectively, compared to the same three-month period a year ago.

NIKE Brand: Asia Pacific and Latin America

Nike's Asia Pacific & Latin America segment posted $1.64 billion in revenue during Q3 FY 2024, about 13% of total revenue. EBIT was $471 million, about 33.5% of the total. Revenue rose 2.87% and EBIT dropped 3%.

NIKE Brand: Global Brand Divisions

Nike's Global Brand Divisions segment revenue is attributable to NIKE Brand's licensing businesses that are not part of any of the geographic segments, demand creation and operating overhead expense, and costs associated with its global digital operations and enterprise technology. The division posted $9 million in revenue in Q3 FY 2024, making up a small fraction of total revenue. The segment posted a $1.2 million loss before interest and taxes while revenue decreased 25%.

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. The segment posted $495 million in revenue during Q3 FY 2024, comprising about 4% of the total. It reported $98 million in EBIT, about 7% of the total. Revenue and EBIT fell 20% and 40%, respectively, compared to the year-ago quarter.

Nike's Corporate segment revenue primarily consists of foreign currency hedge gains and losses related to revenues generated by Nike's other operating segments. The segment posted revenue of -$14 million in Q3 FY 2024, a significant deterioration from revenue of $12 million in the year-ago quarter. The segment reported a loss before interest and taxes of $874 million.

Nike also breaks down the share of revenue from its distribution channels: Sales to Wholesale Customers (55%); Sales through Direct to Consumer (i.e. NIKE Direct) (44%); and a negligible amount from the rest. The Direct to Consumer distribution channel grew 1.5% YOY in Q3 FY 2024, while Wholesale Customers' revenue declined 0.5% YOY.

Nike’s Recent Developments

On Jan. 19, 2022, Nike announced that it was making a number of changes to improve its supply chain in order to better serve customers. The company said that prior to winter 2020, North American business operated almost entirely through its distribution centers in Memphis, TN. Nike said that it would not only transform those distribution centers into omnichannel facilities, but was adding entirely new distribution centers in Los Angeles, CA, Bethlehem, PA, and Dallas, TX. The company also added a regional service center in Madrid to complement its European logistics center in Belgium. Nike also said it was using new technology, including AI and machine learning, to improve the efficiency at its distribution centers. The company announced several other initiatives to improve its supply chains.

How Nike Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies , we offer investors a glimpse into the transparency of Nike and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Nike releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Nike discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Nike breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

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.

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

Nike Inc. " Form 10-Q for the quarterly period ended February 28, 2022 ," Page 25.

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

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 22.

U.S. Securities and Exchange Commission. " Nike Inc., Form 10-K for the Fiscal Year Ended May 31, 2023 ." Page 41.

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 ." Page 19.

Supply Chain Dive. " Nike Says a ‘Sole Train’ Helped Mitigate Supply Chain Disruptions ."

• How Companies Make Money 1 of 23
• How IBM Makes Money 2 of 23
• How Micron Makes Money 3 of 23
• How Snapchat Makes Money 4 of 23
• How Spotify Makes Money 5 of 23
• How X (Formerly Twitter) Makes Money 6 of 23
• How Uber Makes Money 7 of 23
• How Alibaba Makes Money 8 of 23
• How Amazon Makes Money 9 of 23
• How Lockheed Martin Makes Money 10 of 23
• How Nike Makes Money 11 of 23
• How Starbucks Makes Money 12 of 23
• How Bank of America Makes Money 13 of 23
• How Berkshire Hathaway Makes Money 14 of 23
• How BlackRock Makes Money 15 of 23
• How JPMorgan Chase Makes Money 16 of 23
• How Square (Block) Makes Money 17 of 23
• How Visa Makes Money 18 of 23
• How Robinhood Makes Money 19 of 23
• How Acorns Makes Money 20 of 23
• How Chime Makes Money 21 of 23
• How Credit Karma Makes Money 22 of 23
• How Reddit Makes Money 23 of 23

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

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.

• How it works
• Help center
• Get label or store design Roadmap
• Liability insurance
• Terms of Use
• Privacy Policy IP policy
• Returns Social Responsibility
• Affiliate program

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.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Notify me of follow-up comments by email.

Almost done! Please Select Your Region To Receive Customized Content

Select Your Region

Your information is safe and secure with us

Almost done! Please complete this form and click the button below to subscribe

Enter your email address to receive FREE weekly investment insights, stock analysis, case studies & more!

• View programs
• Take our program quiz
• Online BBA Degree Program
• > Specialization in Artificial Intelligence
• > Specialization in Business Analytics
• > Specialization in Digital Marketing
• > Specialization in Digital Transformation
• > Specialization in Entrepreneurship
• > Specialization in International Business
• > Specialization in Product Management
• > Specialization in Supply Chain Management
• Online BBA Top-Up Program
• Associate of Applied Science in Business (AAS)
• Online MS Degree Programs
• > MS in Data Analytics
• > MS in Digital Transformation
• > MS in Entrepreneurship
• Online MBA Degree Program
• > Specialization in Cybersecurity
• > Specialization in E-Commerce
• > Specialization in Fintech & Blockchain
• > Specialization in Sustainability
• Undergraduate certificates
• Graduate certificates
• Undergraduate courses
• Graduate courses
• Apply to Nexford
• Transfer to Nexford
• Explore Education Partners
• Scholarships
• For organizations
• Career Coalition
• Accreditation
• Our faculty
• Career services
• Academic model
• Learner stories
• Book consultation
• Careers - we're hiring!

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.

Learn how to develop the most in-demand skills for your future career!

Discover how you can acquire the most in-demand skills with our free report, and open the doors to a successful career. 

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.

Ready to take the next step?  Download our brochure  or  book a call  with our Nexford Advisors!

Nexford’s staff writers help you make the most of your university experience.

We’re based in the US and have teams across the world, including in the UK, Africa and Asia.

Join our newsletter and be the first to receive news about our programs, events and articles.

• Flipboard icon Flipboard
• Newsletters

Where Nike’s Marketplace Strategy Is Going Next

Peter Verry

More stories by peter.

• Awake NY and Happy Socks Deliver a ‘Fresh but Classic Take’ on Athletic Socks With Their Latest Collaboration
• With Caitlin Clark’s Reported $28M Nike Deal Yet to Be Announced, She Scores a New Wilson Partnership
• How Hymne’s Jide Osifeso Reimagined Reebok’s Classic Nylon Plus and Club C Sneakers
• Show more sharing options

Many athletic brands have followed Nike’s lead  and created an omnichannel playbook to win over consumers. But if you ask Daniel Heaf, VP of Nike Direct, there’s a clear difference in the Swoosh ecosystem.

“Everybody knows that what you need are physical and digital touch points. It’s not stores and digital or direct and wholesale. What makes Nike unique is the scale and diversity of our marketplace strategy,” Heaf told FN.”There’s no other brand that operates at the scale that we do. The direct business that we’ve built — particularly over the last five or six years — combined with the strength of our wholesale partners and points distribution, it’s unmatched in the industry.”

Skepta Criticizes Previous Nike Deal, Says He Was Treated Like an 'Influencer' for Sneaker Designs

Nike foamposite: everything you need to know about the air foamposite one, its tech and more, nike reveals wnba star sabrina ionescu's new signature shoe, the sabrina 2.

In its last reported quarter, Nike Direct sales climbed 22% to $5.3 billion, with Nike brand digital sales increasing 24%. Also during Q3 for its fiscal 2023 , the company’s wholesale revenues grew 18%, a notable mark given Nike’s emphasis on its direct-to-consumer business.

From Nike’s S23 Studio in New York, Heaf addressed select media and shared how connection and community is at the heart of the athletic giant’s marketplace strategy.

The exec stated much of what Nike has learned comes from its robust membership of 160 million members.

“We understand what their needs are, and we’re able to take that and use it in product creation and the process of personalizing marketing, merchandising and marketplace experiences across both our own channels and across the marketplace,” Heaf said.

Speaking with FN after his presentation, Heaf highlighted membership as one of the company’s most profound successes.

The Membership Formula

“We have the ability to know, serve and contact members individually. Three years ago, almost all the demand through Nike Direct was from new members. Today, most of the demand is through repeat purchase,” Heaf said. “What we’ve done is we’ve created this ecosystem that means consumers interact with us more frequently, they buy with us more frequently and they’re more loyal to the brand. That is a really meaningful change to the way that business has ever operated.”

The learnings Nike acquired through membership, Heaf explained, have also informed its approach to its owned retail locations. The highlights of its store fleet include House of Innovation, which is the company’s flagship concept that showcases innovation in both product and storytelling, and Nike Live, which specifically serves the woman consumer.

But Heaf said Nike is aware that its consumers don’t just live in its own channels.

Arguably its most notable recent experiment from a retail partnership perspective was a connection forged with Dick’s Sporting Goods, which was announced in November 2021. This partnership allows Dick’s Scorecard and Nike Membership accounts to connect through the Dick’s mobile app, resulting in an easy-to-use platform for customers to seamlessly shop an expanded selection of Nike footwear and apparel.

“We’re just focused on making it easier and a richer experience,” Heaf said.

What’s more, Foot Locker CEO Mary Dillon confirmed in late-March during the retailer’s investor day that the company is “revitalizing” its partnership with Nike. The exec stated the two were focusing on key strategic areas including basketball, kids and sneaker culture, and were sharing insights to plan their strategies together.

Beyond the transactional interactions, Heaf said Nike has made “goosebumps-worthy storytelling” and experiences through its digital platforms a priority. He said the ambition that Nike has with stores business is matched by that of digital.

“We went from a pretty small digital business three or four years ago, to now if not the biggest but one of the largest footwear and apparel apps in the world. This requires a whole enterprise to get to that,” Heaf said.

Just like with its stores and retail partners, Nike has also been able to experiment digitally.

Heaf highlighted the deployment of Nike Training Club content through Netflix , which launched in December 2022, as one of the more notable wins as of late. “Tens of millions of new consumers are now engaging with our content through Netflix,” he said.

The exec also made note of its partnerships with gaming companies, such as EA Sports with its soccer and “Madden” franchises, as well as Epic Games through Fortnite and with Roblox and its own .Swoosh platform of digital collectibles .

The experiences are arguably the most pronounced via the SNKRS and NBHD platforms, which Nike is using to fuel inclusive, fair and engaged communities.

“SNKRS was always meant to be both an opportunity for us to launch our incredible, highly-coveted product, but also be a community hub for this incredible crew of sneakerheads,” Lucy Rouse, VP and GM of SNKRS , said addressing media at S23 Studio.

Rouse also offered a deep dive on NHBD (pronounced neighborhood), which she described as an ecosystem that includes an inclusive network of community change-makers, creatives, retail partners and cultural authenticators.

“NHBD enables us to contribute to these incredible progressive and inclusive communities and cultures all over the world. Our NHBD partners are the ones that are driving systemic change across multiple issues, whether it’s racial injustice, whether it’s social injustice, whether it’s LGBTQIA+,” Rouse said. “They are shining a light on those issues, and us being able to work with them enables us to make sure that we are moving the world forward.”

Women’s Focus

Nike brought three women’s NHBD partners to S23 Studio to highlight how issues are being addressed. The trio included Abby Albino and Shelby Weaver, owners of Toronto-based boutique Makeway, and Stine Lindholm Pedersen, co-founder of Copenhagen-based retailer Naked.

“The main thing is inclusivity. Women just want to be on the same level of men in this industry,” Pedersen said of the most pressing issue women in sneakers are facing at the moment. “The most important thing right now is having full size ranges. We don’t want to be told that a shoe was for women and then there’s this shoe for men. We want gender fluidity if anything at the moment, and that’s definitely for the future as well.”

Weaver agreed and added, “Women just don’t want to be boxed in. We don’t want to be told to buy this particular silhouette because it’s only available in these types of shoes. We want to have access to everything and then be able to choose the things that speak to each of us for whatever our individual identities are.”

As for Albino, the issue she believes is at the top of the list is safety.

“One of the things that I’ve heard often is when women go to men-owned sneaker boutiques or sneaker boutiques with employees that are men, they just don’t feel as safe,” Albino explained. “There’s bullying and harassment and want to make sure that we actually have a really safe space for women to feel like they can be who they are and engaged and have access to sneakers in a way that is welcoming.

Although Nike is winning with its ecosystem, Heaf told FN that there’s plenty of room to grow.

“Some of the products that we offer, women’s bra and leggings for example, we have built amazing digital experiences for those particular products and we have also built bespoke experiences in our stores for it. The bras and leggings fixtures that we now see across our Nike Rise and Nike Live stores have been really successful in driving the launch of our bras and Zenvy leggings. But are we that good in every single classification?” Heaf explained. “I want to get to that level of distinction where we’re as good for basketball shoes as we are as good for women’s fitness and men’s lifestyle footwear. That requires not a one size fits all approach. We have to differentiate how we tell stories and how we surface these products to consumers.”

These Height-Boosting Jimmy Choo Max Sandals Worn by Cynthia Erivo Are 40% off Right Now

• Fashion News
• Celebrity Style
• Collaborations
• Outdoor Footwear
• Women’s Footwear
• Sneaker News
• Men’s Footwear
• Children Footwear
• Business News
• Executive Moves
• Mergers & Acquisitions
• Shoe Guides
• Sneaker Deals
• FN Gift Guides
• Foot Health

Access exclusive content

Alerts & Newsletters

By providing your information, you agree to our Terms of Use and our Privacy Policy . We use vendors that may also process your information to help provide our services. This site is protected by reCAPTCHA Enterprise and the Google Privacy Policy and Terms of Service apply.

Footwear News is a part of Penske Media Corporation. © 2024 Fairchild Publishing, LLC. All Rights Reserved.

More Like this

Strategic business planning tips from nike.

The latest article from Fast Company , How Nike’s CEO Shook Up the Shoe Industry , can lend every company some essential strategic planning tips.

Mark Parker is more than just Nike’s CEO.  He has been an essential part of Nike’s success and continued reign at the top of the athletic shoe pyramid.  Parker provides a glimpse into how Nike’s strategic plan and mission statement embodies the heart and soul of the company.

To read the full version of this article, click here .

Comments Cancel

Join 60,000 other leaders engaged in transforming their organizations., subscribe to get the latest agile strategy best practices, free guides, case studies, and videos in your inbox every week..

Leading strategy? Join our FREE community.

Become a member of the chief strategy officer collaborative..

Free monthly sessions and exclusive content.

Do you want to 2x your impact.

Through the Power of Community, NIKE, Inc. Advances Toward a Better World for All

The Leading Source of Insights On Business Model Strategy & Tech Business Models

Jordan Business Model

Jordan follows a demand generation business model , where its iconic brand works as a propeller for the sale of its footwear and apparel, which in 2023 generated $6.59 billion in revenue for Nike or 12.8% of its total revenue .

Table of Contents

Value Proposition:

• Athletic Excellence and Style: Jordan Brand offers athletic footwear, apparel, and accessories that combine performance excellence with a sense of style. Their products are designed to help athletes perform at their best while also making a fashion statement.
• Cultural Icon: Jordan Brand represents more than just sports; it is a cultural icon. The brand ’s association with basketball legend Michael Jordan and its impact on streetwear and fashion make it highly desirable to consumers seeking both performance and lifestyle products.

Distribution Strategy:

• Multi-Channel Distribution: Jordan Brand employs a multi-channel distribution strategy that includes retail stores, online sales through their website, and partnerships with authorized retailers and distributors. This strategy ensures accessibility to a wide range of consumers.
• Limited Releases: The brand frequently utilizes limited releases and collaborations to create buzz and exclusivity around their products. Limited-edition releases often generate high demand and are sought after by collectors.

Marketing Strategy:

• Athlete and Celebrity Endorsements: Jordan Brand leverages endorsements from athletes and celebrities, reinforcing its association with excellence and style. Michael Jordan himself is a central figure in the brand ’s marketing efforts.
• Cultural Engagement: The brand actively engages with street culture and fashion trends. It collaborates with artists, designers, and influencers to stay relevant and maintain its cultural significance.
• Content and Storytelling: Jordan Brand uses storytelling and content marketing to connect with consumers emotionally. Documentaries, commercials, and social media content often highlight the brand ’s heritage, athletes, and moments of greatness.
• Community Building: Jordan Brand fosters a sense of community among its consumers. It engages with fans through events, social media, and exclusive access to products, creating a loyal and passionate customer base.

Key Takeaways

• Iconic Brand: Jordan’s brand holds immense recognition and cultural significance, acting as a driving force behind its business model ’s success.
• Footwear and Apparel: The core focus of Jordan’s business model revolves around the sale of its footwear and apparel, which are highly sought after by consumers.
• Revenue Contribution: In 2022, Jordan’s products generated over $5 billion in revenue for Nike, constituting more than 10% of Nike’s total revenue .

Related to Nike

Who Owns Nike

Nike Business Model

Nike Strategy

Nike Revenue

Nike Financials

Nike Mission Statement

Nike SWOT Analysis

Nike Competitors

Converse Business Model

Michael Jordan’s Net Worth

More Resources

About The Author

Gennaro Cuofano

Discover more from fourweekmba.

Subscribe now to keep reading and get access to the full archive.

Type your email…

Continue reading

• 70+ Business Models
• Airbnb Business Model
• Amazon Business Model
• Apple Business Model
• Google Business Model
• Facebook [Meta] Business Model
• Microsoft Business Model
• Netflix Business Model
• Uber Business Model

NIKE reveals moscow-based sports facility inspired by russia's 'cage football' subculture

just in time for the 2018 world cup, NIKE opens a 4,685-square-meter multidimensional sports center in moscow . located in the center of the city’s gorky park, the KOSMOS-designed NIKE BOX msk  draws inspiration from the country’s traditional street football subculture known as korobka .

as well as a spacious football field, BOX msk  accommodates athletic pursuits, three-on-three basketball courts, yoga groups and moscow’s NIKE running club. the inspiration for the site derives from the heart of russian football which evolved around courtyard cages, a series of playgrounds separated by protective fences introduced in the absence of other urban places to play.

known as ‘korobkas’ these spaces were known to be the conditions many of the nation’s greats got their start in the game. architecture firm KOSMOS , who was selected for the project in a competition organized by  NIKE and strelka KB , have designed the site’s central pavilion, with transparent facades referencing the air units found in NIKE shoes.

the site anticipates to go on and offer 7,300 hours of sport classes throughout its first year. this summer, BOX msk will host the korobka rebels football tournament, where more than 3,000 male and female players across U17 and U21 levels will participate.

architecture in russia (122)

Kosmos architects (4), product library.

a diverse digital database that acts as a valuable guide in gaining insight and information about a product directly from the manufacturer, and serves as a rich reference point in developing a project or scheme.

• architecture in new york (585)
• iF design (21)
• NYCxDESIGN 2024 (7)
• 314 architecture studio (19)
• architecture in greece (238)
• bjarke ingels group / BIG (327)
• foster and partners (292)
• kengo kuma (263)
• oppenheim architecture (17)
• the ellinikon (4)
• mass studies (24)
• serpentine gallery pavilion (47)
• temporary pavilions (423)
• architecture in the philippines (23)
• brutalist architecture (37)
• concrete architecture and design (704)
• residential architecture and interiors (3865)

designboom will always be there for you

Converse Reveals Job Cuts as Nike Inc. Layoffs Continue

Converse is cutting roles as part of a general Nike Inc. business restructuring plan, the company confirmed to FN.

In a statement, Converse said it "is realigning some of our teams and optimizing the way we work in support of our biggest growth opportunities." The company also said that it "is continually taking steps to support our future growth."

The job cuts are part of Nike's previously announced layoffs amid a general plan to "streamline" the organization and save up to $2 billion in costs over the next three years, the company said in  December . At the time, Nike alluded to layoffs and said it could soon face employee severance costs as it rolled out the strategic plan.

In February, Nike  confirmed  that it was laying off 2 percent of its workforce and in April, disclosed via a filing with the state of Oregon that 740 employees will have been let go at the global headquarters as part of two rounds of layoffs by June. As early as  November , several Nike employees had taken to LinkedIn to share they were laid off from the company amid a broader C-suite shakeup across design and marketing.

Nike did not confirm how many roles were impacted at Converse, which it acquired for $305 million in 2003 . Bloomberg News first reported on the cuts.

Nike has recently faced  criticism  for what experts and analysts see as a lack in innovation in its product pipeline. In December, Nike touted a new plan to build a "multiyear cycle of innovation" to win over consumers, which in part included streamlining the distribution of some of its key franchises to drive more brand heat. Since then, Nike has  touted  new products like the  Air Max DN , the  Pegasus Premium  and the  Pegasus 41 .

In explaining the Swoosh's innovation lag, Nike chief executive officer John Donahoe recently ignited backlash when he said  remote work  was to blame. According to analysts, Nike's innovation issues stem from relying too heavily on best-sellers instead of creating new franchises, as well as a broad loss of talent at the top and prioritizing financial goals over brand equity.

More from Footwear News

• The Best Sneakers Releasing in May
• How to Buy Futura's Nike SB Dunk Low Sneaker
• Is This WNBA Star Sabrina Ionescu's New Nike Signature Shoe?

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

News & Analysis

• Professional Exclusives
• The News in Brief
• Sustainability
• Direct-to-Consumer
• Global Markets
• Fashion Week
• Workplace & Talent
• Entrepreneurship
• Financial Markets
• Newsletters
• Case Studies
• Masterclasses
• Special Editions
• The State of Fashion
• Read Careers Advice
• BoF Professional
• BoF Careers
• BoF Insights
• Our Journalism
• Work With Us
• Read daily fashion news
• Download special reports
• Sign up for essential email briefings
• Follow topics of interest
• Receive event invitations
• Create job alerts

Converse Cuts Jobs as Part of Parent Nike’s Cost-Savings Plan

Converse is cutting some jobs as parent company Nike Inc. trims its staff across divisions in search of cost savings.

Nike is undergoing a $2 billion cost-cutting plan that includes slashing 2 percent of its workforce. Layoffs have hit its Oregon headquarters across two rounds, with the process expected to conclude by the end of its fiscal year, according to an internal memo reviewed by Bloomberg News.

Converse, based in Boston, operates its own product-development, supply-chain and marketing functions specific to its business. The brand does use technology from Nike in its products.

Converse “is realigning some of our teams to better support future growth,” a spokesperson for the unit said in a statement Tuesday. “We can confirm that the total changes to Converse’s workforce were included in Nike’s overall 2 percent reduction plan, however, we were operating on a discrete timeline.”

ADVERTISEMENT

Nike had nearly 84,000 employees worldwide as of last May. Converse, known for its Chuck Taylor and One Star sneakers, represents about 5 percent of Nike’s total sales.

By Kim Bhasin

Learn more:

Nike to Axe Hundreds of Jobs in Bid to Save $2 Billion Amid Sales Slump

The announcement comes after the sportswear giant said sales only rose 1 percent in the three months to Nov. 30.

• Retail : Streetwear
• Retail : Activewear

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

Counterfeit Goes Cool: Brands Urged to Embrace #Dupe

Gen-Z consumers are flaunting their knockoffs and imitations online. Social media experts say brands should play along.

At Front Row, Accelerating New Routes to the Consumer

Formed of five different agencies with complementing areas of expertise, Front Row partners with beauty, health, wellness, and consumer brands to accelerate their e-commerce growth. Here, its chief brand officer, Christopher Skinner, shares the challenges and opportunities in reaching new consumers.

This Week, Hoka, Macy’s and Ralph Lauren Play the Expectations Game

Earnings season kicks into high gear, with companies riding high and plumbing new lows reporting.

Does America Need Another Fast-Fashion Brand? Uniqlo Thinks So

The Japanese apparel chain will be launching its sister brand GU in the US later this year, targeting younger consumers with lower prices and a curated selection of trendy wares.

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

Our newsletters may include 3rd-party advertising, by subscribing you agree to the Terms and Conditions & Privacy Policy .

Our Products

• BoF Insights Opens in new window

• My View My View
• Following Following
• Saved Saved

Nike not renewing franchise agreements in Russia - newspaper

• Medium Text

RETURN OF SHUTTLE TRADERS?

Sign up here.

Reporting by Reuters; Editing by Simon Cameron-Moore and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab

World Chevron

We think you are in Canada. Update your location?

Ukraine war latest: Armed ship destroyed in Crimea, Kyiv says; controversial US television host launches show in Russia

Ukraine says it hit and destroyed the Russian missile ship Tsiklon in Crimea over the weekend. Meanwhile, analysts say Moscow is seeking to draw out Kyiv's forces - as Putin makes another significant change to his cabinet.

Tuesday 21 May 2024 23:00, UK

• Kyiv claims it has destroyed last Russian warship armed with cruise missiles in Crimea
• Tucker Carlson launches new show in Russia
• Putin sacks minister in new sign of shift in war strategy
• European country now pushing to let Ukraine strike deep into Russia with Western weapons
• Russia using 'understaffed and incohesive forces' in bid to draw out Ukrainian troops
• Big picture: What you need to know as war enters new week

We're pausing our coverage of the Ukraine war for the moment.

Scroll through the blog below to catch up on today's developments.

Vladimir Putin has praised the late president of Iran, Ebrahim Raisi, and said he was a "reliable partner".

Raisi was killed in a helicopter crash near the Azerbaijan border over the weekend along with his foreign minister and seven others.

Speaking on the leader, Mr Putin said he was "a man of his word" who carried out any agreements the pair made.

"He was truly a reliable partner, a man sure of himself, who acted in the national interest," Russian news agencies quoted Mr Putin as telling Vyacheslav Volodin, chairman of Russia's lower house of parliament.

"He was, of course, a man of his word and it was always good to work with him. What I mean is if we came to an agreement on something, you could be sure the agreement was carried out."

The Kremlin leader asked Mr Volodin, who will be attending memorial events in Iran, to pass on "words of our sincere condolences in connection with this tragedy".

Since the start of the war in Ukraine, Russia has strengthened political, trade and military ties with Iran in a deepening relationship that the US and Israel view with concern.

Heavy fighting in the Pokrovsk area in eastern Ukraine has forced Ukrainian troops to engage in "manoeuvres," the Ukrainian military's general staff have said.

Their report said Pokrovsk, northwest of the Russian-held city of Donetsk, remains the front's "hottest" sector.

"In some areas, the situation requires our troops to engage in manoeuvres," the general staff report reads.

Volodymyr Zelenskyy has referred to the region and adjacent areas as "extraordinarily difficult" in his nightly video address.

Volodymyr Zelenskyy has said allies are taking too long when it comes to decisions on military support for Ukraine.

In an interview with Reuters, the Ukrainian leader said every decision which everyone came to was "late by around one year".

"But it is what it is: one big step forward, but before that two steps back. So we need to change the paradigm a little bit," he said.

"When we're quick, they fall behind. And then there's a gap - six, eight months of unpassed (aid) packages, and then two-three months of supplies - and a year goes by. We would like not to lose the advantage."

Mr Zelenskyy also said Ukraine had never used Western weapons on Russian territory.

A senior Russian diplomat has said that the EU plan to channel profits from frozen Russian assets to Ukraine would have "unpredictable" consequences, according to the TASS news agency.

According to TASS, Kirill Logvinov, Russia's acting permanent representative to the EU in Brussels, told Russia journalists: "The only predictable thing is that those in the EU will be obliged sooner or later to return to our country what has been stolen."

For context : In March the European Commission proposed transferring to Ukraine profits generated by Russian central bank assets frozen in Europe.

The plan would see 90% channeled through the European Peace Facility fund to buy weapons for Ukraine. 

The rest would be used for recovery and reconstruction.

Russia's defence ministry has said it has begun a round of drills involving tactical nuclear weapons. 

The exercises were announced by Russian authorities this month in response to remarks by senior Western officials about the possibility of deeper involvement in the war in Ukraine.

It was the first time Russia has publicly announced drills involving tactical nuclear weapons, although its strategic nuclear forces regularly hold exercises.

According to the ministry's statement, the first stage of the new drills include nuclear-capable Kinzhal and Iskander missiles.

The maneuvers are taking place in the southern military district, which consists of Russian regions in the south.

A Moscow court has ordered a Russian journalist who covered the trials of the late Russian opposition politician Alexei Navalny and other dissidents must  remain in custody pending an investigation and trial on charges of extremism.

Antonina Favorskaya was arrested in March. 

She is accused of collecting material, producing and editing videos and publications for Navalny's Foundation for Fighting Corruption, which had been outlawed as extremist by Russian authorities, according to court officials.

Today, Moscow's Basmanny district court ordered that she remain in custody until at least 3 August.

Kira Yarmysh, Navalny's spokeswoman, said earlier that Ms Favorskaya did not publish anything on the foundation's platforms and suggested that Russian authorities have targeted her because she was doing her job as a journalist.

Former Fox News presenter Tucker Carlson has launched his own show in Russia.

The controversial US media personality, who this year became the first Western journalist to interview Vladimir Putin since Russia invaded Ukraine, will host his show on the state-owned Russia 24 (Rossiya 24).

In the first episode, Carlson will discuss the dangers of ticks and Lyme disease.

Who is Carlson?

Carlson, who has been a vocal supporter of Mr Putin in the past, was sacked from Fox News in April last year.

He took up the prime-time weekday evenings spot on Fox News in 2016 with his show Tucker Carlson Tonight, and quickly established himself as a key player in the network and an influential voice in Republican politics.

The presenter often embraced conspiracy theories and far-right issues. He repeatedly questioned the efficacy of COVID vaccines and compared mandates to "Nazi experiments".

While he found success with viewers, his inflammatory comments caused some advertisers to distance themselves from the programme.

After his departure from Fox News he rebooted his show on X last year, calling Elon Musk's site the last big remaining platform to allow free speech.

Ukraine says it has destroyed the last Russian warship armed with cruise missiles that was stationed on the occupied peninsula of Crimea.

It comes after we reported earlier comments by Ukraine's military, which said they had hit the Russian missile ship Tsiklon (see post at 3.09pm).

Ukraine's military reported conducting a long-range attack that destroyed the Russian minesweeping navy vessel on Sunday and said it needed more time to confirm what else had been damaged.

"According to updated information, the Ukrainian defence forces hit a Russian project 22800 Tsiklon missile ship in Sevastopol, on the night of 19 May," the general staff said today.

The Ukrainian navy later said on X that the vessel had been "destroyed".

Ukrainian navy spokesperson Dmytro Pletenchuk said the Tsiklon was Russia's "last cruise missile carrier" based on the peninsula.

Tsiklon never fired a cruise missile while on active service, Mr Pletenchuk said in televised comments.

Crimea was annexed by Russia in 2014 and is home to Russia's Black Sea Fleet headquarters at Sevastopol.

The Russian defence ministry has not commented.

European Union countries say they have reached an agreement to use the profits from frozen Russian assets to provide military support to Ukraine and help rebuild the war-torn country.

The 27-nation EU is holding around €210bn (£179bn) in Russian central bank assets, most of it frozen in Belgium, in retaliation for Moscow's war against Ukraine.

It estimates that the interest on that money could provide around €3bn (£2.56bn) each year.

Ukraine is desperate for more weapons and ammunition as Russia presses its military advantage.

EU headquarters said 90% of the money would be put into a special fund known as the European Peace Facility that many EU countries already use to get reimbursed for arms and ammunition they send to Ukraine.

The other 10% would be put into the EU budget. The programmes that this money funds would help to bolster Ukraine's defence industry or to help with reconstruction, should some countries object to their share being used for military purposes.

A small group of member states, notably Hungary, refuse to supply weapons to Ukraine.

Be the first to get Breaking News

Install the Sky News app for free