Just Do It. An Overview of Nike’s web3 Strategy

TL;DR:

  • Nike is dominating in web3, releasing a number of popular collections
  • NIKELAND is the best example of a working metaverse for a brand that isn’t cringy
  • Nike’s NFT volume makes other brands look like they aren’t even trying
  • Omnichannel mastery is essential in 2022 and Nike does it best
  • AR-enhanced clothing could be part of a spatial web future

Nike has an active, bold, and ambitious web3 presence, easily rivaling and in many aspects surpassing competitor Adidas for online sneaker dominance. Digital is woven into everything NIke does. It is how it operates, engages with its fanbase, and plans to expand its business. Nike has recognized that people are spending a good chunk of their time online, and has made considerable efforts to pivot its business to focus on D2C sales. Emotional branding techniques lay at the heart of Nike’s marketing strategy, by utilizing the hero archetype to inspire customer loyalty. You are the hero, and your lazy side is the villain. Somewhere in the middle, a voice in the back of your head is telling you to hop onto the SNKRS app to bid on a pair of Air Jordan 5 Retro T23 Tokyos.

We could easily have a separate article detailing Nike’s R&D involving sneaker innovation, or their impact on sportswear style over the last 30 years, but let’s focus solely on web3. We’ll start this overview with a timeline of Nike’s activity in the space, dig into the recent initiatives, talk a bit about the analytics surrounding drops, and conclude with a brand analysis. If you wanted an all-in-one place to understand what Nike is doing in web3, this is it.

Timeline of Activity in web3

September 1999 - Nike By You (Nike ID) customizable sneaker service on Nike.com

December 2019 - Nike issues a patent for CryptoKicks (blockchain phygital pairing system)

January 2020 - RTFKT founded (for context of acquisition)

November 2021 - Debut of Roblox-based NIKELAND metaverse

December 2021 - Nike acquires RTFKT

February 2022 - Release of MNLTH NFT

April 2022 - Nike reveals what’s inside of MNLTH

April 2022 - CryptoKicks auction on Opensea

Initiatives

Nike’s Apps (overview) - Nike’s digital ecosystem is impressive and broad to say the least. A QR scan on their main brand website directs you to the Nike App, where you can learn about the latest gear, read stories, and engage with a worldwide community. Although Nike was already pivoting to more of a D2C approach, the pandemic accelerated this growth in a big way. Nike’s D2C transformation and its apps go hand-in-hand. With that in mind, consider the following:

  • Nike’s Apps (The Nike App, Run Club, Training Club, and SNKRS) drive substantial value. CEO John Donahoe notes that “a consumer who connects with us on two or more platforms has a lifetime value that’s four times higher than those who don’t.”
  • The apps that Nike have are very popular, many of which have been downloaded 500 million times since the pandemic began.
  • Nike had three consecutive quarters of 80% digital sales growth in 2020 and 2021.
  • In 2018, Nike’s goals were to grow its digital reach by 30% by 2023. It has repeatedly set new goals, because it keeps reaching the goals it sets years ahead of time.

All of this is part of Nike’s plan to become an even stronger D2C brand. Why go to the mall when you can try on a pair of Nike’s using AR through an app? Why visit a sportswear shop when you know you can get free shipping and returns through Nike.com?

The Nike App - Think of this as the primary Nike app. It acts as a personal guide for Nike, providing you with the latest updates on products, thought-provoking stories, and access to a worldwide community. Free shipping is a major plus, along with 60 day returns. A good chunk of Nike’s online store is accessible through the app, making online ordering easy.

SNKRS - A web2 app made by Nike, offering exclusive sneaker drops for customers in US/China/Japan. Live streams are commonly hosted on the app, with a notable example being Air Jordan 4 PSG shoes (selling out in two minutes). If products are live streamed and highlighted on the app, they will sell out. Unprecedented volume is being reported, delivering over $4 million in sales in less than 30 seconds (a Nike record).

RTFKT - Nike acquired this innovative brand in 2021. RTFKT was founded in 2020 by Benoit Pagotto, Chris Le, and Steven Vasilev. RTFKT leverages new technology to create a next generation of collectables, merging culture and gaming. Core focuses of the RTFKT team are blockchain tech (embracing NFTs), next-gen in-game engines, and augmented reality. RTFKT can be thought of as a web3-native venture. Notable RTFKT collections (3d wearables) include CloneX, Jeff Staple, Ferocious, Space Drip, and RTFKT Creators. RTFKT had the design and speed to help Nike with its CRYPTOKICKS vision it had initially in 2019.

CloneX owners have commercial rights over their avatars, and a token-gated site was used to allow holders to download the 3D files. That means holders can create additional content or anything they can possibly imagine using the avatars. The open source mentality took some time for Nike to feel comfortable with in this instance, but it paid off in a big way. RTFKT and other content creators are creating tutorials on how to download and customize a CloneX avatar. Supported file types include Blender, Maya, Unreal, Unity, and GLTF (to name a few).

RTFKT’s plan in the future is to make phygital products that are authenticated using NFC chips physically and NFTs digitally.

RTFKT x Nike Dunk Genesis CRYPTOKICKS - Customizable shoes on the blockchain. Customers purchase a ‘skin vial’ to change the color of various parts of the shoe, including the classic Nike Swoosh, tongue, heel, and more. You can imagine the possibility of having increased customization, by allowing 3rd party creatives to make their own vials and re-skin Nike sneakers. The possibilities for creative partnerships are endless here.

RTFKT x Nike AR Genesis hoodie - Only available to the holders of the CloneX and CryptoKicks collections, this phygital hoodie is co-branded with Nike and comes with an NFC chip, trackable using AR. The ability to track the hoodie in AR allows for fun virtual effects to be added within the AR-space, like the option for virtual wings. The hoodie is also wearable by CloneX avatars digitally, with the same AR effects available for both the physical and digital versions of the hoodie.

AR Genesis hoodie, wings included
AR Genesis hoodie, wings included

RTFKT Snapchat Lens - It’s worth noting that RTFKT Studios has released a number of Snapchat AR lenses. This is paving the way in the industry for AR try-ons. And while the technology is not without its kinks at the moment, it is clear to see that AR-enabled and AR-centric clothing will become extremely popular in the future. The distinction between digital and physical worlds will blur as companies like Snapchat and Apple develop AR-glasses complete with UI overlays. Tech-centric social signaling will change as adoption of AR-wearables increases throughout the decade.

This will be more popular in a decade, trust me
This will be more popular in a decade, trust me

MNLTH - The first official collaboration between Nike and RTFKT, which appears as a crate/mystery box on Opensea. As the Opensea description reads “Behold a mysterious MNLTH, etched with Nike & RTFKT markings. It seems to be sentient . . . What does it do?” MNLTH NFTs were sent to people who already own CloneX NFTs, with the current floor price sitting at around 3.4 ETH (5.4k at time of writing). The 20,000 NFT collection incorporated quest mechanics leading up to the final reveal. In April 2022, a website was revealed for MNLTH holders to burn the NFT in exchange for one Nike Dunk Genesis CryptoKicks, one Skin Vial Evo, and one MNLTH 2. Vials can be used to upgrade sneakers with limited edition skins. The first vial set, Evil X, was based on CloneX, including 8 CloneX DNA skins.

NIKELAND (Nike x Roblox) - Nike’s first metaverse space, utilizing the Roblox platform, allowing fans to participate for free in promotional events, and engage in related brand experiences. Over 7 million people have spent time in NIKELAND since it launched in 2021, with notable celebrity experiences (LeBron James being the best example). Any items used or purchased in NIKELAND are transferable to other Roblox environments. Much like in Animal Crossing, every visitor to NIKELAND is able to customize their own ‘yard’, which serves as a space to show off in-game items and collectables. Games inside of NIKELAND include soccer, swimming in Lake Nike, various easter eggs, riding around on a skateboard, and hilarious bounce pads throughout the map.

Free advertising for Nike comes in the form of the virtual merchandise available within the NIKELAND showroom. Purchasing virtual shoes, clothing, accessories, and likely more tie-ins and goodies in the future.

Kahris crushing it on the Nike branded hoverboard
Kahris crushing it on the Nike branded hoverboard

POS System

Nike has partnered with LS Retail for a Mobile POS (point of sale) solution. Nike has mastered omnichannel, and this becomes evident when shopping in one of their retail stores. The stores are well designed, thoughtfully curated, and there’s a sense of consistency when navigating between the online experience and shopping in-person. We saw some of this experience taking shape as early as 1999, with the introduction of NikeID. Now, over 20 years later, the interplay between the web and physical spaces is part of every shoe release. Many shoes that are showcased in-store can only be purchased online. Product displays in-store also summarize the technology used for each release (Flywire, Dri-Fit, and Hyperfuse are the best examples).

The flagship Nike store in NYC offers other ways for customers to engage with the brand, from shooting hoops that capture playback highlights, to using a treadmill that simulates running outdoors. We will no doubt see more immersive and engaging experiences in-store that have tie-ins to Nike’s web3 efforts.

In every Nike store, the staff is equipped with a POS device to operate from. This allows Nike employees to help customers around the store and not be tethered to a traditional cashier desk. I encourage anyone that wants to dig more into Nike’s omnichannel experience to check out Alex Senn’s post here: https://www.linkedin.com/pulse/nike-case-study-what-omnichannel-retail-should-look-like-alex-senn/

BOPIS is becoming increasingly popular, and is a real acronym
BOPIS is becoming increasingly popular, and is a real acronym

USD is the only accepted currency on Nike’s website for US customers. Payment methods include traditional credit cards, Apple Pay, Klarna, and Paypal. The Euro is accepted overseas.

Accepted payment methods:
Visa, MasterCard, American Express, Discover
Apple Pay
PayPal
Klarna
Nike and Converse Gift Cards
Product Vouchers

Discord Info

Nike doesn’t have a Discord server. This may be by intention, as Roblox and RTFKT both already have them. The brand is almost too big to have a single Discord server. If people have an interest in the secondary market of collector sneakers, there are a dozen notable Discord servers you can join to track, trade, and gossip over releases. We know the potential horrors of attempting to moderate a server with 250,000 people, and Nike’s social media accounts have some of the most followers of any brand (besides the Kardashsians). Perhaps a more corporate-centric Discord-style service could be more useful, given the amount of fraud that is prevalent even on medium-sized servers.

Tech Stack

  • Ethereum self-custody digital wallets
    • Opensea.io NFT store (customers pay with ETH)
  • Regular eCommerce payment portals
  • Very active social media presence (Instagram, Twitter, TikTok)
  • Dynamic websites, utilizing CSS, JSON, and React JS

RTFKT x Nike Dunk Genesis CRYPTOKICKS NFT Stats & Metrics

(captured 8/4/22)

ETH Contract: 0xF661D58cfE893993b11D53d11148c4650590C692
Blockchain: ETH
Token Standard: ERC-721
Creator Royalties: 10% (higher than normal)
Unique Holders: 6,571
CRYPTOKICKS Minted: 12,621
Sales Today: 13
7 Day Sales: 54
USD Volume Today: 12,860

Secondary Market Analytics

(Analytics derived from Opensea.io on 8/04/22)

Sales Today: 13
7 Day Sales: 54
USD Volume Today: 12,860
Current floor price: Ξ 0.72
Top price: Ξ 22
Average Price: Ξ 1.1959
24HR Volume: Ξ 9.34
90 Day Avg Price: Ξ 1.1959
90 Day Volume: Ξ 2,221.9974 ($3,561,861 at time of writing)

There are a number of collections we could review the analytics of, but the collection that showcases the most activity and normality is the Nike Dunk Genesis collection. It’s worth noting that MNLTH is an ERC-1155, and CRYPTOKICKS is an ERC-721. Both have a relatively high creator royalty of 10%. The floor and average price has remained consistent since launch, despite market conditions. ETH volume is normal as well.

Nike is making a killing off of the 10% royalty fee. These NFTs will remain popular for the foreseeable future, and anything associated with CloneX will be collected and praised for as long as Ethereum is a chain that continues to run. With the possibility of more Nike partnerships, we could see these NFTs used in metaverses years from now, and that possibility will keep the floor price higher. Nike is doing as well as any other major brand given present market conditions, and it is difficult to imagine them doing much better. The brand has prepared itself for the next cycle and will no doubt have more successful releases incorporating metaverse and AR functionality into future NFTs.

Shout out to @lightsoutjames and @cryptuschrist for making dashboards so I didn’t have to this time around.

Virtual/In-Person Events

  • Nike regularly hosts and co-hosts events with other brands within the footwear industry.
  • There have been no notable in-person web3 events hosted by Nike
  • Nike is regularly hosting events within NIKELAND

Brand Analysis

Strengths

  • Nike is the single biggest shoe name in the world, with instant name, logo, and brand recognition
  • The acquisition and partnership with RTFKT, keeping its mantra of exclusivity and design at the forefront of its creations while targeting internet, gaming, and creator crowds
  • Quick to market with NIKELAND metaverse, and willingly and openly embraced NFTs before many other competitors
  • Constantly in the headlines and already a well-known web3 brand leader
  • The clear leader for AR-based clothing and shoes, something that other large brands are struggling to pay attention to

Weaknesses

  • Shoe collectors are still relatively niche, even if sneaker fashion is mainstream
  • The future and success in metaverses may rely on crafting affordable virtual merch; current NFTs are out of reach for most regular consumers
  • Nike has had no in-person web3 meetups to note
  • The number of apps and loyalty programs for Nike can be confusing
  • Future roadmap is uncertain for some of the recent NFT releases
  • NIKELAND being built on Roblox caters primarily to children, but the people who buy Nike sneakers are not – we need a more mature Nike metaverse or tie-in similar to Adidas
  • AR technology and screencaps from using Snapchat filters is still somewhat cringy and unpolished at times

Opportunities

  • Nike could be the first big brand to have a successful, wholly owned, metaverse
  • Partnering with web3 native artists and video game makers could be a win-win for the brand
  • NFTs and high-value sneaker sales go hand-in-hand. Nike could lead the way for how phygital looks moving forward and how physical ownership is verified on-chain
  • Using Roblox with NIKELAND can get younger people into the brand. Digital first, then sneakers
  • Nike could be the name when people think of AR-clothing. Nobody else is as big or as notable. AR-enabled clothing could be the next big market

Threats

  • Other shoe companies like Adidas realize the potential of gaming and metaverse partnerships, and are pulling off that ‘cool’ look that Nike has attempted with some of its more recent sneaker NFT releases
  • Adidas offers their metaverse experience to a more mature audience, which is more appealing to the age groups most likely to make high-value purchases
  • Nike’s bullish bet on NFTs may backfire if the market takes a turn for the worst, or if NFTs become further demonized
  • Web3-centric sneaker DAOs may attempt to gobble up some of the cool exclusive market, but this seems more far off given the logistical and monetary complications
  • A poor NFT release from a technical standpoint could turn off customers for good, Nike needs to tread both quickly and carefully
  • The lack of a centralized place to chat about Nike puts it at a disadvantage when compared to Adidas, which has openly embraced Discord culture

Summary

Nike has reinvented itself time and time again over its 58 year history, and its entrance into web3 has shown the rest of the footwear world what engagement in this space can look like. Nike already had a number of web2 apps that were widely used and popular, and the brand has mastered the omnichannel experience. With the addition of SNKRS and RTFKT, we see the brand adapting to the art, fashion, hyperactivity, and reality of the online-first world. Nike’s foray into AR-enabled clothing may prove to be a watershed moment that will serve as a prototypical example of what is to come for tech-centric fashion. MNLTH serves as a fun and unique way to engage with fans, and NIKELAND will continue to evolve and host events in the web3 space. The web3 community for Nike will continue to grow, until all of the online experiences for the brand become impossible to separate. If any brand can pull off tastefully jumping into the web3 and metaverse space, it’s Nike. Just Do It.

Need help with your web3 go-to-market strategy? Eager to dive into web3 and NFTs, but not sure how to approach it? Reach out to immutablelabs.io and schedule a chat with one of our experts!

Company Portals:

https://www.nike.com
https://www.roblox.com/nikeland
https://rtfkt.com
https://mnlth.rtfkt.com
https://clonex.rtfkt.com

Social Media:
https://www.tiktok.com/@nike
https://www.instagram.com/nike/
https://www.snapchat.com/add/nike

References:
https://www.theverge.com/22833369/nike-rtfkt-nft-sneaker-shoe-metaverse-company
https://www.forbes.com/sites/bernardmarr/2022/06/01/the-amazing-ways-nike-is-using-the-metaverse-web3-and-nfts/?sh=735e0afe56e9
https://www.thedrum.com/news/2022/03/22/nearly-7-million-people-have-visited-nike-s-metaverse-store
https://www.tubefilter.com/2022/03/23/nike-metaverse-nfts-nikeland-users/
https://www.thestreet.com/lifestyle/sports/nike-pulls-first-weapon-to-dominate-metaverse-cryptokicks
https://www.cnbc.com/2021/11/02/nike-is-quietly-preparing-for-the-metaverse-.html
https://www.psfk.com/2022/05/nike-is-taking-over-the-metaverse-with-direct-to-avatar-sales.html
https://vrscout.com/news/nikes-just-do-it-attitude-pays-off-in-the-metaverse/
https://www.cbsnews.com/news/nike-cryptokicks-nft-blockchain-metaverse-rtfkt/
https://medium.com/@nic__carter/redeem-and-retain-nfts-are-the-future-of-luxury-goods-760f00dbce23
https://about.nike.com/en/newsroom/releases/nike-acquires-rtfkt
https://www.voguebusiness.com/technology/why-nikes-next-web3-move-is-a-black-hoodie-rtfkts-founders-tell-all
https://techstory.in/nike-and-rtfkt-studios-finally-revealed-whats-inside-the-mnlth/
https://brainstation.io/magazine/nikes-digital-ecosystem-paved-the-way-for-d2c-transformation
https://602communications.com/nike-brand-strategy-emotional-branding-using-the-story-of-heroism/
https://hypebeast.com/2022/7/rtfkt-x-nike-ar-hoodie-set-to-launch-this-week

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