E-Business Analysis of Adidas
BUS 352: e-Business
E- Business Analysis of Adidas
Adidas is a company that started in Germany and quickly became a famous global athletic clothing and footwear company. They employee over 57,000 people around the world and have stores in over 100 nations. Worldwide they produce over 900 million sports and sports lifestyle products a year. They have invested over 153 million dollars into research and development alone. They are headquartered in Herzogenaurach, Germany and have key locations in Amsterdam, Portland, Boston, Shanghai, Hong Kong, and Panama. They also own the Reebok brand as well. Much of their success can be attributed to the internet and online sales. Adidas plans to double their online sales by the year 2020, and they are in the process of closing half of their stores in the U.S.
A Brief History of Adidas
In 1920 Adolph Dassler, who was a soccer player, invented spiked shoes for track and field in Germany. A few years later he and his brother Rudolph created the sports shoe company Gebruder Dassler which would later become known to the world as Adidas. Thanks to his shoes unique design, they began to gain fame in the track and field scene and started to become known worldwide (Mahdi et al. 2015). In 1936 in Berlin, Jesse Owens won four gold medals for the United States wearing a pair of Dassler’s track shoes. During World War 2 the brothers supplied shoes to the Hitler youth movement and German athletes for the Olympics. In 1948 The brothers fell out, and Rudolph left Adidas and founded his own company which is now known as Puma. Dassler passed in 1959 and in 1978 he was inducted into the American Sporting Goods Industry Hall of Fame as one of the founders of the modern sporting goods industry. In the 1970s, Adidas was the top athletic shoe brand sold in the U.S. Muhammed Ali and Joe Frazier were both wearing Adidas boxing shoes in their “Fight of the Century” in 1971. The three-stripe trademark has become vital to the distinctiveness of the Adidas brand and has been considered ‘famous’ by courts since the 1970s (McKelvey 2008). Adidas was named the official supplier for the 1972 Munich Olympic Games. Adidas has retained ownership of their mark for many years which can seemingly be attributed to their strategy of pursuing litigation against the use of stripes on apparel, merchandise, and trademark registration applications (Katie M. Brown, & Natasha T. Brison.2018). In 2005 Adidas purchased the American shoemaker company Reebok to compete with Nike in the U.S.
Adidas E-Commerce Strategy
Thanks to the internet, business growth has increased a lot for businesses that sell items online. The shoe industry is primarily benefiting from the rise in e-commerce. Thanks to E-commerce brands can sell their products directly to the customer without having to open and operate physical stores all over the world. Many shoe companies must operate through third-party retailers to sell their shoes. With the direct to consumer sales model, footwear manufacturers can sell directly to consumers. Another benefit of operating a business online is that a business can gather information on their consumer, offer them personalized products, and build relationships with their customers no matter where they are. Taking the middleman out of the equation is very beneficial for shoe companies, and that is why many of them are operating more and more through online stores. Adidas has already seen dramatic annual growth rate since selling shoes directly to customers. According to the current Adidas CEO, the most important store they currently have is their online store. Adidas Ecommerce business is currently its attest growing channel with sales being up 36% in the last year. Based on recent research, the salesforce regional vice-president for Adidas stated that 56% percent of online purchases on the site were made via mobile devices. Adidas is very active on social media which helps them to build a healthy relationship with their customers. They have a large following on Twitter, Facebook, and YouTube. They also are very open to diversity and work with many different athletes, artists, and music creators from different backgrounds and industries. Their customer interaction, open-minded attitude, environmental awareness, social presence, and pricing is made up of their successful e-commerce business strategy.
A lot of Adidas success is owed to innovation and technological advancements. One of their main selling points is that they use the latest technology to test and develop their shoes. One of their newer and popular line of shoe FORMOTION is a shoe created using a free-moving heel system; this system allows the shoes to adapt to the individuals running style. Developments like these are significant for individuals that do not want to have to do too much research on which shoes are best for their running style. Adidas focus is on helping the environment as much as they can as they realize that their shoe manufacturing has a significant impact on the environment. Companies such as P&G, Dell, and Adidas are leveraging waste reclaimed or diverted from the waters for product and marketing (Romeo, 2017). They have eliminated their factories material waste by 50 percent and have found ways to design lighter and stiffer shoes so that less material is used in the manufacturing process, and carbon emissions are reduced. They also now use a modular mold system that allows them to use the same mold system for various products mold bases which has reduced their mold material waste when shoes are discontinued. A recent technological development that the company has made has been to use laser welding and water-based glues. Use of water-based glues has reduced the amount of glue that is used, which has reduced toxic emissions in this area. The website also uses A.I. chatbots to provide instant customer service and response to customers before and after a purchase. This allows human customer services representatives to be freed up to handle more complex order problems and questions. Consumers like to think that they are helping the environment when they are purchasing products, so this brand strategy is very beneficial for the company.
Adidas Knowledge Management is based on sharing collective knowledge. skills and experience across all of their departments, brands, and regions. Ideas, innovations, and lessons -learned are shared and applied collectively. Adidas strategy is to reduce the duplication of effort, so communication within the organization is essential for their knowledge management strategy. The company wants its employees to spend the least amount of time looking for information possible to improve efficiency, productivity, proficiency, innovation, and growth. Their goal is to foster an enabling environment by improving access to Adidas corporates knowledge & information for every region. Each store in every region should have access to the same information as any other store in any other region. Adidas is focused on dedicating resources on change management and building active knowledge management communities.
The Impact of Internet Regulations
E-commerce executives around the world have predicted that regulations will hinder online retailing and marketing in the future. Governments are already exerting more control over the web and will block certain content. The web was once a place where consumers felt free to be themselves with stricter regulations on web usage consumers could turn away from the internet for certain things. Many regulations are put in place to protect consumer privacy, but too many limits to available information will restrict the free flow of information on the internet. Some people believe that because the government is motivated by money and the internet is making them much money, they will not be too strict on regulations. E-commerce laws are very different depending on the government and the country the consumer is living in. Many online businesses fear that government action could limit the profitability of the online business in the future. Online companies have to be aware of international regulations and export laws and taxes. Some countries have items that are restricted for sale in their country as well.
Limitations to Global E-Commerce
There are many limitations to Global E-Commerce, and Adidas handles them very well. Due to the size and popularity of the company, they have to have many servers available to handle the load of thousands of online customers a day. In the key locations, I mentioned before many are hosts to content delivery services (CDNs) and geo-load balancing servers, which are used to improve the sites speed and reliability. There is also the challenge that software development tools are still undergoing change and development, with the result that it poses problems for the integration of internet and e-commerce software with existing applications and databases (Turban, E., King, D, Lang, J. 2011). A significant limitation to global e-commerce, as mentioned when talking about internet regulations is working with import and export laws for various countries. Another limitation when operating globally online is payment methods. In the united states, it is reasonable to use debit/credit or PayPal to make payments online. In many other countries, these payment methods are not the standard and may not be used at all. If a customer is interested in your product but cannot pay with their preferred method, then they will be likely not to purchase the product at that time. Being flexible with a variety of payment methods is essential for running a successful online business. In the distribution of many consumer goods and consumer services, not only are there critical national differences in products and delivery requirements, but online ordering and payment may be a tiny part of the total system in comparison with purchasing, warehousing and physical distribution (Grantt, R. M., & Bakhru, A. 2004).
Adidas is a very successful company that has done a great job in integrating E-commerce into their business. They are constantly adapting and innovating to remain competitive in the rapidly growing online shoe and apparel market. Adidas biggest competitor in their market is Nike, and both companies continue to use technology and e-commerce to their advantage to please their customers and provide shoes and apparel to consumers all over the world. Adidas is focused on becoming a sustainable company, and they are dedicated to learning and improving their efforts whenever they can. Adidas states that sport is the key to an individual’s health and happiness, and they aim to enable people around the world to stay healthy mentally and physically by staying active. They are also focused on improving the environment. Thanks to E-commerce Adidas will be here for a long time to come and will grow into an even bigger company in the future.
Grantt, R. M., & Bakhru, A. (2004). The limitations of internationalization in e-commerce. European Business Journal, (3). Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edsbig&AN=edsbig.A126403898&site=eds-live&scope=site
Katie M. Brown, & Natasha T. Brison. (2018). A Tale of Two Trademarks: A US Analysis of the Protection Strategies of adidas and Converse. Entertainment and Sports Law Journal. https://doi-org.proxy-library.ashford.edu/10.16997/eslj.214
Mahdi, A, Abbas, M, Mazar, TI and George, SA. 2015. A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with Special Reference to Competitive Advantage in the Context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3): 167–177.
McKelvey, S. 2008. Recent Trademark Dilution Cases Redefine Concept of ‘Fame’. Sport Marketing Quarterly, 17(3): 173–177.
Romeo, J. (2017). A new beachhead: Brands using reclaimed ocean plastics as a new source of raw materials: companies such as P&G, Dell and Adidas are leveraging waste reclaimed or diverted from the waters for product and marketing. Plastics Engineering, (6). Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edsbig&AN=edsbig.A496570062&site=eds-live&scope=site
Turban, E., King, D, Lang, J. (2011). Introduction to Electronic Commerce (3rd ed.). New Jersey: Prentice Hall. Retrieved from https://vitalsource.com/