The Proportion Of DTC Sales Increased To 35%, And Nike Vigorously Developed This Channel

According to Wikipedia, direct-to-consumer (DTC) refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen.

In 2011, Nike stated in its annual report that wholesale accounted for the largest share of Nike brand revenue, but the company should also focus on promoting the growth of DTC channels.

Data shows that DTC sales reached US$2.9 billion in 2011, accounting for 16% of Nike’s total brand revenue; and by the end of Nike’s 2020 fiscal year on May 31, 2020, the sales ratio of DTC channels has increased to 35%. %, achieving revenue of US$12.4 billion.

Credit Suisse managing director Michael Binetti said: "I can think of few brands that have greater potential for economic growth from this transformation than Nike. It's a big brand. , there are many benefits to this.”

In the case of Nike, it has a strong brand and can therefore lead considerable business through its own channels to gain more sales. In addition, through DTC channels, Nike can also better control the way its brand is displayed without being restricted by the platform.

It’s not just Nike, other retailers have also noticed the development opportunities of DTC channels. For example↓

Under Armor executives plan to abandon undifferentiated wholesale partners and focus on direct-to-consumer products;

Adidas announced a four-year plan to have DTC sales account for 50% of net sales by 2025;

There are also some large retailers that have established partnerships with DTC brands. For example, Target, Sam's Club, and Nordstrom sell DTC-branded products on their shelves.

A report from McKinsey and the World Federation of the Sporting Goods Industry estimates that the shift to DTC has been accelerated by two years, driven by the pandemic. The researchers suggest that in the medium to long term, brands that want to thrive need to target at least 20% of their DTC business.

Previously, RetailDive also analyzed the development trends of DTC brands in 2021, such as more traditional retailers entering the DTC field, digital native brands seeing the value of physical retail, DTC brands expanding their category scope, and DTC brands expected to attract greater attention. The customer base and DTC brand are expected to attract investment, etc.