Nike vs. Adidas, Who Has The Better E-Business Strategy: Giving My Thoughts On The Ongoing Struggle For Market Supremacy

Nike Vs.
Adidas, who has the

better e-business strategy
Giving my thoughts on the ongoing struggle for market
supremacy
Hussein Akberali
[E-Business Strategy, Spring 2010]

[Dr. Firend Rasheed]
Friday, November 5, 2010
Nike Vs. Adidas, who has the better e-business i

strategy
Table of Contents
Nike Vs. Adidas, who has the better e-business strategy ......................................................1
Giving my thoughts on the ongoing struggle for market supremacy..............................1
Introduction.........................................................................................................................................................1
The Battleground................................................................................................................................................1
SWOT Analysis...................................................................................................................................................2
Financial Analysis..............................................................................................................................................2
E-Business Strategies and Effectiveness..........................................................................................................3
Nike Vs. Adidas, who has the better e-business ii

strategy
Hussein Akberali
Nike Vs. Adidas, who has the better e-business

strategy
Giving my thoughts on the ongoing struggle for market supremacy
Introduction
Over the years, there has been an ongoing battle between two of the
major market powerhouses in the sports footwear market, Nike
and Adidas, with not one company getting a stronghold over the
other. In this report, I will attempt to give my thoughts and
understanding about their strategies towards e-business and
distinguish who has the better E-Business model and strategy. Survival of the fittest!
The Battleground
The title for this section may sound somewhat dramatic, but the truth is since the start
of the Internet being used as for commerce that is what it is close to becoming for the
two superpowers in the footwear industry. Going back to around the 1920’s, we come
to see that this was the time Adi Dassler fashioned his first shoe in Germany and began
the start of a huge global brand that we see today called Adidas. However, in the early
1960’s Blue Ribbon Sports came into the market to challenge Adi Dasslers famous sports
brand, Adidas. It wasn’t till 1972 that Blue Ribbon Sports became Nike Inc.
Over time, the competition has changed and moved onto a broader spectrum from
traditional offline brick and mortar stores to a more innovative online click and mortar
store. Without losing any of their traditional values by keeping a physical presence,
they just added an online facility to expand their market and improve their reach as
well as reduce their operational costs. The online Adidas store is an easy to remember
store.adidas.com whereas Nike follows a similar easy to remember URL niketown.com.
Nike Vs. Adidas, who has the better e-business 1

strategy
It is important to analyze the two websites in two major areas; ease of use (user
friendliness) and appearance. In terms of appearance, Nike has managed to give their
website a more young look, with more brand relevance with the colors being more
appropriate to the brand. Whereas Adidas have gone for a more traditional page,
making it easier to view. In terms of user friendliness, Adidas edges ahead of Nike
because of their minimal flash content and browser friendliness across all platforms (IE,
Firefox, Safari, Chrome etc.….)
SWOT Analysis
From the SWOT analysis from the case we can see that both companies are very strong
and have many opportunities in the market with more women taking up sports making
it a viable market and with the expansion into global markets giving the companies a
chance to expand to new and large markets. However, they are under threat from the
companies that are global, as sometimes-small companies can cause huge organizations
stiff competition and also erode their global market share, just as Adidas did with Nike.
Furthermore, these companies are very reliant on the people they sponsor, meaning one
bad move could see them say goodbye to the certain market, meaning they must
‘babysit’ the athletes that they sponsor or back. For example, the recent Tiger Woods
scandal or the Wayne Rooney scandal, which put Nike in a difficult spot. All might
seem easy, but sometimes some things are easier said than done as we can see from the
above cases.
Financial Analysis
Without any doubt Nike is the market leader in not only the product aspect but also the
financial aspect of this industry. However, recently, Adidas has been slowly taking a
large part of market share from Nike. The financial comparisons indicate Nike having a
substantial financial advantage over Adidas. The operating margin and return on assets
is slightly lower for Adidas. This could be indicative of the market leader and market
follower relationship. Adidas needs to increase their operating margin and return on
assets to gain ground on Nike.

strategy
E-Business Strategies and Effectiveness
What can be noticed about Nike and Adidas? What makes them so similar yet so
different?
Nike has always been the market leader in the sports footwear and apparel industry.
Adidas have been improving from a relatively insignificant company in the market to
number two in the sports footwear and apparel industry. Over the years, Nike has been
increasing their stronghold over the online market, and Adidas have been attempting
and managed to close the gap to a certain degree on their rivals Nike.
Furthermore, both companies follow a Merchant E-Business model. Which involves

three pillars that are pure-play e-tailor, bricks and clicks, and their online store. The
main purposes of getting into relationships with pure-play e-tailors is to promote and
market products; focus on the content to create new exposure and; gather, gain and
transfer market knowledge to their business counterparts. Nike has landed a deal with
Fogdog Sports, which will sell their entire Nike product line on its web site. Adidas
signed an agreement with SportsLine.com and Sports.com. The benefits to Nike and
Adidas to make a partnership with these pure-play e-tailors are to provide worldwide
reach and coverage of their brand. Nike and Adidas will also operate their traditional
bricks and mortar establishments, while selling their specialty products on their e-
commerce web sites. This business model is referred to as "bricks and clicks." The
primary goals of operating a bricks and click site is to increase sales, reduce cost,
increase market reach, applying competitive pressure, promoting new products,
improving customer service, and progress in addressing user concerns. Additionally,
Nike and Adidas have included an affiliate link, which allows consumers in various
regions to locate affiliated store locations such as Foot Locker and Champs.
How effective is their E-Business Strategy

In 1999, when Nike realized the potential in the online market, they didn’t sit around
waiting for an invitation to join, they took the initiative by seizing the opportunity and
hence today being the market leaders. Over time, they have increased their portfolio
from normal shoe designs to a more advanced customized design. The three pillar

strategy
merchant model has proven to be effective, as today Nike have run away with the
market with their closest competition being Adidas.
Adidas noticed the need to be competitive in a very open market, they did not sit
around and watch Nike Run away, and they reacted to their strategy and today sit as
comfortable number two in the market. Over time, they have managed to close the gap
with their merchant model proving slightly more successful than Nike’s.
It is also important to mention that Adidas and Nike’s cost of selling over the Internet is
50% of the product, which is proven by a study in the article.

strategy

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Nike Vs.

Adidas, who has the

[E-Business Strategy, Spring 2010]

Nike Vs. Adidas, who has the better e-business i

E-Business Strategies and Effectiveness..........................................................................................................3

Nike Vs. Adidas, who has the better e-business ii

Nike Vs. Adidas, who has the better e-business

Nike Vs. Adidas, who has the better e-business 1

Nike Vs. Adidas, who has the better e-business 2

Furthermore, both companies follow a Merchant E-Business model. Which involves

How effective is their E-Business Strategy

Nike Vs. Adidas, who has the better e-business 3

Nike Vs. Adidas, who has the better e-business 4

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