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Asos, The Next Online Retail Model?

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Asos, The Next Online Retail Model?

Asos, The Next Online Retail Model?

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  • 1. Asos, The Next Online Retail Model?Helixa16, rue Brey - 75017 ParisCreative Commons License July 2012
  • 2. Why Asos? 2
  • 3. ASOS is the largest european pure-player on online clothing retail - Profitable since 2003 - Has delivered 63% CAGR over the last 5 years - Should exceed 1b€ in revenues by 2014 on our forecastsInternational business accounts for 59% of sales - Free shipping shipping to 190 countries - No foreign warehouse - Top 5 most visited online fashion storesWhat is the secret of Asos? 3
  • 4. Asos at a glance 4
  • 5. 2000 ASOS launched in the UK «As Seen On Screen» sells clo- thing and accessories as seen in films and on stars ASOS IPOASOS was admitted to AIM on the London Stock Exchange 2001 2004 ASOS Business model Maiden Profit ASOS Magazine Free magazine on last women’s fashion trends to promote ASOS 2007 items 5
  • 6. ASOS own label At first, a label only for women, 2008 then extended to men ASOS sites Launched American, German and 2010 French languages versions. Then, Australian, Italian and Spanish languages (2011) and Russian (2012) ASOS marketplaceAdd small business and customer to customer sales to their 2011 e-commerce offer ASOS offices 2012 Opened the first international office in Sydney, Australia 6
  • 7. 495 £m +46% 190 AMBITION 2015 SALES (2012) GROWTH COUNTRIES 1 £b SALES (2012 vs 2011) UK198 £m sales (41%) ASOS 2012 INTERNATIONAL 284 £m sales (59%) +103% (vs 2011)+7% (vs 2011) BASKETS ORDERS 63.5 £ average basket 11.8 m orders +6% (vs 2011) +52% (vs 2011) CUSTOMERS 17.5 m unique visitors (+35%) 4.4 m active customers (+38%) Source : ASOS 2012 Full year financial results 7
  • 8. Asos,A clear and aligned positionning vision Be the online Fashion destination for young adults: inspire and power Fashion discovery mission Provide the best online shopping experience for fashion through one of the largest offer (branded & own label products in womenswear, menswear, …) for all prices and enriched with social platforms - Young adults (16 to 34 years old), men and women target - Highly interested in Fashion - Digital natives E-stores & - 7 country-specific websites for: UK, US, Australia, France, Germany, Italy, Spain - All devices and social networks points of interaction - Asos Magazine Source : ASOS website 8
  • 9. Asos: an online success story 9
  • 10. Asos, Turnover while significant MarginsSkyrocketting CAGR 2005-2012: +66% 495 m£ CAGR 2005-2012: +71% 340 m£ 223 m£ 165 m£ 81 m£ 43 m£ 42 m£ 20 m£ 20 m£ 29 m£ 8 m£ 14 m£ 14 m£ 3 m£ 7 m£0m£ 0 m£ 1 m£ 1 m£ 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues EBIT Source: Company data, Credit Suisse estimates 10
  • 11. A Growth fueled by Innovations00m£00m£ ASOS for children (2009) Collection Mobile ASOS maternity00m£ Collection (2008) & Marketplace ASOS Apps ASOS for men (2010) Launch (2007) (2012) Australia, Spain & Italy (2011) ASOS Salon Designer Store (2012)00m£ (2009) Facebook Store (2011) ASOS outlet Launch in (2008) US, France & Germany Asos Magazine (2010) 1 online fashion th (2007)00m£ ASOS own ASOS show UK (2006) ASOS Life (2009) brand Cosmetics (2004) (2005)0m£ 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Company data, Credit Suisse estimates 11
  • 12. Expected sales growth over thenext years in a gloomy market ASOS sales growth, UK & International1 200 M£1 000 M£ 800 M£ 600 M£ 400 M£ 200 M£ 0 M£ 2009 2010 2011 2012 2013e 2014e 2015e Uk Sales International Sales Source: Wells Fargo Securities estimates, December 2011 12
  • 13. Asos compared to other Online Retailers EBIT % of sales for majors e-tailers, FY 2010-2011 15,4% 8,5% It delivered its 1st operating profit in 8,3% 2003, only 3 years after its launch Net-a-porter profitability is quite an 5,5% exception thanks to high luxury margins 1,3% -27,8% -30,0% -20,0% -10,0% 0,0% 10,0% 20,0% Source: Company data, Credit Suisse estimates, December 2010 13
  • 14. How does ASOS manage to be so profitable online? 14
  • 15. A Very Attractive Customer PropositionA Highly Effective International Strategy A Constantly Improved Cost Structure 15
  • 16. An Appealing Product Offer Is the1st Pillar of ASOS Attractiveness ASOS sales split by product Menswear 20% Accessories 16% Beauty 8% Womenswear 56% Source : SG Cross Asset Research 16
  • 17. A large range of products ASOS Womenswear Range VS global peers, Full Price, August 2011 Zappos Forever 21 AsosDebenhamsLa Redoute M&S In Europe, Asos has the leading Zara range proposition available, parti- cularly targeting the 18 – 34 fashion H&M forward. 0 1 000 2 000 3 000 4 000 5 000 Tops & T-shirts Blouses & Shirts Dresses Jeans Source : Company websites, Deutsche Bank 17
  • 18. With well targeted prices and a very competitve entry level ASOS URBAN 485 € 485 € OUTFITTERS TOPSHOP45 € 485 € 25 € 255 € 20 € 285 € 255 € ZARA H&M 60 € 40 € 45 € 20 € 25 € 20 € 10 € 0€10 € 40 € 20 € 60 € entry price top price Source : Company websites 18
  • 19. Serve by a highly convenientservice proposition 5.95 $ - 6.95 $ for US 4 £ for UK Free above 50 $ for US Cost of delivery Free and above for Free shipping international above 75 € for EU Up to 4 days in UK 4 days for UK Speed of service 4 -> 10 days up to 10 days and more and more for in EU international Free for UK Ease of return Free At your own cost At your own cost outside UK Source : Company websites 19
  • 20. Asos,The most «liked» Fashion retailer ASOS facebook likes per £1m of sales VS global peers, August 2011 4500 4000 3500 3000 2500 2000 1500 1000 ASOS is a good example of a brand that has made of its community a 500 strong pillar of its business model 0 ar ok xt M a ra s OS &S hk am H& Ne Be Za Lo M AS rs nh & w Be be Ne ll Pu De Source : SG Cross Asset Research 20
  • 21. The 2nd visited clothing retailer on theplanet, a strong indicator of ASOS appeal Postion Name Average Daily Visitors (000s) 1 VANCL.com 920 2 ASOS Plc 749 3 HM.com 606 4 Nike 465 5 Moonbasa.com 458 6 Trendyol.com 380 7 Inditex Group 357 8 Bonprix 353 9 Forever 21, Inc 327 10 Limited Brands 317 Total Retail Apparel 18 001 Source : Comscore Ranking 21
  • 22. ASOS Marketplace - 2010 One of the largest Fashion Marketplace with: • 65,000 products listed • 500 boutique sellers from 95 countries • 28,000 individual sellers from 98 countries Customer Value Added Get access to small brands and designers, but also to vintage products. And get the opportunity to sell their own items and creations. ASOS Benefits • Offer the largest range, through own & external brands, small retailers, designers and vintage • Engage your customers giving them the chance to sell and get inspired by other customers 22
  • 23. ASOS Fashion Finder - 2011 Social platform to see the new trends and the most popular looks & outfits among the community. Around 134,000 outfits created and 174,000 items of user generated content. Customer Value Added Be in the known about Fashion thanks to a large choice of trendy looks created by other customers and get inspiration to develop their personal style ASOS Benefits Establish ASOS as an authority of Fashion Source new it brands and products for free Make profit of a social platform with very active users (1.9m social comments and votes) 23
  • 24. ASOS Mobile Website and Apps[2009 – 2011] ASOS MOBILE WEBSITE ASOS MAGAZINE Since 2009 ASOS website is available also on mobile phones. Mobile sales rose 800% Y-o-Y in 2011, and should stand for 20% - 30% of global sales in 3 years for Nick Robertson (ASOS Ceo). Customer Value Added Not only get access to the ASOS offer at any time through SCAN TO SHOP ASOS MEN’S MAGAZINE any device, but also discover new looks and brands through the magazines ASOS Benefits Make buying at ASOS easier and available on all the Internet devices Enrich the shopping experience adding contents through the magazines 24
  • 25. A Very Attractive Customer PropositionA Highly Effective International Strategy A Constantly Improved Cost Structure 25
  • 26. ASOS highly efficient Internationalstrategy ASOS global strategy roadmap ASOS fast International But ASOS has also been expansion is in part due to its very efficient in replicating From a UK e-tailer online-only model, as no time its successful UK strategy to a multi-country is required to hunt for new of lowering delivery charges web platform store locations and fit out and improving services to new outlets. drive growth in new markets. Source : ASOS 2012 Financial Report 26
  • 27. Emerging markets, the next ASOSgrowth opportunity ASOS exposure to emerging markets vs Global peers, % of global sales in 2010 and in 2015e 80% ASOS is expected to make 70% much faster progress into immature markets than other 60% traditional European retailers, 50% especially in China. 40% China is already the 6th largest country by sales for 30% ASOS. And there’s a huge 20% potential since the online apparel market is relatively 10% underdeveloped and ASOS proposition is likely to be 0% Inditex Esprit ASOS H&M Marks & Spencer Debenhams Next Primark well-received. 2010 % sales in emerging markets 2015e % sales in emerging markets Source : SG Cross Asset Research 27
  • 28. A Very Attractive Customer PropositionA Highly Effective International Strategy A Constantly Improved Cost Structure 28
  • 29. Reinvesting Gains In CustomerProposition To Drive Growth 112% 84% 6,0% 38% 16% All lines of the P&L have seen efficiency gains 1,1% since 2009. A noteworthy effort has been made 3,9% 4,8% on staff and warehousing costs. 0,6% 9,4% 4,3% 6,4% As a result delivery is now a cash investment for 13,5% ASOS while it was a source of profit in 2009. 8,5%2009 2010 2011 2012 Delivery costs recovery Warehousing Production Costs Payroll & staff Marketing Costs Other Opex Costs Source : ASOS Company Reports 29
  • 30. A Model inspired from Online and Fashion Best Practices 30
  • 31. Amazon and ASOS, same vision :customer obsession… « We start with the customer, « Do what’s right for the and we work backward » customers, not what’s right for the business » Jeff Bezos, Amazon CEO « ASOS is aiming to become the Amazon of Fashion » Nick Robertson, ASOS CEO« We see our customers as invited guests to a « It’s all about changing the perception fromparty, and we are the hosts. It’s our job every day ‘what can we sell’ to ‘what customers want’ and ifto make every important aspect of the customer we can sell some of that… then that’s fantastic! »experience a little bit better » 31
  • 32. Amazon and ASOS, Same Pillars… AMAZON key pillars ASOS key pillars Serve customers, ASOS superior customer proposition ever better and in ever more ways, is at the heart of all that we do. by improving customer proposition Its credo: innovate restlessly to offer the best through continued efforts to : shopping experience through: Reduce prices The best offer & services of products & services at the best price Increase selection The world’s best of products offering Fashion selection Increase in-stock The « best in class » inventory availability products availabilities Source : Jeff Bezos and Nock Robertson interviews 32
  • 33. Inditex model… An Inspiration forASOS Fashion Best Practises INDITEX positioning ASOS (initial) positioning Customer value proposition: Customer value proposition: Give to a customer segment the latest Offer red carpet replicas and copies of Fashion trends from catwalks at dresses worn by actresses at affordable affordable prices prices Customer target: Customer target: Highly sensitive to latest Fashion trends Young, net-savvy Price conscious Fashion Forward Price sensitive Key resources: Key resources: 1. Highly fashionable product design 1. Highly fashionable product design 2. Fast speed to market (lead time) 2. Fast speed to market (lead time) 3. Cost structure optimization 3. Cost structure optimization This positioning requires to design “hot” products that capture the latest consumer trends and renew constantly your offer to stay on the edge 33
  • 34. Inditex fast-fashion, the best way tomatch with the latest customer trends INDITEX Fast Fashion System 2 key pillarsHighly fashionable product design Short production & distribution lead timesOffering consumers a product they value more Quick responsiveness enables frequent changeselicits a greater willingness to pay from customers in product assortment and more flexibility to adaptand make them less willing to risk waiting for a to the latest customer trends.clearance sale and possibly experience a stockout. It yields significant value for firms by better matching supply with uncertain demand. Key resources: Key resources: 1. Customer trends monitoring 1. Local sourcing 2. Quick design lead times 2. Efficient supply chain Inditex has proven that when both fast fashion pillars are combined the firm enjoys a great incremental increase in profit Source : The Value of Fast Fashion, G. Cachon, R. Swinney, Stanford University, 2011 34
  • 35. Inditex and ASOS… Same HighlyFashionable Product Design Strategy INDITEX – Highly Fashionable Products ASOS – Highly Fashionable Products From catwalks to the street From carpets to the street Louis Vuitton SS 2012 Catwalk Louis Vuitton SS 2012 Catwalk Zara Spring 2012 Collection Zara Spring 2012 Collection Alexa Chung - 2011 ASOS Autumn 2011 Collection Both companies are very similar on these strategic points and really more competitive than traditional retailers 35
  • 36. Inditex and ASOS…Same Quick Response Strategy INDITEX ASOS quick response strategy quick response strategy Short lead time Short lead time From 2 weeks to 2 months Around 6 to 8 weeks (While 6 months for traditional retailers) (While 6 months for traditional retailers) Local sourcing Local sourcing Only 35% of sourcing from Asia Only 30% of sourcing from Asia (While H&M 75% of products from Far (While H&M 75% of products from Far East) East) Central inventory Central inventory Warehouses only in Spain One unique warehouse while shops around the world while ASOS delivers to 190 countries Both companies are very similar on these strategic points and really more competitive than other traditional retailers 36
  • 37. Asos goes beyond Inditex by setting astrong emotionnal relationship ist r s me » e res t!» itte h oic t n’t ll ea e outf r wit ch rtan ca s wi s r ua l us ch po ite i so ’s g !» us l, oo it» beca rban bett e mu y im qu but riend e d a ce it wait y o c on ra t u fit so er s is me y f ck la o nm is s tuff a , bu aly are it’s v res for it m he ketp day t oo g eZ p u re , is d ve ar t c ar re ’s g es » blo like s I lik hea s us he sos Th ensi y we !» jus m o et his « ’s c so «T A !» « p d t ave and e m « L ebsit «T ways it d a on me ex bo a lo «I hlogs « on w a l a n to o it n e What lik b she thinks gree nal de otio Em She likes to read and share The dress is arrived fashion magazines with her mother «I can return my products for The buying decision free» is taken Goes to H&M with her Zara, Urban outfitters friends time to time and Asos are all «The shipping was fast and free» because it’s near her house Waiting for her dress open at the same time Looking for her credit «Asos is a great place to Spend 30 min by day on Openning her card and order shopping because it’s not only a Facebook, to chat mainly web browser Goes on Asos blogs and showcase of products but a marketplace place to discover» Facebook and her favorite 3 or 4 blogs that she likes fashion blog are open and check 1/2 hour per «Asos put the last trends in an week affordable e-store» Phase of Past experiences Comparison Purchase Reception Post experiencethe Journey She loves fashion and always take She spends most of her shopping time comparing brands but also The product have only taken 3 days The more she goes on ASOS, the time to check the last trend on the products. She’s looking for a product not for a brand. Her to arrive more she likes fashion world and web, she knows ASOS because of shopping time is mixing with her social activities and even with feels close to it her friends and blogs her studying time 37
  • 38. Is Indi-Zon the real name of ASOS? fast fashion pure player model model • Highly fashionable • Highly fashionable • Customer obsession • Customer obsession • Product design • Product design • The largest selection • The largest selection • Affordable Prices • Affordable Prices • The best prices • The best prices • Short Production and • Short Production and • The best availabilities • The best availabilities Distribution Lead Time Distribution Lead Time • The best services • The best services • Local Sourcing • Local Sourcing • Central Inventory • Central Inventory 38
  • 39. Strategic Innovation to reinvent businessesIn a constantly changing world, To build such strategies, Helixa hascompanies can no longer do business devised a series of new tools andin the same way as in the past. Indeed, proceeds by combining creativitycompanies now have to steer a course with analysis to imagine for itsthrough a world where everything is clients what has as yet never seenchanging at a high speed . It is forcing light of day.them to rethink their strategic choices With its wealth of experience in suchalong completely different lines. Those sectors as luxury goods, media,firms able to rapidly identify disruptive retailing, chemistry, energy andinnovation and take up adequate internet and given its design thinkingstrategies can gain the upper hand inspiration, Helixa can offer highlyon competitors and become the next effective tailor-made solutions.winners. Helixa’s team mixes engineers, strategists and designers. 39
  • 40. For more information, contact us: 16, rue Brey Paris 17èmedevelopment@helixa.com (+33)1 45 72 55 89 This document is underCreative Commons License 40