The return of one-to-one commerce

IN 1966 JEFF JOHNSON, Nike’s first-ever full-time employee, created the company’s first store in Santa Monica, California. As Phil Knight, Nike’s co-founder, recounts in his memoir, “Shoe Dog”, it became a “holy of holies” for runners. Mr Johnson was a bookworm, so the shop had shelves of books that he felt runners should read. Pinned to the walls were photos of runners and of Nike’s sneakers, then called Tigers. Mr Johnson kept card files of each customer, including their shoe sizes. He sent them Christmas cards and congratulatory notes if they won a big race. Many wrote back seeking Mr Johnson’s support and advice, which he gave, especially when it came to injuries.

When your correspondent told this story to Heidi O’Neill, now head of Nike’s consumer and marketplace division, she got “goosebumps”. It recalled a time, she said, when Mr Knight and his colleagues, struggling to get the business off the ground, put shoes on the feet of one runner at a time. For decades afterwards, she says, Nike was unable to replicate the intimacy of this one-to-one customer relationship, as it relied on rapid expansion of its wholesale business. Yet since 2017 the firm has been cutting the cord with many of its wholesalers, including Amazon, the world’s biggest online retailer, to focus on becoming a “direct-to-consumer” (DTC) company. DTC now accounts for 40% of Nike’s revenues. Its shoppers’ use of digital technology has enabled Nike to recreate that hallowed “one-to-one world”, says Ms O’Neill.