How Nike’s Subscription Service is Building Brand Loyalty at a Young Age
By Ben Rudolph
Nike represents the latest brand to join the subscription model trend. Whether it be streaming, software, health apps, clothing, or even groceries, recurring revenue subscriptions are an increasingly popular business model due to their ability to generate predictable revenue streams as they lock in consumers.
Dubbed “Nike Adventure Club”, Nike’s subscription model will allow parents to order shoes for their children aged 2-10 on a monthly, bimonthly, or quarterly basis. These subscriptions cost $50/month, $30/month, or $20/month, respectively.
Nike plans to offer more than 100 varieties of shoes to choose from, including Converse sneakers. Each recurring shipment comes with a customized sneaker box with the child’s name on it, the shoes, as well as games, activities that parents can play with their kids, and the occasional bonus gift, such as a Nike backpack. Nike also pitches its focus on sustainability, encouraging shoes to be sent back once they are worn out or outgrown. The company plans on either donating the shoes to a nonprofit cause, or recycling the materials into other products.
Adopting a subscription program requires a product and a purchasing pattern that allows for repetitive needs. This reality demonstrates the genius in Nike Adventure Club. Nike identified a usage group that requires frequent purchases. As children, kids’ feet grow at rampant rates. From ages 1-3, children can go through some 6 pairs of shoes per year; from ages 3-5, they go through 4 pairs per year, and 2 pairs per year after that. Nike knows that time is at a premium for parents; they don’t have a lot of it to spare to shop for shoes. This program makes economic sense for parents, and locks them and their kids into the Nike brand, hopefully, for life.
Nike continues to be the favourite brand in shoes and apparel for teens. In many cases, this adoration results from being introduced to Nike gear at a young age. Nike hopes Adventure Club will only increase this trend.
Nike began trialling the program with over 10,000 families in the US. Early results show positive acceptance due to the ease of the program. David Gobban, the head of Nike Adventure Club reported that, “one mother said that between driving her kids to soccer practice and music class, she just didn’t have the time to go to the mall to buy a new pair of shoes,” and that “this program solved a problem for her.”
If you’re a grown up sneaker-head, will there be a Nike subscription program coming in the future for you? Maybe. Nike hints there may be more types of boxes to come, and has mentioned one for intensive runners, such as people training for marathons, who may go through a pair or running shoes every three months.
Regardless of whether it’s Nike or another brand, expect subscription e-commerce to continue to grow; McKinsey & Co. reports that it has already grown by more than 100% since 2013.
Sources:
https://www.nikeadventureclub.com/membership
https://www.fastcompany.com/90387934/nikes-first-shoe-subscription-two-years-in-the-making-is-here
https://www.engadget.com/2019/08/12/nike-subscription-service-kids-sneakers/
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