Adidas steps up digital transformation aiming €4 bn from e-commerce

Adidas in its annual report for 2018 said the company’s e-commerce sales grew 36 percent last year, thanks to its focus on digital transformation. E-commerce is the fastest growing sales channel for Adidas.
Adidas efforts in digital transformationAdidas is connected with more than 500 million users through different platforms and social media channels. Adidas app is available in 25 countries with 7 million downloads. Adidas has made investment in CRM platform to optimize the online sales.

The target from e-commerce sales is €4 billion in 2020. At present, Adidas spent almost 50 percent of the total brand marketing activities on partnership assets. Adidas will enhance its spending on digital and other areas and reduce spending on partnership assets to 45 percent by 2020.

Reebok, a part of Adidas, enhanced website speed and usability of its consumer-facing digital eco-system. Rebook will re-design the site in 2019 and a launch a new membership program to optimize the consumer experience.

Adidas has also made investment in automation technologies such as auto cutting, computer-based stitching, robotic adhesive spray system, and auto packing solutions as part of the aim to improve efficiency in production.

Adidas said its general and administration expense increased slightly to €1.576 billion in 2018 from €1.568 billion in 2017 thanks to its main focus on digital transformation and IT investments.

Germany-based sporting goods company said its distribution and selling expenses increased 3 percent to €4.450 billion in 2018 from €4.307 billion in 2017 mainly due to investment in e-commerce business and logistics.

Adidas has set up Speedfactory that enables the company to place the digitally-powered shoe factory anywhere in the world. Adidas aims to speed up time-to-market with the setting up of the Speedfactory. Adidas has two Speedfactories – one in Ansbach in Germany and the other in Atlanta in the US.

Adidas is planning capital expenditure of €900 million in 2019 vs €794 million in 2018 in a bid to enhance investment in e-commerce and physical retail, IT and logistics infrastructure across the world.

Adidas has reported 6 percent increase in revenues in the first quarter of 2019 to €5.883 billion.

Adidas achieved double-digit growth in Greater China in e-commerce. “We continue to see exceptional growth in our e-commerce driving consumer engagement up 40 percent, driven by double-digit growth across all regions. We’re driving traffic and engagement rates through exclusive releases such as the Alphaedge 4D and other releases,” Adidas said.

Instagram check out produced 40 percent growth. “We are committed to hit around the €4 billion mark from e-commerce sales by 2020. We are focussed from an investment standpoint on e-commerce channel because it is the single most important channel for us worldwide,” Adidas CEO said.

Rajani Baburajan