Several technology companies have made billions of dollars in recent years by adopting a subscription-based business model. Indeed, Netflix and Microsoft earn billions every quarter by giving paying consumers access to their unique content and software.
Just in time for back-to-school season, Nike is taking a page out of the tech sector’s book. The forward-thinking clothier recently unveiled a kids’ shoe subscription service called Nike Adventure Club.
Adventure Club Details
In 2017, the apparel corporation launched the innovative subscription initiative as a pilot program. For $20 a month, parents of children ages two to 10 can receive four pairs of new kids’ shoes a year. Nike also offers a $30 per month plan that provides six pairs of shoes and a $50 monthly plan that supplies 12 pairs of sneakers annually.
Subscribers can choose from a collection of 100 different styles of both Nike and Converse shoes. Each Adventure Club box is also customized for its recipient and comes packed with an activity guide designed by KaBoom, a non-profit that aims to boost the amount of exercise kids get.
Since Adventure Club’s launch, 10,000 consumers have subscribed to the service. As a result, Nike decided to take the program nationwide on August 12.
The corporation believes its subscription service will be a hit with parents for two reasons. For one, kids grow fast. This means their brand-new sneakers won’t fit a month after buying them. Nike also wants to appeal to parents living in rural areas that don’t have time for long shoe-shopping trips.
“We’ve discovered a huge pain point for parents around shopping for kids’ shoes,” Nike Adventure Club general manager Dave Cobban told CNN. “This was a great opportunity to experiment with different solutions.”
According to market research firm Euromonitor, the U.S. children’s clothing market is worth $33.9 billion.
Though Nike is only targeting parents and kids with its Adventure Club program, the corporation has plans to expand its subscription offerings. Dave Cobban explained that Nike’s market research found that runners also go through shoes quickly. As such, the footwear brand may be able to capitalize on the needs of marathoners and other active adults.
“We’re starting to think about what other athletes have problems that could be very easily solved by a subscription,” said Cobban. “This is the beginning of something pretty exciting for Nike.”
Nike’s subscription initiatives also fall in line with its larger strategy of becoming a direct-to-consumer brand. Last week, the corporation announced it had purchased retail predictive analytics firm Celect for an undisclosed sum. Before its acquisition, the startup provided its clients with actionable market intelligence by analyzing their sales and logistics data.
The corporation explained it would use Celect’s resources to forecast its customers’ purchases better and help better allocate its inventory. However, Nike doesn’t intend to dedicate its new subsidiary to helping retail partners. Instead, the firm wants to optimize its own online business and outlet stores.
Theoretically, Celect could use its algorithms to help Nike’s Adventure Club pair customers with shoes they’ll love. It could also find ways to convert subscribers in the $20 per month tier to the $50 level via targeted upselling. If the kids’ shoe initiative succeeds, it could lay the groundwork for Nike’s withdrawal from the brick-and-mortar retail sector and subsequent transformation into a fully direct-to-consumer business.`