Nike Expects Permanent Shift to Online Sales – What Does This Mean?

It’s no surprise that the digital world is the new normal, and that online shopping is here to stay.

Pre COVID-19, online shopping was climbing at a steady rate.

Now that we were forced to the comfort of our own homes and told to hunker down, things have changed drastically, and FAST.

This caused a huge halt to 2020 all around the world.

The travel industry was one of the hardest to be hit, but it affected pretty much every business you could think of, whether it be good or bad.

Now that everyone spends more time at home, online shopping has literally sky rocketed.

During the Coronavirus crisis we have seen a 28% increase in online sales and over 150% increase in grocery shopping.Graph

There are a few reasons for this:

  1. We are at home anyway
  2. We don’t want to risk going out and getting sick
  3. We can buy things that weren’t available in-store

What Has This Done to Nike?

Well ever since gyms shut down all around the USA, everyone had to turn to working out from home.

There was less demand for sportswear, because, well, they were home most of the time anyway.

However, customers continued to buy shoes for the casual aspect and not for athleticism or sports.

This has caused an influx of online sales and a decline for in-store goods.

Is this a bad thing?

Nah, it was going to happen sooner or later.

Nike have been doing it for years anyway.

They’ve been increasing online sales to save money without the middleman.

This is also great for shareholders.

Since Nike are cutting costs and making more money, people will want to buy more stocks and the price goes up.

It’s a win-win.

Nike’s plan to move permanently to online selling is actually a good thing.

Of course brick-and-mortar businesses will suffer and some will likely collapse as a result.

But the pros outweigh the cons.

I don’t think they mean they’ll completely forget Nike stores, but they’ll definitely shut some down.

At the end of the day there are people who enjoy online shopping, and those who would rather be in the atmosphere of a shop, listening to the music pumping, and enjoying the presence of being in a shoe store.

Because there’s nothing like it.

Still to this day they make more sales from brick-and-mortar businesses.

In this article from 2018, they said that Nike were making 15% of their money from online sales, and they expected that number to be 30% by 2023.

However, that 30% came far more quickly as a result of the COVID-10 pandemic.

As of June 2020, they’ve already amassed 30% total revenue from online sales. A huge increase that came far more quickly than expected.

So there’s no point in shutting down the stores anytime soon.

What Nike have in-store for the future only time will tell.

But for now Nike are here to stay both online and offline.

Online sales are increasing and eventually if they’re making at least 90% of their total revenue online, I would expect to see a permanent shift to online sales.

At this rate I think it’ll be here far quicker than anyone expects, even for Nike.

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