Led by retail adventurer Mary Kate Buckley, Nike explores the wilds of selling online

When Nike Inc. decided to add an e-commerce layer to its Web site—to sell the shoes and clothes it promotes online—staffers didn’t have much direct-to-consumer retail experience to go on: no catalog operation, no order-fulfillment program. But the executive who’s overseeing the launch, Mary Kate Buckley, is a pro at figuring out how to implement retail operations under the most challenging circumstances.

“I am excited in unchartered territory,” says Buckley, who recently celebrated her one-year anniversary as director of new business ventures for the Beaverton, Ore.-based manufacturer. “I have been in the position where I am in the dark and have to figure out just what approach to take to solve all of the problems.”

The world’s leading maker of athletic shoes (fiscal 1998 revenues: $9.6 billion) is one of the biggest brand-name manufacturers yet to tiptoe into e-commerce. In February, Nike initiated the first phase of a four-part Internet sales plan by adding online ordering and payment functions to Nike.com, which until then had been an informational Web site. To test the waters, Nike began selling its innovative Alpha line of shoes, clothes and accessories online to U.S. customers.

In Phase 2, the company will roll out a full Internet store of Nike products sometime this summer, and in the final phase, Nike will sell its goods online worldwide. “Nike is one of the first manufacturers trying to do out and do e-commerce right,” she says. “To me, that’s exciting.”

Information vs. inspiration

But, like the Chicago Bulls in the post-Jordan era, Nike’s future in e-commerce is anything but a sure win. Among the many questions the manufacturer faces is whether selling online will pull business away from traditional retailers that sell its shoes. Nike finds itself competing online against traditional retailers like Foot Locker, and going toe-to-toe with other manufacturers, such as Adidas, that have begun to sell directly to consumers over the Internet.

Nike’s biggest online stumbling block may turn out to be Nike. The manufacturer “doesn’t have an awful lot of experience in retailing in general,” observes Ken Cassar, an analyst with the digital commerce group at Jupiter Communications, a New York-based consulting firm. “Nike doesn’t have any experience with direct-to-consumer fulfillment or with taking orders remotely. It also will be a challenge for any manufacturer to grab a significant portion of the market because people just aren’t used to buying athletic footwear from manufacturers.”

Right now, however, Nike doesn’t expect online sales to run laps around its traditional retail business. As Buckley sees it, the Web site remains more of a communications vehicle than a sales channel—a way to showcase Nike products and connect with consumers. “The very nature of our product is that sizing and fit is important,” she adds. But after concluding that many merchants selling Nike products online weren’t doing much beyond simply slapping up product photos and discounting prices (Nike approves the sale of its products on Web sites it inspects and endorses), company staffers thought they could do it better. “The Web is a perfect environment to bring a lot of depth of product information to consumers,” Buckley says.

“When you think of Nike advertising, there are a lot of inspirational messages,” she adds. “By putting our products on the Web site and really talking about what the technologies are, we are giving consumers what they need to select the right product.”

From Disneyland to Niketown

To make e-commerce work at Nike, Buckley is drawing on her previous experience heading up new business projects for The Walt Disney Co. in Europe and Asia. She created a business model in India for Disney without the benefit of market research or an existing infrastructure. In Japan, Buckley built an electronic catalog and a showroom where retailers could view the entire Disney line from 300 licensed vendors.

Nike’s drive to do things better—to be the best—is what attracted Buckley, who worked for 10 years at Disney prior to assuming her new position. “I had always admired the way Nike managed the brand,” she recalls. “To me, Nike stands for quality. It’s a company that always does something right, so I thought it would be great to help them expand a little bit.”

When Buckley arrived at Nike and began looking at new business proposals, e-commerce quickly floated to the top. To evaluate its potential, Buckley asked a series of questions: Would it enhance the brand value? Would it at some point be profitable? She subsequently presented a strategy to Nike’s management council, winning approval to set up a Web store.

Nike already had an online creative team and a Web master to handle its Internet activities. To initiate the e-commerce venture, Buckley assumed control of the Nike.com group and hired a few key players, including a merchandising coordinator to select which items will be sold online, and a creative director to articulate Nike’s brand message within the brand tone on the site.

The team is leveraging the resources of the entire company for its Web site, working closely with departments such as marketing, Buckley says. “E-commerce will impact every area. We also have decided that we will limit spending to the best of our ability. So we are really scrambling to do things at low cost.”

Early on, Nike staff identified many of the hurdles they would have to overcome to set up an e-commerce business. While the company has a small number of Niketown stores, “we recognized that we are not direct-to-consumer retailers and we didn’t have direct-to-consumer delivery systems,” Buckley says. “We had a lot of work to do.”

As one of its first steps toward e-commerce, Nike hired United Parcel Service to be its distribution partner for the venture. “We weren’t going to invest our money in building distribution systems,” Buckley says. “That’s not core to our business.”

Project Alpha

Phase one of the Web site rollout is a logistical testing period, and Buckley is working to assure that distribution is up and running before Nike begins to offer a broad range of products online. (A Web site showcasing the Alpha line was introduced last December, and Nike added the shopping functionality in February.)

Things haven’t gone entirely smoothly. The company has had to resort to manual systems to make sure customers got their products. Access problems have plagued the site as well. Many potential visitors could not log onto the Web site, and some who did access the site found it to be slow-footed and cumbersome.

Nike experienced a few technical problems with the site during the early days, especially getting different software to work together, Buckley admits. But the first phase of the Web site roll out was meant to be a testing period. As a buffer to retailers, for instance, it quickly added a store locator online.

Meanwhile, Nike’s online team is constantly gathering data about how people use the site, and staff members meet frequently to share ideas and update one another, says Buckley, who devotes nearly all her energies to Nike.com. “With the Web site, we are making a bunch of assumptions, going out to test them, analyzing the results and then adapting quickly.”

After initial research suggested that some people were still reluctant to give their credit card numbers over the Web, the online team decided to include an 800 number customers could call to place orders—only they buried it within a customer service tool bar. When no one called the toll-free number, staff moved it to the home page. Now, telephone orders account for 25% of online sales.

IRCE 2008 Conference Multi-Media CD-ROM

“I learn something every day,” Buckley says. “To be in e-commerce, you have to have some element of vision, some comfort level with being without a lot of hard-core information, and you have to be willing to learn and adapt.”

Thinking globally

Nike presently sells its products through retailers in more than 100 countries, and its e-commerce ambitions are similarly global in scale. “We have relationships with retailers all over the world,” Buckley explains. “We can’t just sell from here and undercut our retailers outside of the United States.”

The ultimate success of selling shoes online may depend on where someone lives—even within the United States. “Shoes are notorious for not fitting properly,” says Bob Wischnia, managing editor of Runner’s World magazine, Emmaus, Pa. “The sizing is sometimes off, and you just don’t know how a shoe will fit until you try it on. That’s obviously one of the biggest obstacles to online shoe sales. On the other hand, if you don’t have a running store within 50 or 60 miles, then the Internet is a good avenue.”

Nike’s biggest advantage may be that its brand message should transfer well. “They have done a phenomenal job developing their brand for television,” Cassar says. “On the Internet, they will be in an even better position because their advertisements push activity. They tell you to do something.”

In other words, “Just buy it.”

MargaretAnn Cross is a business writer in Allentown, Pa.

July 1997-March 1998: Director of new ventures, The Walt Disney Co., Disney Consumer Products (Europe, Middle East and Africa).

November 1996-June 1997: Director of retail development and marketing, The Walt Disney Co. (Asia Pacific) Ltd.

October 1994-October 1996: Director of corporate development and senior manager of business development, The Walt Disney Co. (Asia Pacific) Ltd.

April 1993-September 1994: Marketing manager, The Walt Disney Co. (Asia Pacific) Ltd.

August 1987-March 1993: Manager of finance and administration, senior financial analyst and financial administrator; The Walt Disney Co.

March 1985-July 1987: Systems and financial analyst, Doremus and Co.

March 1983-March 1985: Assistant media director, media planner and assistant media planner; Grey Advertising.