To: Mark Parker, CEO of Nike

Dear Mark,

When I was growing up in suburban New York, almost every kid in middle and elementary school wore Nikes. It wasn’t up for debate—of course you were going to buy a pair of Nikes, and after that another pair, and after that yet another pair.

But today, when I talk to and see people who are the same age now as I was then, it’s as if a switch flipped—many kids are wearing Adidas sneakers, if not more than Nikes.

Adidas has staked out an admirable position on the cutting edge of fashion and culture trends, with collaborations not only with athletes, but also musicians, fashion designers and other celebrities. These moves have restored a noteworthy amount of clout that the brand lacked for a long time.

However, while public figures have and probably will always drive sales, there is a more lucrative and meaningful opening for Nike that will continue to differentiate the brand from its competitors, and also directly aligns with your 2020 Sustainable Innovation plans.

Here’s one idea about how to win over younger shoppers.

Launch and operate an in-house secondary market for Nike products.

There is increasing activity happening around brands and their secondary markets. Companies like Supreme have had thriving ones for a long time, platforms like The RealReal and Grailed are diving into specific markets and legacy players like eBay continue to forge ahead.

What’s missing, however, is a powerful secondary market that a sneaker brand owns and operates, which can have important effects on Nike’s organization, brand and bottom line:

  • It allows you to capture significant additional revenue from your products. Nike, like most companies, makes its money on the initial sale of its products, but after this first sale, you barely capture any revenue. A secondary market creates true lifetime value and brings in significant revenue beyond the first sale.  
  • It strongly encourages Nike to manufacture the highest quality products that last the longest time. The Roshe Runs I used to buy fell apart after a few months of every-day walking—it’s clear that Nike has work to do when it comes to making long-lasting products. But a secondary market acts as a powerful incentive, as well-made products will continue generating revenue while lower-quality products will not.
  • It allows you to stake out a clear position as a sustainable leader and harmonize this feature with the Nike brand, as these qualities become increasingly important to younger shoppers. Most of the admirable innovations outlined in your 2020 report still revolve around the idea of selling a product once and making money once. It’s great that you recycle materials both for future products and for other uses such as tracks and playgrounds, but you can go further and build a truly circular business model. This requires challenging the inherent implication that you can only make money off of the first sale.

Consumption is obviously an essential part of any physical goods company. But as our world becomes warmer and more complex, companies with significant staying power—but also risk—need to take the lead when it comes to driving sustainability in an economically-rational way.

This is just one idea among many others that could further propel Nike into uncharted territory as a sustainable leader. Let me know if you’d like to hear more.

Richie Siegel
Founder and CEO
Loose Threads