To flip the Adidas tagline, nothing is impossible when you have great digital payment options.
Speaking with PYMNTS as part of the ACI Merchant Series, Marko Ivanovic, director of digital payments at Adidas, said as much, as he enumerated the ways this iconic global footwear and athletic brand is strengthening sales in stores and online with a personalized payments approach.
“We love our Adidas app, we love our consumers, and I think these digital tools [are] the key to improving customer satisfaction, driving revenue and a focus on customer needs,” Ivanovic said, remarking on how the brand is focusing its customer-first payment strategy both online and in-store.
For Adidas, he said, that means going heavy on digital coupons, rewards, loyalty, and balancing payment methods depending on the setting, be it retail stores or eCommerce.
“For us, it remains a priority in our strategy. We offer, for example, one-click checkout. These digital tools are the key,” he said, “and we will evolve over the next year.”
Get Set, Go
What many people may not know is that Adidas has been in the buy now, pay later (BNPL) space for a decade, long before it burst forth as a new idea coming out of Australia.
He noted the brand has been offering a regional form of BNPL that started in Germany and Austria and was rolled out to Nordic countries in 2016, and it’s now seen as table stakes everywhere.
“We see it has a significant impact on conversion rates. In some countries, you can't go without [BNPL] because customers really want to have that option, especially the young generation, and we see those customers spend more,” he said, pointing to higher average order values when BNPL is used versus other payment methods.
See also: ACI Worldwide Teams With NTT to Promote LatAm/EU eCommerce
Getting the Payments Mix Just Right
As found in the study “Big Retail’s Innovation Mandate: Convenience And Personalization,” a PYMNTS and ACI Worldwide collaboration, only about half of U.S. and U.K. retailers believe they have the ideal mix of digital payment tools.
For example, Ivanovic noted that Adidas sees regional and cultural differences in how installment payments work around the world, making a one-size-fits-all solution impossible, as is reflected in its push for deeper personalization.
“For instance, there is one buy now, pay later where we see a higher AOV [average order value], but less payment method share. On another [BNPL] option we see a higher payment method share but a lower AOV. It shows us also that we have customer groups who really prefer certain buy now, pay later options. This is definitely driving conversion, revenue and customer satisfaction,” he said.
It’s also driving changes to how payment options are presented at checkout, as part of the brand’s greater emphasis on personalization at crucial transactional moments.
Online and in stores, Adidas has now started showing customer’s their most favored payment method at the top of the list of choices, a move that also ensures a speedy checkout.
“We want to know our consumers,” he said. “We want to know their preferred payment method. We want to know the payment methods they used for the last three to five orders to show them on the top,” he said. “Then the consumer is feeling [like] Adidas really cares which payment methods I’m using.”
Get the study: Big Retail’s Innovation Mandate: Convenience And Personalization
Mobile Is Hot, and So Is Fraud
As to what else is hot and getting hotter, Ivanovic said it’s all about mobile.
“We clearly see the shift to mobile in general. We’re already offering a range of mobile payment methods, like Apple Pay, Google Pay, and WeChat Pay. We also launched PayPal in stores,” he said. “For us, it’s members first, one-click checkout, especially for the young generations that do everything with their mobile.”
Adidas is taking it a step further by analyzing mobile payment methods by country to make sure that local payment options are featured in-app for customer satisfaction — and to assure a sale.
“There are specific payment methods that you need to look into on a country level,” he said.
“We see this as a strategic pillar for us in payments.”
Where there are digital payments, there is fraud, and that’s another pillar of the brand’s digital payments strategy that’s recently been reformulated to combat many forms of digital fraud.
Saying fraud is about the highest he’s seen it after a decade in the industry, Ivanovic said fraud today is market-specific and country specific, calling for a new approach to fighting it.
“It’s not only chargebacks anymore, or credit card fraud anymore. We see voucher abuses, we see goodwill credit abuses, we see return abuses. They really try to find loopholes to get into free products.”
Until recently, Adidas was working with more static fraud rules and manual order review. In Latin America, they did phone validation to ensure the real cardholder was placing the order.
That changed in late 2020 and early 2021 as he said, “We introduced a new risk management provider that works with the latest technology. We are using AI [artificial intelligence], ML [machine learning], algorithms, we are using a strong device fingerprint mechanism. With that, we eliminated manual order review.”
After that changeover, he said, “We see it clearly pays off. The approval rates were never higher before. However, we have markets, especially Latin America, where fraud is different. It’s not easy to fight.”
How Consumers Pay Online With Stored Credentials
Convenience drives some consumers to store their payment credentials with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze consumers’ dilemma and reveal how merchants can win over holdouts.
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