Nike Runs With E-Commerce… But Slowly

Sneakers and sports apparel giant Nike, Inc. (NYSE: NKE) announced that it began the first phase of its online sales strategy, with a new e-commerce area on the Nike.com Web site. Previously, Nike.com served as an informational and marketing showpiece but, as of this week, the company shifted its emphasis to “direct-to-consumer” selling of products.

According to the company, the move to e-commerce comes “in response to the growing number of consumers seeking greater access to Nike products.” In other words, the growing number of online shoppers has become a tempting source of untapped revenue for Nike.

Philip H. Knight, chairman and CEO of Nike, was quoted as saying, “With the Internet, we have an opportunity to recapture a level of intimacy with our consumer and simultaneously drive potential buyers to our retail partners.”

A Humble Beginning

In what initially will be a limited three-month offer available only in the United States, Nike will sell some of its “Nike Alpha Project” items online, including footwear, apparel and equipment for sports like soccer, tennis, and basketball.

The limited online offering is designed to give the company the opportunity to test the waters of online selling and to face the challenges that every new e-commerce site encounters. After the initial testing period, Nike plans to implement a more ambitious site with a wider product mix later this year.

“The Internet is very much a laboratory — a global experiment in access to information and products. This is the spirit in which nike.com enters the world of e-commerce,” said Mary Kate Buckley, director of new business ventures at Nike. “We also know there is a lot more for us to learn before we can be a great web site. I like to think of today as the continuation of Nike’s e-commerce experiment… a chance for consumers to contribute to our learning how to better serve their needs.”

Assuring Resellers

As Nike begins to bypass its traditional distribution channels by selling directly to consumers, the company addressed the issue by promising not to undercut its resellers. Products will be valued at full retail price plus shipping and handling costs.

Maintaining positive relationships with Nike retailers is a key component of Nike.com, according to Mark Duggan, director of U.S. sales. “We will also provide a Store Locator function. This will do a great job of directing users to retail stores near them that offer the Nike Alpha Project products. In an ever-evolving retail environment, we’re expecting this to be good for everybody selling Nike products.”

According to Duggan, a large percentage of consumers who surf the Internet are looking for product information to help make an informed decision about what to buy. Armed with this information, they go to their local retailers to experience the fit and feel of the products and make their purchase.

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