How Air Jordans Became The Best Shoes Ever!

Modern sneaker culture was built on the limited run of celebrities. When Michael Jordan first signed with Nike in 1984, star-endorsed Air Jordans were expected to generate $4 million in annual sales – in the first 9 months they made $100 million.

Nike President and Co-Founder Phil Knight said it was “the perfect combination of quality product, marketing and athlete support.”

Backed by a rising all-star and a rock-solid marketing strategy, Nike’s Air Jordans quickly became the most coveted shoe in the world.

Nike releases boots fairly regularly these days – their August 2019 lineup is already stacked with 10 new sneakers, but none have the impact of a Nike-Jordan combo. After more than 20 years, Air Jordans are still the greatest sneakers of all time. Let’s examine why.

celebrity influence

Nike’s public relations department hasn’t limited its celebrity lineup to basketball stars—or even athletics. In 2017, famed designer Virgil Abloh was spotted wearing his special edition Air Jordan 1s called Off-White at the Met Gala. Nike sees these shoes resell for over $2,500 a pair.

Likewise, Travis Scott collaborated with Nike to create a special edition of the Jordan 1, which became the most coveted sneaker of 2019. Other Nike sponsors include DJ Khaled and Don C, both with shoes that are resold at astronomical prices. But how does aftermarket value help the Nike brand? Let’s talk about the art of the limited release.

Limited edition

It’s obvious that resellers benefit from limited releases, which is why you’ll find people camping out in stores waiting to snag as many pairs as possible. So are sneakers a good investment for resellers and collectors? Does all the hype really make sense? What isn’t so obvious, however, is Nike’s hand in the pot – unremarkable, as intended.

The reality is that limited supply releases work like free marketing for The Swoosh. By skillfully balancing need fulfillment and deadstock, Nike is able to maintain an air of exclusivity while limiting resale. Despite the significant multiplier achieved by certain limited releases by celebrities, most are coordinated with such precision that only a fraction of the release reaches the resale market – around 4% (StockX).

Drops can sell out instantly – Nike and Jordan remain at the forefront of the sneakerhead conversation – but without being so constrained that resellers can charge huge premiums where Nike could have made retail sales.

All of this sleight of hand is backed by exceptional supply chain precision.

The balancing act requires Nike to accurately predict future demand for new products that are likely to be unique. Hitting the right production number is crucial to the limited release strategy. Nike typically follows their initial release with a later replenishment, or “re-release,” to capitalize on increased demand after the sale.

The hype also contributes to increased sales for later releases in the same line, as in the case of 2013’s What The LeBron X and 2014’s What The LeBron XI, where a series of unrequited demand helped make a similar shoe the same Price to sell, but much larger quantities the following year.

Requirements design with SCM precision

Demand shaping is primarily a promotion driven by marketing teams. The premise is to create a lot of hype about a product and then just barely cover the demand. This improves the overall brand equity.

While this goes against the usual supply chain management (SCM) focus on perfect order fulfillment, that doesn’t mean SCM doesn’t play a role.

Proper demand forecasting is still very important and helps Nike manipulate supply and demand to rise to the top of the sneaker game year after year.

Air Jordans article and permission to publish here provided by Leydon Prentice at Vanguard Software. Originally published on Supply Chain Game Changer on August 7th, 2019.

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