A Tale of 2 Footwear Subscriptions – Learnings
Last week Outside In covered POCs on Shopper Utility by Sports Brands here at:
In that article (and during my study), we came across 2 illustrations of ‘Subscription Services’ which were ideated upon as a promising use case in providing enhanced Shopper ‘Utility’. One of them worked very well and continues to grow, whereas one of them was discontinued following an ‘experiment phase’
In this edition of Outside In, we dig deeper into both of these illustrations to try and get learnings about what works and what…well…needs a rethink and a refresh. Subscription Services driven by Personalization has been one of my favorite propositions to push with Retail & Consumer companies – obviously only in relevant categories. So, this topic here really got my interest. I am hoping it will be of interest to you as well. Grab your coffee…
A) One of the POCs for Shopper Utility we covered was on Nike Adventure Club –
In 2019, Shoewear brand Nike created a subscription service for children’s shoes, making it easy for parents to get new shoes as their children grow out of them
Members could pay a flat monthly fee and can choose to receive new shoes on a monthly, bimonthly or quarterly basis, with the option to skip months or swap sneakers if they don’t fit or if their child doesn’t like them
The online site made it easy for kids to select the style of shoe they want, from performance shoes for sporting activities to casual lifestyle styles for everyday wear
In order to make the unboxing experience more fun, Nike customized each box with the child’s name and includes stickers and booklets with ideas for outdoor activities
Program Status: Discontinued – As things stands today, this pioneering (can we say?) service stands discontinued – as posted on their official website below
Analysis
1) Consumer Insights – Auto Refresh of Shoe/Fashion Items for Growing Kids
The service was based on a strong insight: kids grow out of their clothes before you’ve managed to film an unboxing of their latest shipment. And purchasing clothes, trying them on etc., can be a time-consuming task. Shoes, on the other hand, were ruined even before the size became an issue; and in some circles, young kids’ attention to shoes is really high
So the need for convenient, affordable and on-trend service was clear and exciting for parents: They didn’t have to remember to examine the wear and tear of their kids’ shoes, nor did they have to remember their sizes or throw out the shoes into the landfill. For a monthly fee, Nike was going to take care of those feet & the environment
Steady Revenue Stream: For Nike, these subscriptions offered a lot of value. Instead of competing for the consumers’ attention with each and every purchase opportunity, the consumer is locked in. Revenue stream can be more predictable and data for future development and targeted sales – is just as valuable
2) What Parents (and the Kids) Loved
Seasonal fresh style
One simple monthly fee – no hidden charges
Always free shipping, returns and exchanges
Option to change or cancel the plan at any time
Going green with the shoe recycling program
3) What Were Difficulties – Execution Challenges Derail Plans
For their loyalty, consumers expect to be granted a better price, rewards, and/or VIP only offers. Other fashion subscription services – Stitch Fix being the leader of the pack – styling and personalization are offered. But this is where Nike failed to deliver
Low Value for Money: With multiple websites to choose from, and “24 hour only” huge sales (returning every 48 hours), subscribers had to work hard to buy a pair of Nike shoes for $60, which was the price they would pay with a $20 a month subscription for 4 pairs a year. They didn’t see any “VIP” and “special club drops” offered. Thereby, most parents let go off the chance of having their kids sport the latest fashion, when they can save hundreds of dollars instead. And those who were not price-sensitive might opt for less mainstream brands
Low Value of Having Shoes Sent Over: Nike targeted people who were e-commerce savvy already. Not only were these clients brave enough to buy something as taunting as kids’ shoes – but they were also adopters of fashion subscription services. These people didn’t waste time going to stores. For them, shopping, returning and replacing was as easy as choosing a show on Netflix. So value of having shoes sent over was considered ‘table stakes’ and not exemplary
Consumer Targeting Mismatch: The website offered shoes in sizes fitting older kids and even teens as well as toddlers, but the marketing communication concentrated on 3 to 10 years old. Then, the added value was the cute activity packets and content offered to subscribers – which wasn’t necessarily attractive or alluring to kids in this demographic (and did not provide an upside to compensate for the price and loyalty). And, they did very little to market the club
Food for Thought – Market to Adults
Nike’s opportunity in the subscription business can be enormous – but should it consider reaching out to adults, rather than to children? Over 110 million people in the US walk and power-walk for fitness and another 60 million run/jog. For adult athletes – whether professional or not – changing shoes at the right time is crucial
With so many connected devices and wearables, from watches and bands through steps and miles tracking apps, Nike can learn everything about the length of stride, number of miles accumulated, and timing of change, to offer personalized fitness advice and products to the amateur athlete
This type of service is on-trend with the demand for mainstream “concierge” services (everyone wants to be treated like pros), and the awareness for fitness and bone/joint health. People would be probably more open to splurging on sneakers when their mobility and performance depend on it, rather than for their kids to be able to show off their kicks at the playground
B) And there was another compelling POC centered around Shopper Utility in the form of OneASICS Runkeeper Ecosystem –
The Runkeeper app is designed to keep a customer’s runs interesting and motivation high via a series of audio cues and participation in virtual challenges, running groups and more
It is free for everyone, with more services on Offer in the upgraded option like ASICS-developed Training Plans for getting race-ready
Program Status: Running Successfully All Over –
Runkeeper has over 50 million users in 180 countries that access the app in 12 languages (English, Spanish, French, Italian, German, Brazilian Portuguese, Japanese, Swedish, Dutch, Russian, Korean, and Simplified Chinese). In 2016, after the acquisition of Runkeeper by ASICS, it has evolved the team into ASICS Digital. Based in Boston, eponymous home to the iconic marathon, ASICS Digital is the hub of the company’s digital transformation. ASICS Digital powers the company’s “entire digital consumer world” comprising four brands: ASICS.com; customer membership program OneASICS; virtual workout app ASICS Studio, and the Runkeeper app
Analysis
1) Consumer Insights – Fitness as a Service & Relying on Audio
Pioneered the ‘Fitness as a Service’ Proposition – Health and Fitness apps usage has grown by more than 330% over the last many years, according to research by Flurry Analytics
It found that 96% of people stayed loyal to their apps and more than 75% of active users opened their digital helper at least two times a week
Asics launched a new subscription-based fitness app, featuring a variety of workouts (outdoor running, indoor cycling, elliptical, strength training and treadmill fusion) created by professional personal trainers
There were multiple video-based training apps out there. But it was actually a cumbersome experience because one had to put the phone at angles one could see the screen with, toggle between activities and observation, etc. Based on this insight, it decided to create an audio-first workout tool. By relying mainly on audio, it frees the user from having to watch the screen to train
2) What Runners Loved
It is easy-to-use has audio cues to motivate beginners
It also has training programs if one needs a goal to work towards when one is starting out – there are lots of options to choose from, including 5K, 10K and even a marathon
It also has a number of advanced features for seasoned runners, as well as a premium membership option to unlock even more stats and running plans
Users could access special gear, services, events and expertise such as free shipping, access to Runkeeper Go subscriptions and free 90-day shoe returns even after they have run in them
3) What Worked for Them
It makes great use of your smartphone’s sensors and GPS, which means the data it collects is accurate and shows you how you’re doing in real-time
There’s also the option to connect with friends and share activities and goals, as well as join wider community challenges
Focused Localization Program Managers take ownership of different parts of the business and evolve the program in two specific focus areas: fitness app and global content
Examples of the services they use are localized visual asset production, 3rd party reviews, local copy writing, and local content creation. The highest priorities for their language technology partners were flexibility and automation capabilities. They need to be able to connect to many different content repositories
Single View of a Customer: Their goal was to build a single view of the customer, to build a clearer picture of their individual fitness goals and journeys, and see what works for them and what doesn’t. And a particular focus is using analytics to personalize customer interactions, so that they’re not treating a long-term customer like this is their first interaction with Asics
Food for Thought
According to Jason Jacobs, founder and chief executive of Runkeeper: It seems clear that the fitness brands of the future will not just make physical products, but will be embedded in the consumer journey in ways that will help keep people motivated and maximize their enjoyment of sport
For Example: Take the integrated journey for Shoe Replacement –
The ‘Shoe Tracking’ feature in Runkeeper – It enables users to monitor how many miles or kilometers they’ve while wearing a particular pair of shoes, so that they have some idea of when they should replace them (General advice points to between 300 and 500 miles.)
While runners will be notified within the app that a worn-out pair of running shoes is nearing retirement, an integration with (Salesforce) Marketing Cloud could hypothetically enable Asics to back up that notification with an email that includes a money-off voucher for the user’s favourite model of shoe
In Conclusion
Sportswear companies that have traditionally sold physical products have to look at building ongoing, even daily, relationships with customers, by connecting with them every time they exercise, not just when they purchase a pair of running shoes. Fashion subscriptions can provide real value for consumers and for competitors, but it is indeed a tricky business. Take Stitch Fix the company reported revenues of $1.77 billion for the year ending August 2020, with 3.5 million active members, compared to $1.58 billion for 2019 and 3.2 million active members – demonstrating that consumers are willing to pay for styling and direct-to-consumer fashion. But Stitch Fix’s bottom line was a loss of $ (67.1) million, compared to net income of $ +36.9 million for the fiscal year ended August 3, 2019, due to growing operating expenses
There needs to be meaningful sales throughput by subscription programs that maximize consumer purchases of their Physical Products. Organizations need them to boost overall revenues, either through helping them to shift more exercise gear, or through the sale of app subscriptions – but preferably, through both
References and Sources:
1. Nike Adventure Club: https://www.nikeadventureclub.com/
2. Nike Adventure Club – Beginning or End of Subscription Services: https://researchci.com/nike-adventure-club-the-end-or-just-the-beginning-of-footwear-subscriptions/
3. ASICS Runkeeper Services: https://www.asics.com/gb/en-gb/mk/runkeeper
4. ASICS Acquires Runkeeper: https://www.sporttechie.com/asics-acquired-runkeeper-to-keep-up-with-the-data-gathering-of-adidas-and-under-armour
5. Tech Radar on Runkeeper: https://www.techradar.com/in/how-to/runkeeper
6. Fitness as a Service: https://www.interlaced.co/article/asics-enters-the-fitness-as-a-service-space-with-the-launch-of-asics-studio
7. ASICS Runkeeper Localization: https://slator.com/how-asics-runs-localization-insights-on-vendors-processes-technologies/
8. ASICS Consumer Spending and Shoe Replacement: https://diginomica.com/asics-goes-hot-pursuit-customer-spending-snowflake