What: Since 2011, the sportswear giant has grown DTC sales from 16% to 35%, all while continuing to take share.

Why is it important: DTC business share will continue thriving in the coming years.

In 2011, DTC sales made up 16% of Nike brand revenues, or USD 2.9 billion of the total USD 18.1 billion brought in that year. By the end of Nike's fiscal 2020, which came 31 May, that number had grown to 35%, or USD 12.4 billion. Of course, Nike's revenues have also grown over that 10-year period, to USD 35.6 billion. By comparison, Adidas made USD 23.8 billion last year, and Under Armour made USD 4.5 billion.

It's been about having the right product, definitely. But it's also been about knowing how to make tough decisions. In the '90s, that meant opening outlet stores when trends shifted to khakis and away from sneakers, according to Matt Powell, senior industry adviser for sports with the NPD Group, and in the past few years, it's meant doubling and tripling down on shifting spend to its DTC channels.

Nike has a strong brand, so it's able to command a sizable business through its own channels. Another advantage to the method is that Nike has more control over how its brand is presented through DTC channels, something which analysts speculated was the reason it stepped away from Amazon.

A report from McKinsey and the World Federation Sporting Goods Industry estimated that the shift to DTC has been accelerated by two years because of the pandemic, and researchers recommend that in the medium- to long-term, brands that want to thrive will need to aim for a 20% DTC business, or higher. It's at that point that brands begin to see a virtuous cycle from DTC sales and higher margins, rather than the "vicious cycle" that comes with less scale of the channel.

How Nike is using DTC and data to expand its empire

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