Market Intelligence Insights June 27, 2019
Is Nike in for Another Strong Quarter?
When reporting its fiscal Q3 results in March, Nike reported its first $1bn quarter of digital sales. So as we gear up for Nike’s Q4 results let’s look into some of the ways it accomplished its strong Q3, and use SimilarWeb’s alternative data for an evaluation of corporate performance in fiscal Q4.
- Direct traffic to Nike.com in the US is increasing, showing brand strength and healthy growth
- The SNKRS eCommerce app, which drove significant growth last quarter, is seeing a steep decline in use
- The percentage of Android devices with the SNKRS eCommerce app installed is stagnating
The majority of Nike’s sales, approximately 70% in FY 2018, came through resellers such as Footlocker and Dick’s Sporting Goods. Of the remaining revenue, derived from direct sales, 27% came from digital sales in FY 2018, up from 24% in FY 2017.
First of all let’s look at traffic channels to nike.com to understand how strong Nike’s brand strength is.
Following record highs for direct, organic and paid search traffic in November 2018, traffic from these channels declined until March this year when direct traffic entered accelerated growth, widening the difference between the traffic it generates compared to other channels. With direct channels consistently driving the most amount of traffic, we can determine that Nike’s brand awareness is strong.
In the fiscal Q3 earnings call Mark Parker, Nike’s CEO, mentioned that the company’s eCommerce app, SNKRS, played a large part in Nike’s success – experiencing “triple digit” growth during the quarter.
We can see the growth of the percentage of Android phones with the app installed in the US, i.e. the app’s install penetration, was particularly significant in November 2018 – February 2019.
But in order to really understand how valuable the SNKRS app is for Nike, we can look at total time spent on the app, a proxy for consumer engagement.
What we see is that Nike was successful at driving engagement of the SNKRS app and building hype around its November 2018 releases, which could be attributed to its strong third quarter. However Nike was unable to sustain this strong engagement, and the amount of time users are spending on the app has dropped significantly YOY, back down to levels in 2017, before there was a surge in the amount of Android devices with the app installed.
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