Our corporate startup of the week, Nike Adventure Club, is a masterclass in venturing. Subscription-based business models have quickly moved passed streaming, music and software onto more uncanny industries like healthcare (e.g. MDVIP and PillPack), airlines (e.g. Volaris, EasyJet) and even the house plant industry (e.g. BloomBox, Pet Plant Club).
Part of the allure is that we now have the technological infrastructure to create real value from this model. For example, digital payment platforms like PayPal and Stripe make it easy for companies to set up and process recurring payments.
With these resources in place, more corporations are experimenting with subscription models as a supplementary form of serving their customers. Here are a few numbers to contextualise its success:
With numbers like these, it’s safe to assume the subscription-based business model is a viable opportunity to find new growth via a corporate startup. Most recently, making its grand entrance into the world of children’s footwear, with the Nike Adventure Club.
How the corporate startup was born.
Nike has several innovation and growth targets planned for the years to come. One of their goals is to accelerate both their organic and acquisition growth to reach a sales revenue of $ 50 billion by 2023. Part of their strategy involves experimenting with new ventures and business models – and it’s no surprise a subscription-based venture would be on their list.
Most successful subscription models thrive on offerings that will be needed over and over again (e.g. consumer packaged goods (CPG), meal plans, skincare products, etc.). In the context of footwear, who goes through shoes quicker than kids?
Children are continually growing, and they tend to give their shoes quite a beating. According to Indigo Digital, kids ages 1 to 3, can go through 6 pairs of shoes per year, while kids 3 to 5 can go through 4 pairs per year (and 2 pairs a year after that). That’s a lot of shoes!
Meet the Nike Adventure Club.
Nike Adventure Club is a sneaker subscription service for kids that delivers shoes right to your doorstep throughout the year. Dubbed by Nike as “a parent’s best friend” the service can be a lifesaver for busy parents (especially those with 2 or more children) who might not have time to go shopping as often.
Aside from being convenient for parents, the service familiarises kids to the Nike brand from an early age, making them more likely to develop brand loyalty as adults. Director of Product Experience and Retention at Nike Adventure Club, Dominique Shortell explains:
“In providing footwear, we’re always trying to answer: What do kids want? But an equally important question is: What kind of experience are we providing for their parents? We want to make shopping for footwear as convenient as possible for them.”
Two years before the official launch in 2019, Nike had already been running concept validation experiments under the name “Easy Kicks” (to reduce any risk for the Nike brand). Using targeted Facebook ads, they gained 10,000 members during that period and were able to get a much better idea of what their client’s pain points were. Armed with ample proof of concept and plenty of customer data to perfect the concept, the Nike Adventure Club was launched in August of 2019.
How it works.
With Nike Adventure Club, kids can choose from over 100 sneaker styles from both Nike or Converse, and sizes are available for ages 2 to 10.
Each delivery box is personalised with the child’s name and contains additional goodies like stickers, little gifts (e.g. small drawstring backpack) and an activity guide to encourage off-screen playtime.
Twice a year, Nike will send parents a prepaid bag to collect shoes that are too small for the kids. Older shoes are either donated to families in need or recycled through the Nike Grind programme.
Competing in a saturated market.
Through this new venture, Nike has found a genius way to:
- Differentiate itself from competitors.
- Meet a real pain point in the market for busy parents.
- Increase customer loyalty:
- With parents through convenience.
- With kids through a fun, personalised experience.
- Create a source of recurring revenue from customers that might have otherwise gone with competitors.
In addition, this digital model is the perfect way to learn more about new customer personas, in this case, parents and kids. The data they gather from customer patterns, preferences and behaviours can be used to optimise existing products and even create new offerings.
Like many corporations in today’s digital landscape, Nike’s plans for the future include shifting its operations to a more “consumer direct strategy” with digital processes driving up to 50% of the business. As explained by CEO John Donahoe:
“We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back.”
As for Nike Adventure Club, there’s no doubt that they will find new ways to dazzle their customers as time goes on. There are even a few hints on the Nike website signalling the possibility of new similar subscription offerings aimed at different consumers (e.g. limited edition fans).