Nike Acquires Celect – A Data science Firm to Predict Customer Demand

Highlights of the News:

• Nike has announced its acquisition of Celect― a data predictive analytics company, based in Boston.
• This latest purchase is a part of the string of acquisitions by Nike to establish its Direct-to-customer strategy.
• Celect will help predict the demand for Nike’s sneakers and apparel, which will help manage Nike’s inventory.

Nike has acquired a data predictive analytics firm, based in Boston named Celect. 

This latest acquisition fuels Nike’s Direct-to-customer strategy in a way that will prove immensely beneficial for the brand. While Nike displays a great show to its customers, Celect will take care of the inventory management behind the scenes. 

With the help of Celect, a data science and demand sensing expert, Nike is trying to shift its focus from the wholesalers to the direct line with customers. So far, the only indicators of demand for Nike came in from wholesalers like Foot Locker: Their bulk order “signaled demand”. 

The Chief Operating Officer of Nike, Eric Sprunk told in an interview that Nike desperately wants to break this co-dependent relation with the wholesale channels and connect directly with customers. 

By integrating Celect’s technology with Nike’s mobile apps and websites, the sports merchandise company will be able to know what styles of shoes and apparel that customers want, when they want them, and where they want them from. 

Talking about the need for real-time insight, Sprunk said, “Our goal is to serve consumers more personally at scale. We have to anticipate demand. We don’t have six months to do it. We have 30 minutes.”

Celect will help Nike analyze the demand and help reduce out-of-stock rates. This, in return, will bring hope for Nike that it would run into fewer situations where demand and supply are not on an equilibrium. 

This would also lead to less pressure on attaining the profit margins, as Nike will be able to control the inventory and manage and curb the overflow of goods in the warehouse, which customers are no more interested in buying.

Sprunk remarked that the company thought it more practical to acquire Celect rather than “spending two to three years” on trying to develop a similar platform in-house. He said “It’s really difficult work … predicting the retail shopping patterns and behavior. … This [acquisition] gets us much more accelerated.”

This is not the first time we are hearing of Nike’s acquisition of startups. The brand has been on an acquisition spree for quite some time. 

In 2016, Nike acquired a New York-based digital design studio Virgin MEGA (which was backed by Richard Branson’s Virgin Group) to assist in building the SNKRS app – a business platform for shoes launched a year before.

Later in March of 2018, Nike announced its acquisition of Zodiac― a consumer data analytics company, to speed up the process of its digital transformation, as they saw an unanticipated rise in their online sales. Then, in April this year, Nike acquired a computer-vision firm Invertex, which is based in Tel Aviv, Israel. 

The focus of Nike on understanding customer data is a clear indication of the prominent role of AI in the B2C segment. 

It is clear how AI amps up customer experience and proves itself as an eminent tool for organizations to predict customer behavior and better their services accordingly. There is no doubt that AI App Development is all set to take a wide range of B2C industries.