I was having a dialogue on a social platform about the information from today’s Investor’s Day. That dialogue dealt with the other side of the Nike turnaround taking place via the Consumer Direct Offense. I was introduced to a new site today that gives the employees who were laid off by Nike a voice (https://www.thelayoff.com/nike). The site has both the good and the bad of Nike’s workforce reduction; which was discussed in a veiled way when Andy Campion discussed how Nike tends to see incredible growth after “dynamic” times. The insight that can be gained from reading the comments on the site give a completely different narrative about how the company has adapted to the difficult retail environment that forced the development of DTC.
The dialogue I was having was good, but it’s not the point of this post.
Hamartia in Greek tragedies is a character’s fatal flaw. Oedipus’ was pride/hubris. Nike introduced a few strategies today. One of those was their interest in acquiring technologies that will better allow the company to interact with the consumer. Nike is betting big on digital engagement and NDC, SNKRS and their multiple e-commerce channels. When I was writing to my peer he brought up my point I made about Amazon; it reminded me of an article I wrote earlier this year:
adidas, Nike and Under Armour Should Be Worried | The Sportswear Disruption No One Is Discussing
I have a tendency to look way ahead. It’s a trait that helped me to survive as a grey market retail outlet for so long. When I wrote the article above I recall sharing it with NPD Group analyst Matt Powell and he basically disregarded the writing stating that Nike’s work with Amazon would be insignificant (or something like that). His reasoning was that Nike was already the number one brand in Footwear on Amazon. I attempted to explain that this was a BIG problem for Nike because Amazon has the data and this will allow them to disrupt Nike. I’ve basically stopped attempting to share anything with Powell as he told my network site peer that his data at NPD was not questionable. I lost all respect at that point (Red herring, sorry).
Nike’s hamartia could be the brand registry on Amazon but it isn’t. It is a very important reference point for any investor to bring up. The brand registry on Amazon can be utilized to glean information directly from Nike. They already have 3rd party reseller information, but this is not the “fatal flaw”.
As I mentioned in the article above, Nike, like Target, hosts their website on Amazon Web Services. Nike created their own Trojan Horse (I know I’m mixing allusions, just go with it) by establishing the bulk of their growth on a 3rd party platform. When AWS had an outage, Nike went down. If AWS has any issues Nike doesn’t utilize its own servers for web hosting. 80% of North America will run through Nike’s online business on a company’s platform. A company that is in the process of creating its own performance athletic private label…
If you watch the television show Silicon Valley in the last season Richard came up with a technology that allowed data to be stored on a network of cell phones. This would diminish the risk associated with servers crashing. Since the phones are linked to the cloud the data will always be accessible. Now, on the show they had to hide the data and piggyback on a network… but you get my point, I think.
Nike placed the entire bulk of its growth on the back of a company that it doesn’t control. A 32 Billion dollar a year company has not invested in its own server farm but wants to become a digital, ecommerce driven company and they are banking their shareholders future on this.
Nike’s fatal flaw is a self created Trojan Horse and I am willing to bet no one has considered this as the stock price continues to climb.
What do you think about this? Am I looking too far ahead? Is this conspiracy theory talk? Leave a comment below.
