Zuora Inc.

08/17/2019 | News release | Distributed by Public on 08/17/2019 20:02

The Sneaker Wars Come to the Subscription Economy

ByTien Tzuo August 17, 2019

Last week Nike launched the Nike Adventure Club, a sneaker subscription service for kids aged two through 10. Nike says it's using the service to test out the subscription market before expanding it to runners and other athletes who need to replace their shoes frequently.

Makes sense.

You might not know it unless your a hip young person (or an old person trying to stay hip!), but the sneaker wars are back in a big way.

Now, there's always been pretty fierce competition between the various brands, but Michael Jordan really changed the game in the 1980s. Air Jordans were a huge deal to kids my age. That's when shoes changed from being about brands and logos to being about aspirational figures, and even racial empowerment.

Today, all sorts of public figures have sneaker lines, not just athletes: Kanye West, DJ Khaled, Rihanna. Last year, Puma signed a deal with Jay Z, and nine months later, Adidas was partnering with Beyonce. Kanye West's Air Yeezy line, which started at Nike and is now at Adidas, is already ten years old. And Colin Kaepernick is obviously way more than just a former athlete.

Today, new digital marketplaces like Stadium Goods and StockX are going up against established brands like Foot Locker, and making a significant impact. This is an industry that's poised to hit $95 billion by 2025. The resale market alone, powered by services like GOAT (if you don't know about GOAT, consult your closest available millennial colleague) is expected to hit $6 Billion.

Which brings us to subscriptions, and Nike's announcement. What's going on here?

Well, it's not about the shoes. It's never been about the shoes. 'I've said many, many times that our consumer is driven by cool,' said Foot Locker CEO Dick Johnson on a call with investors last year. And he's absolutely right.

It's always been about the identity that the shoes lend to the wearer. Yeezys and Jordans each have their own set of aspirations, attitudes, and aesthetics.

All the best consumer brands recognize this fact - that they're not really selling products, they're selling identities. Which is why they're trying to move away from isolated transactions towards becoming a meaningful part of people's lives on an ongoing basis.

Subscriptions create a powerful membership effect that reinforces that sense of identity. All the big shoe brands are going to start rolling out their own subscription programs within the next couple of years.

It's all about recurring revenue (and recurring kicks).

For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here.

And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company's Future - and What to Do About It.