Adidas Business Model | How Does Adidas Make Money
🔍Insights
Germans are the best in every sense be it making the cars or be it leading the front of a sports apparel brand. A globally acclaimed company, especially when it comes to football shoes people tend to choose Adidas. The company is the second-largest sportswear brand in the world and the only largest brand in all of Europe.
Known for its eye catchy designs, and the three stripes, this German brand has made its place in the hearts of people all around the world. Not just the ones who belong to the sports industry, but also the ones who want a brand logo on their apparel.
From spiked running shoes, and gym wear to college bags, Adidas has covered a huge market. Over the years, Adidas has maintained its image as amongst the greatest sports brands in history and the impetus behind that success is its business model.
The company is known to evolve production-wise as well as has adopted a great business strategy. Its business model has changed with time, adjusting to the needs of consumers. This effort has helped the sports brand stand strong throughout the ages and gain the trust of more and more customers.
To get a definite idea of how the business model and revenue model of Adidas works, here is a breakdown study of it.
Adidas - About
Adidas - Target Audience
Adidas - Key Products
Adidas Business Model
USP of Adidas
How Does Adidas Make Money?
Adidas - About
The German brand was originally founded by Adolf "Adi" Dassler, once he returned from his duties in World War I. Dassler began making sports shoes in his mother's laundry room in Herzogenaurach, Germany. In 1924, he was joined by his older brother Rudolf, after which both of them named their business "Dassler Brothers Shoe Factory."
But in 1947 the brothers split up due to personal feuds, and Adolf formed his own company. He registered it as Adidas, deriving from his name, Adi Dassler, in 1949. Similarly, his brother, Rudolf registered his own company Ruda, which was later rebranded as Puma.
Headquarters and Area Served
The company is currently headquartered in Herzogenaurach, Germany. Speaking of the areas where it serves, they are although worldwide, yet there are a few nations where the company does not exist. These countries would be North Korea, Russia, Turkmenistan, Afghanistan, South Sudan, Chad and Palestine.
Adidas - Target Audience
As it's a sports brand, it typically aims at a global market and targets sports enthusiasts, amateur athletes as well as the ones playing any sports professionally, and also fitness fanatics. Its secondary audience would be brand loyalists, teenagers, as well as those who admire fashionable trends.
Adidas - Key Products
Being the sports shoemaker in its initial days, Adidas still promotes itself as one of the leading footwear brands in the world. Similarly, sportswear, swimwear as well as fashion-oriented apparel are some of its products.
The next segment is its sports and gym accessories which are appreciated a lot, and with that, the bags, caps, and other products are also the ones that generate revenue for Adidas.
As of 2023, the German sports apparel company generated 57% of its revenue through footwear. Then 36% of its revenue was generated through sportswear and fashion apparel. The other 7% came from the sale of bags, caps, and similar small accessories.
Adidas Business Model
Here’s a breakdown of the business model of Adidas which also are the strategic pillars of the company and have helped it sustain itself throughout the years.
| Strategic Pillar | Description |
|---|---|
| Value Proposition | - Designs high-quality, innovative products - Caters to sports and fashion industry - Focuses on sustainability by using recycled materials in manufacturing |
| Key Areas Focused by Adidas | - Emphasis on designing and developing new products - Ensures strong and reliable sources of material - Selective in choosing manufacturing and production partners - Aims to build and maintain strong relationships with key partners |
| Key Resources | - Skilled employees in design, marketing and supply chain management - Robust distribution and logistics network - Financial resources for investment and acquisitions - Strong brand reputaion and customer loyalty |
| Partners | - Chain of partners for raw materials (leather, cotton, etc) - Manufacturing partners chosen with precision and satisfaction - Retail partners, both physical and online, to promote sales and broaden market reach |
Value Proposition
The German sports brand aims to design high-quality products along with a touch of innovation, this has maintained the brand to stand out from its competitors. It caters to the sports and fashion industry and offers a diverse range of products.
Recently the company has also adopted the sustainable aspect through its business model, where it aims to use recycled material in its manufacturing process.
Key Areas Focused by Adidas
Adidas is mainly focused on designing and developing new products, while also aiming for a strong and reliable source of material. It wisely chooses its partners when it comes to manufacturing and production.
Adidas aims to build new relations and maintain those relationships well enough with its key partners.
Key Resources
When it comes to maintaining the departments, such as design, marketing, and supply chain management, Adidas depends solely on its skilled employees. Similarly, its key resources also include its distribution and logistics network and financial resources for investment and acquisitions.
It also aims at maintaining a strong brand reputation and customer loyalty.
Partners
Adidas has maintained a chain of partners to become a rigid body in the sports niche. From the ones supplying the company with raw materials such as leather, cotton, and more to the manufacturing partners, the company has chosen everyone precisely and has kept them satisfied over the years.
The retail partners including both physical and online sports stores are the ones who promote its sales and also help the company broaden its market reach.
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USP of Adidas
Focusing on the trendy culture, Adidas aims at everyone who has a passion for sports and fitness. They promote their clothing and sports accessories worldwide and have always followed their propositions which are innovation, customization, comfort, and brand/status.
How Does Adidas Make Money?
As of 2023, Adidas has reported an increase in its revenue in the third quarter. It was reported that the company has generated USD 23.47 billion in 2023.
The prime source of its revenue is through sales of its products. Adidas also saves a lot in its spending as it outsources its manufacturers for the production of its apparel and sports materials. This approach has helped Adidas maximize its profits in the global market.
Then again, when it comes to branding it has made its status so grand that people want to be seen wearing the products of this German manufacturer, which is making its sales boost even more.
Conclusion
Adidas is not just a brand that produces sportswear and similar accessories, it has become a brand that targets innovation and progress. The latest products try to make playing a sport comfortable for the customer, all thanks to the constant research done by Adidas.
The business model depicts how Adidas has evolved since its inception and at the same time discovered new ways to make money. It seems that Adidas has taken its tagline too strictly: Impossible is Nothing.
FAQs
Who is the founder of Adidas?
Adolf Dassler founded Adidas in1949.
How does Adidas earn money?
The prime source of Adidas's revenue is through sales of its products. Adidas also saves a lot in its spending as it outsources its manufacturers for the production of its apparel and sports materials. This approach has helped Adidas maximize its profits in the global market.
What is the tagline of Adidas?
Impossible is Nothing is the tagline of Adidas.
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