Nike Uses AI to Directly Sell to Customers, Others will ‘Just Do It’ Soon

Celect is a predictive analytics company based in Boston, USA, which Nike acquired on the 25^th of August 2019. This acquisition allowed Nike to integrate their inventories with the website and app of the company. This not only claimed to allow a more efficient interface with the customers, but also more efficient inventory management, leading to a reduction in operating costs of the company. This was part of Nike's project to sell its products directly to the customers through its online retail platforms.

It is no surprise, that in the last few years, the e-commerce sector has seen remarkable growth. Many brands and companies, like Nike, have taken different steps to make this digital transition as effective as possible. Artificial Intelligence had also been at the core of many of these efforts because of its ability to find and locate products personalized for customers, alongside providing recommendations and suggestions to customers. They also automate a lot of backend processes, without having to use a separate system for inventory management. It is for all these reasons, especially after the pandemic, the long-term sustainability of apparel, fashion, and lifestyle brands will depend on the company's ability to adapt to the newly emerging digital marketing sphere according to McKinsey.

Even within the sportswear and fashion industry, other players are taking a shot at this strategy. Adidas had also struck a deal with the Artificial Intelligence company, – Findmine.

However, AI systems require significant time and effort to develop in-house. To avoid this hassle, Nike relies on a strategy of acquisitions. Before acquiring Celect, the sports brand had acquired Virgin MEGA, a design studio, which allowed them to build their SNKRS app, a successful e-commerce venture specialized in footwear. Nike had also acquired Zodiac, a New York-based consumer data analytics company in the year 2018; earlier in 2019, they acquired Tel Aviv-based Invertex that specializes in computer vision to create a scanning system within Nike's mobile app, which could help customers figure out shoe sizes.

Eric Sprunk, the COO of Nike mentioned that the company is set out to become more customer-oriented rather than focusing its sales through intermediaries. The digital segment of Nike has in fact seen a tremendous amount of growth over the years. The sales revenue of the company saw an increase of 12% between 2017-18 and 2018-19.

In 2020, the company saw an unprecedented growth of 82% in its online sales for the year. The company CEO, John Donahoe stated how the company has reconciled with the fact that online sales are the 'New Normal' worldwide. Sales jump was the highest in Europe and South Africa and the overall sales are back to the pre-pandemic levels owing to the online sales.

In this context, more and more companies in the fashion and lifestyle industry will be moving to 'direct to customers' sales over intermediation in the coming years. This also creates new opportunities for tech entrepreneurs to develop products around inventory management, customer engagement, and eCommerce.