Read the information on Nike at the link below. What benefits will Nike achieve
ID: 344049 • Letter: R
Question
Read the information on Nike at the link below. What benefits will Nike achieve by selling these products direct instead of through the normal indirect channels (retailers)? Do you feel that this is a good distribution decision? Please justify your response.
Nike Direct Channel :http://brandchannel.com/2016/12/05/nike-hyperadapt-dtc-sales-120516/
"Nike’s HyperAdapt DTC Sales Part of Rising ‘See Now, Buy Now’ Trend
Posted December 5, 2016 by Sheila Shayon
Nike HyperAdapt
Nike is changing its 52-year business model by eliminating the middleman and betting on direct-to-consumer sales. In fact, it is selling its new HyperAdapt sneakers exclusively via direct sales channels.
Nike’s self-lacing HyperAdapt sneakers are being sold at the Nike Soho store and the Nike+ ClubHouse in New York City. Later in December, the footwear will be available through the Nike+ app and select Nike stores in the US.
Nike is the largest vendor to big chains like Dick’s Sporting Goods, Foot Locker and Finish Line , reports The Wall Street Journal, and the brand plans to double direct sales to consumers to $16 billion by 2020.
The shift in its sales process is all part of a larger disruption, the “see now, buy now” trend as fashion and tech take consumer demand to new heights.
“See Now, Buy Now is a crucial tipping point, at which the impact of technology, globalisation and democratisation on the fashion industry is felt not just by buyers in the retail industry sense, but by buyers in the me-and-you-on-a-Saturday-afternoon sense,” reports The Guardian.
The global ripple of tech+fashion has eliminated the six-month leadtime for new styles and collections as runway shows are now coordinated with in-store deliveries. “The catwalk-as-trade-show is almost defunct,” notes The Guardian.
In February, Burberry announced plans to show “seasonless” men’s and women’s collections together on the runway, twice a year, with those collections immediately available online and in-store. Window displays and media campaigns will change as soon as a catwalk runway is finished.
Paul Smith, Tom Ford and others are adopting the same model. And Tommy Hilfiger’s second direct-to-consumer show took place in Los Angeles this week.
For this year’s Singles Day 11.11 event, Alibaba sponsored an eight-hour, 200-model catwalk event that it streamed live, teasing fashions by La Perla and Burberry. The fashion show was built around its “see now, buy now” motto to provide customers with “fashion week at their fingertips.”
“Customers don’t see fashion through the lens of fall or spring, and the whole idea of a season is becoming antiquated,” Said Ken Downing, SVP and fashion director at Neiman Marcus, in WWD. “You cannot hold a customer’s attention for six months. They are following every move in fashion, which means that by the time a collection arrives in store they are over it. Technology has changed everything. Customers are living in the here and the now, but we as an industry are working with a business model that is 40-50 years old.”:
Explanation / Answer
Nike Benefits
1. Nike is creating new business by online sale.
2. Direct marketing will improve the sales margins.
3. Nike can easily target in any segment or any customer.
4. Easy to build and maintain a current and existing customer relationship.
5. Quick feedback of after sales and services so they can take immediate action on weak points.
6. Quick brand promotion of any specific product.
7. Customer can avail cheaper price in online shopping rather than retail shopping. So that customer satisfaction towards price will increase.
Not even Nike but also any brand will prefer direct marketing because direct maketing has many benefits over retail shopping. As far as distribution is concern, big MNC companies of logistics and courier are available in market which provide easy and quick distribution to customers. Now days, Distance is becoming shorter by effective road and air connectivity. Distribution will become easy in future days so i feel online distribution is good decision.
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