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How Nike's Express Lane Is Delivering for Japan

By Brian Withers - Oct 15, 2017 at 7:03AM

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Improved fulfillment experiences in Japan highlight a bigger vision of the company's quest for growth.

Growth has been slowing for Nike (NKE -1.02%) with the most recent quarter coming in flat on the top line. The company has bet on a consumer direct offense strategy, powered by its "express lane", to provide a better overall customer experience and to boost results.

A recent upgrade to the delivery network in Japan is just one example of what the company is doing to bring this vision to life.

Japan's express lane ... delivers

Japan is an important market for Nike. The country produced $1.0 billion of revenue for fiscal 2017, with 7% year-over-year growth (excluding currency). Tokyo also happens to be one of 12 cities targeted by consumer direct offense, and the company considers Japan key to its strategic plans through 2020.

The debut of consumer direct offense in June has since enabled "a faster pipeline, delivering personally, at scale." With the help of the express lane, product moves through the supply chain faster. For Japanese consumers, Nike recently announced that it will make "nearly all" products available for delivery to konbini, or convenience stores, for customer pickup. These deliveries happen in about two days -- free for Nike+ members. Orders arrive at konbini close to where customers live or work, in packages made easy for pick up and returns.

So how does this express lane work?

First, customers order from the country-specific website that is linked to the inventory levels in local warehouses for fast shipping. From there, the network of over 12,000 konbini are essentially integrated with the supply chain to allow customers dictate where they want their package delivered. Similar to other efforts in London and Shanghai, an empowered local team in Japan has created a delivery option that will provide a great experience for Nike customers.

This is just the type of service that shows how the company's express lane can help deliver products as quickly as possible, further supporting Nike's direct-to-consumer channel. 

Woman in Japan on a busy sidewalk at night holding a bright orange Nike package.

Image Source: Nike.

Being big but focusing small

Nike is the leading name in sports apparel with a worldwide presence, but it's focusing its efforts on 12 cities in 10 regions that will make up 80% of the company's growth through 2020. CEO Mark Parker stated in the company's fourth quarter 2017 earnings call that the company will "execute with precision and focus" when referring to consumer direct offense. This enables the global giant to leverage local teams to test and learn, then sharing best practices to provide an optimized brand experience for customers.

During the call, Parker further elaborated on how important the customer experience is for Nike:

The key is for our experiences to feel special, and that could mean a personal one-to-one interaction, reserving products based on a consumer's shopping history, or as simple as delivering product within hours. Our vision is for every consumer who engages with the Nike brand to enjoy an elevated, consistent experience regardless of channel.

Nike has consolidated Japan with its emerging markets to form the APLA (Asia-Pacific Latin-America) region, so it'll be difficult to single out the benefits of this specific initiative. But investors should see the company implement small changes like this in markets across the globe in order for them to fuel future growth.

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