Purchases on Instagram are starting to have a bigger impact on Adidas’ online sales.
The sportswear brand is one of the first to test Instagram’s checkout feature, announced in March: a way for people to purchase products directly from the app. In exchange for being part of the marketplace, Adidas and the other 19 brands currently taking part in the closed beta pay a fee to Instagram to sell their products directly via the app. It’s a price that has been worth it so far, said the Adidas’ CEO, Kasper Rorsted.
In the first three months of 2019, online sales jumped 40% year over year, which Rorsted has attributed largely to Instagram. “There was no doubt that Instagram had a positive impact for our online business in the first quarter,” the CEO told analysts on the brand’s earnings call on March 3. “Product launches and Instagram’s checkout tool were the two most important things for our online sales business in the first quarter.”
There were other reasons why Adidas’ online sales were higher than the 24% growth recorded in the last three months of 2018. A big contributor was the release of a string of exclusive product launches it knew would sell well on Instagram. Products from the brand’s Futurecraft range, for example, have sold particularly well on Instagram, said Rorsted. But Adidas won’t always have that breadth and depth of product to launch each quarter, which is why Rorsted said it will take a while to see the true impact platforms like Instagram have on its direct-to-consumer business.
“Our growth online is very dependent on which product launches we have within a given quarter,” he said. “What we’re focused on is ensuring we have the consistency of launches. There will be varying growth rates quarter by quarter depending on which launches have the volumes we have behind them.”
Unlike previous sales tools Adidas has tested on Instagram, the checkout feature means fans aren’t taken to a pop-up version of the brand’s site to complete the sale. Having the sale happen directly from inside the app is meant to inspire people to shop more and make them less likely to abandon products now they don’t have to leave one app for a separate site. As intuitive as the process is, it’s another potential hit for advertisers that are trying to regain ownership of their customer experience and data. While the likes of Adidas still get the purchase data from Instagram conversions, important behavioral data leading up to the sale will now remain within the walled garden.
“Yes, there are other ways for the brand to access behavioral data, and, yes, a lot of platforms don’t offer this depth of data back,” said Lawrence Dodds, communications and planning director at UM London. “But there are few other platforms that give brands access to the same target audience in quite the way that Instagram does; ultimately brands will have to judge whether the sacrifice is worth it.”
Adidas is having greater success selling more products across its online business. Online sales grew double digits across all its regions, said Rorsted, who singled out the role of its app, which has been downloaded 9 million times across 27 countries, as a contributor.
“One of the most important metrics we’ve seen an increase in is on mobile conversions,” added Rorsted. “We’ve worked diligently on making certain that with the shift from stationary engagement to mobile devices, that we’ve been able to dramatically increase the conversion rate on the mobile device because that was where the conversions were lower in the past.”