Under Armour's New Shopping App -- Why This Is Important

By Markets Fool.com


Image source: Under Armour.

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UA Shop, Under Armour's (NYSE: UA)(NYSE: UA-C) newest addition to its suite of apps, was released on Tuesday. The shopping app has been "built on the UnderArmourConnected Fitness platform," meaning that it connects to Under Armour's various other activity-tracking apps to pull data from the more than 170 million current users to create a deeply personalized shopping experience.

Under Armour has made a significant investment in its digital strategy in recent years, both in app acquisitions and building out its own digital infrastructure. This new app not only provides users with a great tool for personalized gear recommendations, but also signals how Under Armour's digital investment will make its way to the bottom line.

Image source: Under Armour.

First look at UA Shop

UA Shop allows members of UA Record, MapMyRun, and MyFitnessPal to sync their existing accounts in one seamless Under Armour account, the first time users can use one account for all Under Armour apps. From there, UA Shop begins making recommendations based on the user's demographics, purchase history, and most importantly, recent activity data pulled from the other fitness apps. The app includes Apple Pay, customer reviews, and apparel tag scanners for use in stores.

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"Launching a shopping app in 2016 is hardly brand-new news," said Jason LaRose, Under Armour senior vice president of revenue, in an interview, "but launching a shopping app that has personalization powered by all of the data that we have from Connected Fitness, from 170 million users with all of their workout information from a preference standpoint, gives us a really awesome picture."

LaRose said that this is both on a broad level, meaning that they know what the best athletes in Connected Fitness community are doing and wearing, and also on a specific level, such as a user's local weather, personal interests, and past activities.

When asked if this app will contain promotional or loyalty offers and programs, LaRose said:

We intend always to treat our best customers best. Over time, there are going to be things that people do that we are proud of them for -- people that will run their first 5k, or that meet a weight loss goal, or run their personal best in a marathon -- and the opportunity for us to blend commerce, product, recommendation, content, athlete tips, plus workout information, fuel information, and recovery or sleep, all of that stuff together, in a way that feels not very transactional and actually quite helpful, that's the opportunity in front of us.

LaRose said that in the future this could even mean awards for UA Record fitness challenges or product testing opportunities for high-performing athletes on the platform.

Under Armour narrowly beatNike to market after Nike announced in March that its own new shopping app would launch sometime in June. Nike's app also seeks to be a more personalized shopping portal that connects users of its other apps into one streamlined experience. However, where Under Armour seems to have the advantage is in its data strategy as it boasts is the world's largest digital fitness community.

Under Armour's data plan

Under Armour spent over $700 million since 2013 to acquire fitness apps, and has also built one of its own. We are now seeing that this investment has been part of a plan to make data a key component in Under Armour's growth strategy.

Under Armour seeks to become a "math house" in which data is used to drive decision making and create more engaging experiences. LaRose repeated what CEO Kevin Plank said in the most recent earnings call, that "data is the new oil," meaning that you have an engine with the ability to provide great recommendations and experiences, but data is the oil that powers that engine to work. "In a world where we have all of the data," LaRose said, "the possibilities for math house are endless because a lot of people can build the engine, but very few people own the fuel."

This also seems to be where Under Armour sees its recently launched wearables coming into play. While the market for wearable trackers is massive on its own, and a potentially lucrative segment for Under Armour, it's also the data from those wearables that is important. Wearables can provide more consistent and accurate data than when users are required to manually record activity, and that extra data is highly valuable.

Why this matters

Under Armour's investment in digital in recent years has not been cheap, and even though the company's connected fitness segment grew revenue 119% in the most recent quarter year over year, it still made up less than 2% of Under Armour's total revenue. However, the UA Shop app provides insight into how Under Armour is planning to start making its investment in connected fitness pay off. It also helps Under Armour sell more gear direct to consumers, as opposed to through third-party retailers, which should help boost profit margin.

LaRose is right that launching a shopping app in 2016 is hardly groundbreaking, but this new app is a great next step for Under Armour and its data-driven strategy. This move shows how Under Armour can get more return on its investment in digital -- just one more reason why Under Armour continues to look like a compelling long-term investment.

The article Under Armour's New Shopping App -- Why This Is Important originally appeared on Fool.com.

Bradley Seth McNew owns shares of Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool owns shares of and recommends Nike and Under Armour (A Shares). The Motley Fool owns shares of Under Armour (C Shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.