Nike’s recent foray into having a subscription business model is a helpful case study when discussing the evolution and adaptation of e-commerce businesses. Seeing as they are one of the biggest shoe brands in North America (and possibly the world), their adoption of a service model that’s typically seen in SaaS businesses has a lot to teach us about where consumer interests lie, how the market is being shaped for in the future, and what that all means for e-commerce businesses.
Nike’s subscription box is targeted toward children ages 2 to 10 years old. This demographic is an easy audience because shoes are regularly outgrown or damaged. The subscription service model takes the stress off of parents as they don’t have to worry about shopping for new shoes. Additionally, the new product offering provides a unique customer experience that appeals to consumers seeking a bit of novelty with the increasingly popular unboxing trend.
From a revenue standpoint, the subscription service model provides Nike with a consistent channel of sales and brand loyalty to the business. The nature of this subscription service model and the time of release have been strategically planned, so let’s take a look at what Nike is attempting to achieve with its new sales strategy and the lessons we can learn from this campaign.
Lesson 1: Start building long-lasting customer relationships from a young age
A vital aspect of nurturing brand loyalty and retaining long-lasting clients is an exceptional customer service experience. With their subscription service model, Nike is cultivating deeper and more memorable customer experiences at an incredibly young age and thereby securing their returning business for years to come. People will always need new shoes, so by encouraging brand loyalty as early as two years old, they will be more likely to continue shopping with the brand throughout their entire life.
Lesson 2: Build social responsibility into your subscription business model
Nike’s subscription strategy addresses ease, convenience, and sustainability for parents as well as children. The company encourages parents to return shoes that are in good condition but no longer needed by the child so that they can be donated to a family in need.
Additionally, any shoes that are worn-out can be returned and recycled to make more Nike products. By solving the problem of hand-me-downs, Nike is making it easier for families to choose their brand as the one-stop-shop for replacements and new purchases.
Lesson 3: Pay attention to important dates
Subscription-based services for e-commerce clothing companies is not a new concept, but it has rarely been implemented by established, big-brand retail companies. Nike has tapped into an increasingly growing market and upping the ante with its premium products. By strategically launching their subscription service model during the back-to-school season, they have made it easy and convenient for parents to pick them as the main provider of their children’s footwear.
Another great way to increase subscriptions and secure recurring sales is to offer special promotions during Black Friday or Cyber Monday to kick off the Christmas shopping season.
Lesson 4: Know your customer
The success of a subscription model hinges on a company really knowing their customer well. Companies like Nike deeply understand the needs and wants of their consumer groups and are using their subscription model to address it. In response to the demand, these companies show creativity and resourcefulness by producing new packaged offerings with the products already available. The ability to address consumers’ needs with a subscription service is opening doors for many types of DTC subscription services beyond retail.
Clothing-based subscription services, like Le Tote, are seeing a lot of success by adopting a SaaS-y model. They understand that the products sold have a short turnaround time, which is crucial in order to make the subscription model effective and enticing to consumers. And they wrap it all up in a very eye-catching, personalized package.
Bokksu is a subscription box service delivering tasty Japanese treats straight to your door. Bokksu noticed a service people craved but didn’t have access to and filled that niche.
And now that we’ve seen a large retailer like Nike hop on board the subscription train, the question is now whether other established DTC companies can keep up with the evolving e-commerce market by doing the same.