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Nike Distribution Channel

Nike distributes its products through three main channels: wholesalers, direct-to-consumer sales including retail stores and websites, and global brand divisions. While sales to wholesalers make up the largest portion, this percentage has decreased in recent years as direct-to-consumer sales have increased. Nike is focusing on growing direct sales to consumers, which provide higher margins than wholesaler sales. The company aims to increase direct-to-consumer sales to $8 billion by 2017 in order to continue shifting its distribution strategy.

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Prashant Srivastav
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2K views2 pages

Nike Distribution Channel

Nike distributes its products through three main channels: wholesalers, direct-to-consumer sales including retail stores and websites, and global brand divisions. While sales to wholesalers make up the largest portion, this percentage has decreased in recent years as direct-to-consumer sales have increased. Nike is focusing on growing direct sales to consumers, which provide higher margins than wholesaler sales. The company aims to increase direct-to-consumer sales to $8 billion by 2017 in order to continue shifting its distribution strategy.

Uploaded by

Prashant Srivastav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Nike distribution channel

NIKE distributes its products through three major channels:

 By selling products to wholesalers in the US and international markets

 By direct-to-consumer (or DTC) sales, which include in line and factory retail
outlets and e-commerce sales through www.nike.com

 Sales to global brand divisions.

Retail partnerships

NIKE, Inc. has also tried to create category-specific retail destinations by partnering
with footwear retailers such as Foot Locker, Inc. (FL), JD Sports, and Inter sport.

NIKE’s sales mix and retail slant

Sales to wholesalers are the largest revenue category. However, this category’s
contribution in the sales mix contracted from 83.3% in fiscal year 2012 to 79.2% of
revenues in fiscal year 2014. DTC sales, on the other hand, increased from 16.2% to
20.3% over the same period. This is significantly lower than the ratio of DTC
revenues for NIKE’s rivals in the space. In the most recent quarter, the respective
ratios of DTC revenue to total revenue for Under Armour Inc. (UA), VF Corporation
(VFC), and Adidas AG (ADDYY) were 25.3%, 23%, and 25.4%.

NIKE is focusing on direct selling to the consumer with its DTC initiative.
Comparing NIKE’s distribution channels, direct sales to the consumer provide higher
margins than do sales to wholesalers. In fiscal year 2014, DTC revenues accounted
for ~20% of total NIKE Brand revenues as compared to 18% in fiscal year 2013. On
a currency neutral basis, DTC revenues grew 22% in fiscal year 2014 and 30% in
1Q15, year-over-year.

The company is attempting to grow the DTC category to $8 billion in sales by fiscal
year 2017, up from $5.3 billion in fiscal year 2014. That’s an annual growth rate of
14.7%, compounded.

Nike distribution channel NIKE distributes its products through three major channels:  By selling products to wholesalers in

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