Nike outperforms Finish Line and Foot Locker on the web

April 7, 2016 11:53 AM

Footwear giant Nike Inc. has stepped up investments in e-commerce significantly in the last year or so. That increased spending and focus on the web is paying off, a new report suggests, as Nike far surpasses its competitors in e-commerce execution.

The report from investment firm Credit Suisse analyzed the e-commerce capabilities of Nike and two of its biggest competitors—Foot Locker Inc. and Finish Line Inc.—and found, for one, that Nike processes and delivers online orders more quickly than the other two merchants. Processing times for orders on averaged 28 hours, Credit Suisse finds, compared with Foot Locker, whose online orders take 131 hours to process, and Finish Line, which takes 146 hours.

“Both Finish Line and Foot Locker on average took longer than five days to process our orders,” the report reads. “We note that both companies have been investing in enhancing their supply chain capabilities, with Finish Line rolling out a new warehouse management system in September 2015 and Foot Locker planning a new merchandise allocation system pilot and rollout. There clearly remains significant work needed for both retailers to catch up with Nike's processing capabilities.”

Additionally, orders placed on arrived in 5.6 days versus 7.9 days for Finish Line and 9.0 days for Foot Locker. Delivery times are an important metric on which consumers make purchasing decisions, Credit Suisse says, as merchants like Inc. set a high bar for fast delivery.

In its study, the investment firm found that Nike kept consumers informed throughout each step of the delivery process, while communication from Foot Locker and Finish Line was inconsistent. Nike, for example, sent emails promptly to confirm orders, inform consumers of delays or new shipment windows, confirm returns and confirm processed refunds. Foot Locker, on the other hand, did not inform researchers when one order was delayed by two weeks, and Finish Line failed to send updates when orders were delivered, returns were received and when refunds were processed.

Nike also includes a free shipping return label with every order, which makes returns easiest of the three merchants. Foot Locker includes a SmartLabel with its orders and deducts a $7 processing fee from the customer’s refund. Finish Line offers free shipping but requires a call to customer service to obtain a return authorization and shipping label.

Finish Line and Foot Locker did not immediately respond to requests for comment.

Nike’s new mobile app, set to launch in June and which combines the capabilities of several of its existing apps, will give Nike a further advantage, Credit Suisse says. “With eight applications currently, the investment behind a more streamlined platform for fitness tracking, personalized training, and exclusive new products could have the power to enhance Nike’s online penetration even further,” the report says. “Nike’s investment behind Nike+ is likely to support and accelerate their push to bring more sales in-house and will better allow Nike to control messaging and branding behind upcoming product releases.”

Beyond its mobile app coming in June, Nike has big plans for its web channel. It’s adapting its stores to better link up with online inventory, and it’s pushing to reach web consumers in more international markets. Nike, which sold about $1 billion worth of goods on the web in 2015, says it will grow e-commerce to $7 billion by 2020. While the web represents 2% of its total sales of $30.6 billion, Nike projects that portion to hit about 14% in the next five years.

Nike is ranked No. 61 in the Internet Retailer 2015 Top 500 Guide. Foot Locker is No. 54, and Finish Line is No. 144. With more than 30% growth online last year, Nike will move up in the rankings and surpass Foot Locker in the 2016 edition of the Top 500 Guide, which is due out next week.




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