You’re reading AI at the Top - Our new series on Sundays, where we share how leading companies and their executives use AI in business.
Who doesn’t love Jordans?
If you have even the slightest inclination towards sports, you’ve spent years admiring what Nike stands for. Truly elite athletes who Just Do It.
The way Nike highly represents athletes made them more than a simple apparel and sportswear brand for sneakerheads.
At the time of writing this issue, Nike is valued at ~$105 billion with 77,800 employees while being associated with top-class players like Cristiano Ronaldo and LeBron James.
In today’s AI at the Top, we will learn:
How exactly Nike uses AI in its business
The companies Nike acquired to fast-track its AI game
Nike’s next big challenge in AI
How exactly does Nike use AI in its business?
For Direct Customers
During my research, I was looking for how Nike solves for procurement, inventory management, supply chain, etc. The boring, non-flashy parts of the businesses that actually keep them running.
But honestly, I wasn’t surprised to see the personalisation on the customer front, considering it’s heavy investments away from wholesale partnerships since 2017.
With 40-42% of total revenue coming from DTC, Nike is providing a smooth experience with AI and machine learning algorithms:
3D Foot Modeling: All you have to do is scan your feet, and the app immediately shows what suits you the best. This has significantly brought down the return rates and production wastage.
Nike by You: How cool is it to imagine a sneaker and customise it to exactly how you want it to look? As a user, it feels like nothing more than a colour-picking tool. But Nike learns from your preferences in the backend while personalising your recommendations.
In fact, I customised my sneakers with my Name and Neatprompts theme. Took me less than three minutes. It has some IKEA effect to it and builds brand loyalty.
Fun Fact: People who have customised their sneakers are 3x more likely to purchase again.
Like all model training, data takes center stage to make Nike’s AI journey a success.
The brand offers a high-value service, like 3D foot modelling or Nike by You for free. The results from the tech gain users’ trust to share more first-party data.
This results in optimising even more for their preferences from the data customers shared. Refinement on loop.
In Marketing
Nike uses Gen AI to move away from push marketing and create a conversation with its customers.
First-party data, browsing history, time spent on each product all contribute to segmenting what apparel you’re into and with what intent.
Result = Personal Messaging
In Design and Prototyping
In April 2024, Nike launched A.I.R. (Athlete Imagined Revolution) to co-create footwear with 13 elite athletes like Kylian Mbappé, Sam Kerr, etc.
The designers take athletes' inputs and create prototypes meeting their performance demands.
While this is experimental and not available for commercial purposes, the combination of consumer preferences, Gen AI, and 3D printing technology brought down prototyping from months to hours.
In Supply Chain
Nike used to react to the sales data. Based on what’s selling, the enterprise created products and sent across its warehouses.
With AI, Nike accurately predicts how the demand changes based on location, preferences, sports seasons, and data from all its apps (Nike, SNKRS, Nike Training Club, Nike Run Club).
So… How does Nike achieve these capabilities?
JPMorgan Chase built its AI systems in-house. PepsiCo partnered with companies like AWS and Salesforce.
While Nike also partnered with Cognizant, most of its AI capabilities are built on acquiring companies that suited their use cases.
Nike’s COO mentioned these acquisitions have saved 2-3 years of internal development time.
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What’s the next big challenge for Nike?
From an apparel brand perspective, Nike has Adidas, Puma, Under Armour, etc., as their competitors. But it’s a competition the enterprise has been dealing with for a while.
But from an AI standpoint, the real competition is with the wearable technology like Whoop, Oura, and, somewhat Apple Watch because of their continuous biometric data.
The data is large, accurate, and way superior compared to browsing and purchase history, activity and training data, etc.
Given Nike’s history of acquiring technologies and integrating them into their supply chain, we won’t be surprised if the brand acquires one of the wearable technologies.
🌟 Want to be featured in the next issue? Reach out with your best AI use case and we’ll spotlight it.
Sources:
Case studies from Digital Defynd, Klover, AIM Media House, Digital Silk, ERP Today, and Nike apps.
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