If These Sports Brands Were IT Companies, How Would They Score? | 2015 Youth Series

We tested six brands — Nike, Adidas, Under Armour, Anta, New Balance and Skechers — to see how "geeky" they really are.

Ask boys in their teens and twenties anywhere in the world what cool means, and you will probably hear much the same answer. It means knowing your electronics inside out, being the first to hear about the next great gadget, having an attitude... Either way, it is no longer the Brooklyn street-corner hip-hop look of 20-odd years ago. If you never saw that scene, picture it: young Black kids in oversized tank tops and baggy pants, a boom box by the basketball court blasting hard-hitting hip-hop. When Nike put all of that on a poster and stamped the swoosh on it, it created a very cool piece of marketing.

Today, trends seem to have vanished from sight and yet turn up everywhere. To catch young people's attention, you obviously have to get serious about the internet. Cool has always been the one thing that matters in sporting goods. Now Nike and its peers want to turn a little geeky too, even though they never had much to do with anything like IT.

So when we looked back on how the sports brands did this year, we chose an angle that seems to have nothing to do with traditional manufacturing: how they are doing on technology. We do not mean manufacturing technology, but the technology they use to reach consumers — both to talk to them and to sell to them. If we treated every sporting goods company as an IT company, which would come out on top?

After all, in today's market, a company without these has no future.

In February 2015, Nike began testing SNKRS, its first e-commerce app, in the US, handing out a limited number of invitations. This year its rivals Under Armour and Adidas together spent as much as US$800 million buying fitness apps. New Balance did not want to be left behind either: it calls its new Fresh Foam line the "big data integrated running shoe."

On Singles' Day 2015, Nike's Tmall flagship store beat last year's full-day sales in 8 minutes. Outdoor Voices, an "internet sports brand" that sells only online, quickly took off, and GQ named it New York's coolest activewear brand. The 3D-printing craze has reached sports too: Adidas, Nike and New Balance have all announced that they are developing 3D-printed sneakers. Few ordinary people will buy them, but they sound cool, don't they?

Perhaps this round of the "trend" race will in the end be won on technology.

Let's start with the easiest part to understand: online sales

In October 2015, Nike CEO Phil Knight announced the company's next five-year plan. Its most striking target: e-commerce revenue up 700% to US$7 billion by 2020. The latest quarterly results, released on December 23, also showed e-commerce revenue on Nike's own website up 50%. Anta's 2015 interim report likewise said that e-commerce is no longer a channel for clearing old stock — which is indeed how they had been using it. Closer to home, Nike, New Balance, Anta and Adidas all made this year's "100-million-yuan club" on Tmall on Singles' Day.

Here is a comparison chart showing how "deeply" each of them uses the internet for e-commerce.

At the same time, they still rely heavily on traditional channels. The number of retail stores shapes the figures in the financial statements; their quality shapes how consumers see the brand. With its plan to open 2,500 stores in China, Adidas last year narrowed the gap between its market share and Nike's in Greater China to 0.1%, while Nike keeps spending more on running its own stores, hoping to strengthen the brand experience offline.

Next, naturally, we compare their online marketing

What are the young people that sports brands love most doing these days? As early as 2011, the consulting firm Nielsen found that they spend 7 to 12 hours a day on social media. And the market research firm Smart Insights recently reported that mobile will account for 72.2% of advertising spending by 2019.

During the Brazil World Cup, Facebook and Twitter had 500 million and 200 million monthly active users respectively. Two Nike ads drew 300.8 million views online, while Adidas's match ball, the Brazuca, also won more than 100 million brand impressions thanks to a few disputed goals.

Video sites and social media matter that much. To keep it simple, we assume that the more a brand puts into them, the more attention it gets.

Social media——

Video sites——

A few interesting points:

• Nike has 5 times as many Instagram followers as Adidas.
• Anta, number three in the Chinese market, has fewer Weibo followers than Under Armour, which has only just opened a flagship store in China. This reflects Anta's focus on the low end of the market, where it spends little on online marketing (or, put another way, the spending has not paid off).
• Still on Instagram, Adidas Originals has 26% more followers than the main Adidas account.
• At last year's World Cup, one well-made animated Nike ad brought the Nike Football YouTube channel a million subscribers. This year, Adidas evened the score with its "Create your own game" football ad.

On video sites, sports brands compete on star players, creativity and big budgets. On open platforms like Instagram and Weibo, they compete on keeping up with trending topics and on eye-catching pictures and GIFs. WeChat, by contrast, is a closed social platform built on close ties, and the trend there is to compete on "providing services."

Beyond basic product information, links to the official site or online store, and routine brand updates, you also have to teach fans how to play basketball, tell them which running routes their city has, give them a way to sign up for brand events, let them look up orders and find stores, and even teach them how to choose shoes.

This also reveals how efficient each brand is. It again comes back to reliance on traditional channels: we would not go so far as to say that the more online a brand is, the safer it is, but since young consumers already live online, building a presence there will certainly make the future safer.

So let's also look at what consumers care about online

On the Baidu Index, which measures search volume, Nike, in first place, gets twice as many searches as Adidas, in second. Between 2013 and 2014, New Balance's search index at one point overtook Adidas's, but this year its popularity started to fall. The retro street-style wave seems to have faded, or moved on to other brands. People searching for New Balance are especially worried about whether the shoes are genuine, which suggests that many netizens buy NB through overseas personal shoppers.

90% of the consumers searching for UA are men; the most "gender-neutral" brand is Skechers

People care about different things depending on the brand. With Under Armour, for instance, they are curious about an unfamiliar brand and ask on Baidu Zhidao where to find its stores. Netizens interested in Anta care more about value for money, are less loyal to the brand, and often ask questions comparing the quality of several brands.

All right, now it is time to test their core skills as technology companies. Being good at the internet does not make you a technology company. At the very least, your official website and app should be decent.

Here are their official websites:

Nike

(Screenshot taken: 12.21)

On April 29, 2014, Nike.com went live, combining Nike's official China online store, NIKEiD and the Nike+ platform. A few days before we wrote this review, Nike redesigned the site again: the pages are now fully flat in design, and the menu structure has been adjusted slightly.

What most sets the site apart from the Tmall flagship store is its NIKEiD customization service. Some Nike Lab products that are hard to find in stores can also be bought there.

Adidas

(Screenshot taken: 11.29)

Covering all three of its brands, Adidas's site is the messiest of the lot. It often jumps to unexpected pages or to its overseas sites, and some banners link to dead pages. Another problem is incomplete translation: even the season's featured product line on the homepage is in English (you have to click through to see the Chinese version of the ad). Yet its product pages are too "localized," using Taobao-style phrases like "baby details" and "baby pictures" that make you think you have wandered onto Taobao.

They later fixed the homepage translation (screenshot taken: 12.21)

The range of goods is also patchy. Click "Find the sports bra for you" and only two products appear. Many limited releases and this year's bestsellers (such as the Stan Smith) cannot be found on the site at all.

Under Armour

(Screenshot taken: 11.29)

Not much to say. "Free shipping on all orders over 199 yuan" stands out. A full range of goods and very fast loading are its biggest strengths. Since you can order without registering, it is basically a site built for shopping.

New Balance

(Screenshot taken: 11.29)

The brand is in the middle of turning from a "fashion label into a sports brand." The banners show more ads for serious sport, and this year the site added a "running shoe advisor," which is quite useful — but once it gives you a result, there is oddly no link to buy, which is frustrating. There is also still some fashion-focused marketing, so the site feels a little schizophrenic.

Anta

(Screenshot taken: 11.29)

The page design is indistinguishable from JD.com's. There are so many categories that you feel you are wandering an eight-storey hypermarket. The range is wide and new products arrive quickly, but the discounts are smaller than on Tmall. And for an official site, the sales atmosphere dilutes the brand experience: endorsers such as the boxing champion Zou Shiming barely appear on the site.

Skechers

(Screenshot taken: 11.29)

Skechers has just redesigned its site; the company says the new version took more than a year to prepare. After the dreadful old site, the new one is a real improvement. It does not copy the US site but has its own design, clearly aimed at young people in China.

Bringing all its product lines together on one site was no small feat. Remember that on Tmall it runs four separate flagship stores: women's shoes, men's shoes, kids' shoes and sports.

Finally, it is time to test their real strength as technology companies.

The China Internet Network Information Center (CNNIC) reported that young people under 25 made up half of China's internet users last year, and that mobile phones accounted for 77.1% of all their searches. The digital research firm eMarketer forecasts that global mobile app downloads will pass 200 billion in 2017, 2.5 times the figure four years earlier.

Don't assume that putting a web page on a phone finishes the job. A usable app needs practical features and smooth interaction. Those features come down to three things: help with exercise and fitness, information, and shopping. But not every company can build an app, and even when money and technology are no obstacle, there is often no need to build one.

Li-Ning, for one, launched its own shopping app. Shopping on it is smooth and the range is complete, but downloads are low, and the app store reviews expose problems with customer service, crashes and more.

To compete with the shopping apps already on people's phones, a brand's app has to offer extra services far beyond theirs. Here fitness apps have the edge, and they also draw in sports brands' core customers:

There are two routes: buy one or build one. Buying a third-party fitness app gives a brand an advantage in data, and also gives its own smart devices and brand community more support; Under Armour does this best. An app built in-house matters more for marketing: it keeps existing fans loyal to the brand and collects usage data from core users. The Nike+ series is the classic example.

Then there is something that might have been a nice extra: sports wearables.

Only three companies seem to have tried: Nike, Adidas and Under Armour.

In July this year, the lawsuit against Nike and Apple over the FuelBand fitness band was finally settled, with Nike paying US$2.4 million. The band, launched in 2012, was taken to court for false advertising (it did not measure activity accurately). The case seemed aimed at the technology of the whole wearables industry, and it raised a question many people have long asked: are fitness bands actually any use?

At least the FuelBand's failure does not seem to have hurt Nike's reputation much. Nike even turned the settlement into a promotion: US$15 in cash or a US$25 gift card. Presumably many people chose the latter.

The FuelBand, now withdrawn from the market

You do still see news about Nike "smart hardware," such as a helmet that cools down quickly to help athletes keep a cool head when questioned at halftime, or sneakers with self-tying laces lifted from a science-fiction film of the last century. But these are just gimmicks to advertise the brand's "tech" side.

Shelving its smart hardware plans looks like a wise choice, and not only because cheaper rivals such as Jawbone and Misfit have appeared. The market itself is immature: in China, wearables sales have only just passed the million-unit mark. Looking back, the FuelBand did its job as a marketing tool brilliantly at first, but its technical flaws spoiled its reputation in the end. After all, an app can be updated to version 2.0, while improving hardware costs far more.

That leaves Adidas and Under Armour, but two questions remain: are they serious about it, and what good will it do if they succeed?

Adidas's smart hardware does at least meet the "cool" standard. Besides the miCoach FIT SMART wristband, now in its third version, the most eye-catching product is the "smart football," the Smart Ball. It has also developed some high-tech gear that only professional athletes would use, such as the Speed Cell, which sits inside a shoe to measure speed, and a heart rate monitor strap, but none of them is widely used.

From left to right: the Smart Ball, the professional heart rate monitor, the Speed Cell, and the standard heart rate monitor

The smart wristband now sells for US$150, but it cost US$399 at launch. Yes, enough to buy an Apple Watch.

Under Armour's idea of "smart wearables" is a little different. CEO Kevin Plank has said that the company's longer-term goal is smart clothing that automatically tracks body movement and vital signs: "If everyone believes the future of humanity will be decided by these hard pieces of glass and plastic (meaning wearable devices), then the world is over. In the end, this technology has to go into clothing."

RaesWear, which can hold all sorts of items

That sounds a bit like an empty promise. In 2011 the company launched a smart apparel program; all it produced was a heart rate strap, which the company dropped because it sold too poorly. What really deserves attention is how Under Armour develops and applies new clothing technology.

Every year UA holds its Future Show at its headquarters to pick clothing technology ideas worth investing in and using. The 2011 winner, a "one-handed zipper," is now used in UA sportswear. This sets UA apart from Nike, but it is also a harder road than "smart hardware."

The one-handed zipper, UA Magzip

In the end, these brands cannot and should not become IT companies. For now at least, "smart" features are only a nice extra. Some companies even less sensible than them have taken "wearable" to mean simply "something you wear": shoes that can play GIFs, now being crowdfunded, or clothes that measure your heartbeat... However technical these products become, as clothes or shoes they always seem to have forgotten what they are for. The first priority is how technology can better serve the "athlete." For now, sports brands should first make themselves look good and be cool; the rest can wait.

(Graphics: Zhu Kailin)