Nike Does Not Sell Shoes

Nike is one of the most renowned brands and the biggest player of the sports equipment game, and whenever you want basketball shoes, you never think to buy anything but Nike. The Jordans is so popular among Millenials that when they visit the store, they don’t ask for good basketball shoes, they ask for Jordans, but how was Nike able to create such an impact and who was the face behind all the success of Nike, and what are the business lessons that you can learn and implement in your business.

The Birth of Nike

It was 1960, and two men named Phil Knight and Bill Bowerman decided to set up a shoe trading company. There could be no better partnership than this for creating a shoe trading company Phil Knight was an MBA in Finance, and also when he was in college, he was very actively involved in all kinds of Athletic events, and on the other hand, Bill Bowerman was a coach for the college team of Phil. Hence he had a piece of knowledge about running shoes from the beginning itself. Phill approached a Japan-based shoe manufacturing company called Tiger to sell their shoes in the U.S. market. The company accepted his deal and signed a contract with him. When it was final, Phil immediately approached Bill and started a company named “Blue Ribbon Sports.”

In the beginning, they imported the shoes from Japan and sold them in their car. After a while, they were able to cut the ribbon of their very first store as the company was quite successful, but Phill knew this business was not scalable, as the Japanese exported only the leftover shoes, and hence the supply never matched the demand. Hence, in 1972, they raised funds from a Japanese trading company, and Nike was born. Everything was going pretty well, but there was one problem, Nike only sold running shoes, and by 1983 this market got too saturated. Nike saw a dip in their sales and profits, and fuel to fire was added by their competitor Reebok, with the launch of their Aerobic shoes. After the launch of aerobics shoes in the market, people immediately shifted, and they started gaining much more popularity than running shoes. This trend turned everything upside down for Nike, and Reebok overtook Nike and became the biggest brand of the athletic market, but just a move made by Nike helped it to revive, and within a short period, Nike was again the Supergiant of the market.

The Beginning of an Era

Nike was struggling to survive in the market, but this was the time when a person came and single-handedly started a new trend, actually an Era, and made Nike great again. Nike decided to bring one of the most charismatic players of all time in the game. Yes, you guessed it right, Micheal Jordan was in the house. Very few people are aware that if Nike never signed Jordan as their Brand Ambassador, they would have dissolved a long time ago, and we might never have known who Nike was. But what did Jordan do? So guys, if you will observe very closely, the biggest abilities of Micheal Jordan were his speed and his jumping ability. Which was strategically used by Nike. Nike spotted these two abilities of Jordan and launched their “Air Jordans,” which were only provided to Micheal Jordan to play in the NBA games. But these shoes were banned pretty much immediately as, according to NBA rules and regulations, you can only wear shoes that matched with the color of your jersey, and Air Jordans were of shiny red color and were unfortunately banned by the NBA. But Nike used turned tables very smartly in their favor. Just after this incident, Nike shot a commercial with Jordan which boldly spoke, ” NBA threw us out, but you don’t need NBA to wear Jordans.”

This commercial was a huge hit, and when the shoes were made available to the local public, they all went out of stock within three days of their launch. Within two months of their launch, Air Jordan closed a sale of a whopping seventy million dollars. Nike signed Jordan for a long contract of 10 years, which stated that Jordan could only promote Nike shoes for the next ten years. Nike signed many athletes in the next few years like Tiger Woods, Lebron James, and who can forget the 1 Billion dollar lifetime contract with Ronaldo. While Adidas bought the rights of the London Olympics, Nike dominated the market in the same year without advertising themselves in the Olympics. They provided athletes with their Volt series shoes and shot ads in every London around the world and did not cast any big name. Instead, they cast teenagers for their ads with a message, “greatness is within you.”

What Does Nike Sell?

Divyanshu, you said that Nike never sells shoes, but in all your paragraphs, the only thing you talked about was shoes and only shoes. Yes, I remember what I said. Nike never actually sells you shoes. What it sells you is (drum rolls) Inspiration. If you ever observed the ads of Nike, they never focus on their shoes. The only focus that they maintain is “You.” How can you achieve greatness? How can you get Inspired? Every athlete in the ads of Nike never talked about shoes. All they talk about is inspiration, and how can you be great like them? How can you be one of them? Although they don't sell you shoes consciously, subconsciously they are selling you shoes only.

What Can We Learn from Nike?

The big lessons that we can learn from Nike are:

• Your foundations define the strength of your Business.
• Learn to accept that you cannot always be the best in the market.
• Learn to make a castle with every stone thrown at you.