In 2019 the former CEO of eBay, John Donahoe–already a Nike board member–stepped up to become Nike’s CEO. He was already chairman of the board at PayPal and with his strong tech credentials it was clear that this foreshadowed a pivot to digital for Nike. When the transition was announced Donahoe said, “digital is fueling how we create the future of retail.” The timing of this shift toward digital was fortuitous with the pandemic’s onset in spring of 2020 upending factory production in Asia and snarling worldwide supply lines–as the pandemic wore on and instore retail evaporated overnight, digital sales were going to be Nike’s main driver of revenue. By the first full fiscal quarter of 2020 digital sales soared 82% and it was clear that Nike’s forecast of earning 30% of company sales digitally by 2025 was not going to be a challenge; they were already blowing past it.
With the confluence of the pandemic and Nike’s shift to focus on online sales, they took a big gamble in retail, deemphasizing large department store accounts and opening small neighborhood stores dubbed ‘Nike Live’ that serve primarily as pick-up destinations and hubs for online sales.
In keeping with this shift toward a strong digital presence, Nike also emphasized building online communities–particularly valuable and appealing during the isolating pandemic. They had long maintained a dominant cultural position as a sneaker brand, winning advertising awards with their daring campaigns and building a massive social presence on Instagram (300+ MM), Facebook (38MM), Twitter/X (9.8 MM), Tik Tok (5 MM) and YouTube (1.5 MM subs). But daring ad campaigns and social media posts will only take a brand so far following a one-to-many mass communication model. While the social internet of Web2 allows communication between brands and customers, this communication is primarily in the form of likes, reposts, comments, etc. To truly build a community in the newly emerging third generation of the internet centered around a participatory web, Nike needed to up its community engagement game.
While some brands tiptoeing into the participatory web create discord servers and other forums for community members to meet and engage with one another, Nike took both a classic and forward-looking path toward building a truly participatory community–emphasizing growing its membership base. This is a classic step as loyalty rewards and membership programs have existed for decades–often as a means to drive added sales. Nike is driving extra sales through their membership program, though following the model of Web 3, this membership community does not exist as a one-way street to learn about product offerings, discounts and earn coupons. Acting more like a VIP club with exclusive access to physical products and online content and community, Nike’s membership is most felt in the unique offerings provided for members within Nike’s apps. The loyalty club is not much in-and-of itself, but rather an entryway to Nike’s variety of branded apps: Nike Run Club App; Nike Training Club App; Nike (general) App and their SNKRS App.
Nike first dipped their toes in the waters of Roblox on March 21st, 2019 when they hosted a two-week pop-up game celebrating the launch of their AirMax 720 sneaker line. This proved a huge hit and many members of the Roblox community started creating their own, unsanctioned DIY Nike products when the activation was over. Nikeland was later foreshadowed in 2020 when a prominent YouTuber created a video denouncing Nike’s cease and desist order demanding users stop creating or wearing unsanctioned Nike branded swag.
On November 18th, 2021 Nikeland as we know it came to fruition. Not coincidentally, I’m sure, the following month Nike announced their acquisition of RTFKT–a brand described by its founders as ‘fully-formed in the Metaverse’ that uses game engines to create collectable digital sneaker NFTs linked to the blockchain and sold on NFT marketplaces to collectors like Elon Musk (who purportedly bought a pair for the equivalent of $90,000 in Ethereum). Nike CEO John Donahoe described the acquisition as “another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture.” Donahoe’s quote about Nike’s digital transformation and the company’s acquisition of a Metaverse sneaker brand operate in tandem with Nike’s investment in Nikeland. Not only will Nike be using their Metaverse-anchored Roblox game to market their products, build loyalty with young consumers and do product testing, they will also be injecting Metaverse inspired products into the company’s DNA in order to be a brand that sells digital as well as physical products. Gearing up for the launch of “Crypto Kicks” (a concept Nike patented in 2019) the company will be working in tandem with RTFKT to launch a Nike line of physical sneakers and their collectable NFT digital twins anchored to the blockchain so that the ‘phygital’ shoe’s provenance can be tracked along the resale market. With the sneaker collectable market currently valued at over $2B (projected to reach $30B by 2030) it’s almost surprising this has not happened yet.
Roblox’s Nikeland is an online Metaverse destination and meeting hub providing a strong sense of social community for young Nike consumers and building brand enthusiasm and loyalty by extending its inclusive message of athleticism for everyone and its longstanding mantra of “Just Do It.” With an emphasis on online sales, a bevy of niche community-building apps, customizable shoes and the acquisition of RFRKT it’s clear that Roblox is not meant to be the company’s only emerging tech experience for users. Nike intends to immerse their audiences from childhood through retirement in their ecosystem. Whether it be a ten year old taking avatar selfies with their skateboard in Nikeland, a young sneakerhead keeping tabs on the next shoe drop via Nike’s SNKR app, a professional designing their own customizable kicks via Nike’s 3D immersive design website, a crypto enthusiast snapping up a new RFRAKT Takashi Murakami collab digital sneaker NFT for $20,000, a busy parent using Nike’s running app to train for a half marathon or literally anyone else with an internet connection who may need athleisure wear or sneakers as they do yoga, play tennis, golf, walk around their neighborhood or literally do anything.