Your SlideShare is downloading. ×
THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION

11,122
views

Published on

THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION …

THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION
Study on ASOS.com and the Fashion Industry, about the strategy behind the success of this UK online fashion retailer.

Published in: Business, Lifestyle

0 Comments
7 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
11,122
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
353
Comments
0
Likes
7
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ISOM 5100 Fall 2012 Group Project- Report THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION Study on ASOS.com and the Fashion Industry GROUP MEMBERS CHAN, Hing Chun Wonsky CHEUNG, Chun Ming Cliff CHING, Nga Ying Helen MAN, KaWai Joseph TAM, Chung Yin Matthew YEUNG, ChingNgai Jason STUDENT ID xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx E-MAIL xxx@xxx.com xxx@xxx.com xxx@xxx.com xxx@xxx.com xxx@xxx.com xxx@xxx.com
  • 2. ISOM 5100 Fall 2012 Group Project – Report THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 1 ~ INTRODUCTION ASOS plc (As Seen On Screen Holdings plc) is a UK based online-only retail fashion company starts in 2000. Within 12 years, it grows from a 2-people company to a firm with 1000 employee. The company was listed on the Alternative Investment Market (AIM) of the London Stock Exchange in 2001. Since then the revenue and the earnings per shares kept growing in a very fast pace. 31-Mar-08 31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12 Revenue (£ m) 81.04 165.40 223.00 339.69 494.96 Pre-Tax (£ m) 7.31 14.12 20.34 15.70 30.35 EPS 6.90p 13.60p 20.00p 27.30p 39.80p 131.00% 97.00% 47.00% 36.00% EPS Growth Exhibition 1: ASOS performance figures from London Stock Exchange Group statement of comprehensive income Year ended 31 March Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating profit before exceptional Exceptional items Operating profit after exceptional items Share of post-tax losses of joint venture Finance income Finance expense Profit before tax Income tax expense Total comprehensive income attributable to owners of the parent 46.00% i 2008 £'000 81044 (37432) 43612 (6328) (30322) 6962 — 6962 — 349 — 7311 (2258) 2009 £'000 165395 (83184) 82211 (10512) (57764) 13935 — 13935 (78) 268 — 14125 (4116) 2010 £'000 222999 (111803) 111196 (18060) (72825) 20311 — 20311 (69) 97 — 20339 (5759) 2011 £'000 339691 (173042) 166649 (34959) (102840) 28850 (12943) 15907 (3) 16 (215) 15705 (4856) 2012 £'000 494957 (242987) 251970 (65840) (144346) 41784 (10585) 31199 — — (850) 30349 (8070) 5053 10009 14580 10849 22279 Exhibition 2: ASOS 5 Years Financial Summaryii In 2012, ASOS attracts 18.8 million unique visitors a month, which is a 69% growth from 11.1 million visits at Q42011. It reached 9.2 million registered users in Aug2012 (a 43% growth compare to Aug2011) with 5 million active customers coming from 160 countries all over the world. In Aug 2012, comScore rankings for 15-34 year olds showing ASOS as the globally most visited fashion website, with daily visit of 625000.iii There is a large group of 381K and 272K followers of ASOS on Twitter and Instagram as of Oct2012, with a much bigger community of 1.94 million liked on Facebook. In this report, we shall study the success story of ASOS in the current industry. What are the reasons behind the raise of ASOS? Why does this brand become so popular? Not very long before, ASOS was a new brand, what are the entry barrier and the market situation of the retail fashion industry? How does ASOS deal with the challenge from the industry? Meanwhile, how does innovation and information technology helps the firm come to these point of success? We shall analyze the company and try to get some answers in this report. THE RETAIL FASHION INDUSTRY: ENTRY BARRIERS AND THE FIVE FORCES Just considering the US fashion industry, it is a big market with about 100K retail clothing Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 3. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 2 ~ stores in 2010 which reap annual revenues of $150 billion annuallyiv. It is a never declining industry, and it is always emerging. There is no single dominating player in the industry. There are many different segments of markets. The industry is fast and fashion trends change every season. The pie of retail fashion is huge, with an even bigger competition when we are now facing globalization and there are international brand all over the world. Retail fashion is an economics of scope. No single brand can cover all kinds of products of men‟s wear, women‟s wear, children‟s and infants, shoes, sport wear, accessories, etc., and the costs to cover all products will be high. Similarly, different brands may target for different age group and different price range, and targeting all ranges will be so difficult. Yet, entering the market of one or a few specialties may not be too hard. Starting-up new brand and become popular immediately seems impossible. Still, every year there are new brands. Some new brands may start local retail shops; while others many choose doing their business on eBay, Yahoo Bid or some local equivalent sites before they turn into big names. The start-up cost of an online shop would be less than that of a retail chain, as the cost of the physical distribution channel would include rent, renovation, sales staff payroll, etc. that can be saved for online business. With the strong competition in the industry, the question is how long these new businesses will turn into big names or will these new businesses survive before they become success. The experience and learning curve does matter somehow. Each brand needs time to get hold of the taste of the target customer group, and the success normally built up on the experience of trial-and-error. Even a brand can catch a target customer group one year, the trend and desire may change next year. In addition other new brands may come to success. The cost of consumers switching to other brands is pretty low indeed. Clothing manufacturers are globally everywhere and accessible, same as the global markets. With easy access to the distribution channels, new brands can start up local or regional retail chain, or start up online shops. In fact, all kinds of technology and processes of the retail distribution are not patented and relatively low cost nowadays. Government regulations could be a concern. Tariffs and bills for protectionism could be a concern, but it will be a macro risk that affects all firms in the country instead of an individual brand. The relatively low entry barrier of retail fashion could somehow explain the reason why there are heavy competitions in the retail fashion industry. There are many rivalries in the industry focusing on the same segment ASOS does. ASOS is targeting the twenty-something fashion lovers and there are strong competition globally in every continents for this segment of young consumer. ZARA and H&M are both the European fast fashion leaders. GAP is strong in the North America, while UNIQLO and MUJI are both strong in the Asia Pacific region. All these brands are strong in one or more regions, then try to expand globally. All these rivalries have strong penetration to the market with their retail chains, and some of them are already starting their online retail channels. Not yet to mention other online retail fashions like Topshop, Forever 21, and other regional online competitors. Seems clothes have no substitutes and all human-beings would wear something daily. Yet, brands have substitutes. Unsatisfied consumers will switch to other brand quickly, and the reasons of un-satisfaction could be complex. For example, trend and design of brand, quality, price, brand image, promotion, etc. Customers can change their tastes when trends change, and their loyalty to one brand can shift to another. Today‟s success does not guarantee the continuation of success tomorrow. Esprit is a good example that she was so successfully in Europe and Asia Pacific, but now the customers gone with the sales & revenue drops. Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 4. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 3 ~ The now-a-days young fashion lovers consume clothes like fast food. They do not demand excellent quality unless they buy luxury products. Otherwise, they expect the quality matches with the price they paid. They demand the designs fit the latest trends as well as their tastes, and loyalty loss quickly when a brand failed to do so. When doing retail online, consumers expect excellent customer experience and services. The expectations include the online web designs & contents, as well as the delivery and refund logistics. ASOS and other online retailers are all doing the best in these areas to keep the customers. On the supplier side, ASOS and other large online fashions may have some negotiation power. They can source clothing suppliers globally and seek for manufacturers with good price and quality. Similarly on logistics and delivery, big online retailers like ASOS can negotiate best contract with Royal Mail or other delivery service, not just on the best price but also the best SLA. With the large transaction volume on credit cards, the PayPal tier amount pricing strategy could provide some benefits of reduced cost to these large scale online shops. For employee side, with the name and reputation established, ASOS has the charisma to attract young and talent designers to join the company thus ensure the continuous creativity of the brand. The average age of the employee is 26-years-old helps ensure the designs can catch the taste of the target customer group of twenty-something. Indeed, ASOS works with complimentors. This is important as the co-operation drives revenue and also increases popularity of the online retail store. They are not just selling their own label but sourcing varieties of over 1,000 brands from all around the world into their portfolio including American Apparel, Denim & Supply and Polo by Ralph Lauren, Jack & Jones, Cheap Monday and Zadig and Voltaire. Ethical product has been a major focus, particularly „Made in the UK‟. ASOS stocks brands such as Barbour, Trickers, Cambridge Satchels and Kinky Knickers, all of which have had an amazing performance in 2011/12.vASOS also establishes a marketplace on their website to attract fashion lovers for unique pieces from indie labels, emerging designers, vintage sellers, seller items from customers‟ wardrobes. People can start their own online boutique on this marketplace site. Exhibition 3: The Entry Barries to Retail Fashion Industry and the Five Forces on ASOS Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 5. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 4 ~ THE OBJECTIVES AND DRIVERS OF THE ASOS STRATEGY We now have some knowledge on the industry landscape of the retail online fashion business. Before we look into more details of the company‟s strategy, let‟s look into the drivers and objectives, which determine the strategic direction and the performance of the organizations, of the strategy in ASOS. Exhibition 4: The Drivers and Objectives that direct the ASOS Strategy  THE OBJECTIVES: THE MANAGEMENT VALUES AND THE STAKEHOLDERS VALUES The values of ASOS management are not easy to achieve. Yet, we can see that they demonstrated in their day-to-day business. Customer obsessed; Restlessly innovative; Collaborative & respectful; Passionate. These are all sealed in the DNA of the company and in the hearts of everything all employees dovi. Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 6. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 5 ~ Exhibition 5: The DNA of ASOS, “The ASOS Way”vii Meanwhile, the values of the stakeholders are important too. Customer of course wants trendy and affordable fashions. Besides, ASOS aims at “Fashion with Integrity”. By achieving goals set-up for the strands of ethical trade, sustainable business, sustainable fashion and the community, ASOS contributes to the environment as well as the community. Besides charity funds, they developed a„Get Started with Fashion‟ program to raise confidence through young people‟s creativity and fashion awareness, where participants learn how to upcyclevintage/charity shop „finds‟ and sell their work on ASOS Marketplace.viiiAs per Louise McCabe, Head of Corporate Responsibility of ASOS, „We want to help provide young people with life changing opportunities, support and inspiration.‟ Through taking up these social responsibilities, ASOS can build up the corporate image, as well as attracting the growing community of fashion lovers who value sustainability. Exhibition 6:Thefour strands ofASOScorporate responsibility strategyix  THE DRIVERS: STRENGTH, WEAKNESS, OPPORTUNITIES, THREATS When we analyze ASOS internally, we know that innovation and fashion sense are the strength of the company. The average age of the employee is young. They are enthusiastic, and innovative. They are passionate towards fashions and know the taste of the target customer group. They know the fashion trends and they can launch 1000 new products weeklyx, the pace and efficiency out-performed others online shops (compare to another Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 7. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 6 ~ popular online brand of Topshop which can only put 300 new products weekly). They are the first online store to produce cat-walk video, and they can put 300 new videos daily online to attract consumers. In terms of popularity, ASOS is less well known outside Europe. ASOS is strong in UK and starting to be popular in US and Australia. However, unlike ZARA and GAP which has a strong retail link to promote their brands globally and can attract new customers online, ASOS may has disadvantage on getting popular without physical shops. Exhibition 7 shows the Google web trends on different fashion brands. The popularity of ASOS is growing, yet is out performed by other brands. The corporation and business strategy has to overcome this weakness. Exhibition 7: The Google web trends of online search for different fashion brands.xi The opportunity of the online retail fashion is big indeed. Shoppers in the UK spent £6.2 billion online in July 2012.xiiIn fact the Jan 2012 year-to-year growth is a 23% on e-retail clothing, footwear and accessories. xiii M-commerce continues extraordinary year-on-year growth at 353%, although the base is small.xivInternational market is another opportunity for ASOS. In 2Q2012, international accounts for 65% of sales at ASOS, with overseas sales soaring 49% during period. EU sales were up 27% in the first quarter and revenue from the rest of the world surged 61%.xv Competitions and change of fashion trends are always threats towards the company. Yet, there are other threats. Union and strikes may affect the online business because when it happens the products may not be able to go to the hands of consumers within the promised time. This is extremely risky for UK based company like ASOS since the power of union is so strong in the country. Royal Mail, facing strikes in 2009, is to blame for the lack of quick sales growth of ASOS.xvi Therefore, ASOS switched the local delivery contract to Home Delivery Network Ltd (HDNL).xvii Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 8. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 7 ~ THE ASOS WAY, WITHINNOVATION AND TECHNOLOGY DRIVING THE BUSINESS GROWTH The strategy of ASOS covers several areas. Designer, Marketing &Customer Services, Corporate Culture, and the Customers are key elements. They put customer in the centre of their heart of everything they do. However, this is not all. In now-a-days digital world, technology, social networks and the Internet are also essential in the firm‟s strategy. As a retail fashion corporation, designer is one of the key. With the company focus on young fashion, the young designers understand the desire of the young target customers with the high efficiency of weekly new products on-the-shelf attracting sales growth. The frequent new products can attract customers visiting the site more frequently therefore a higher order rate. In order to acquire new blood and to keep the designer force young, the firm has partnered with London College of Fashion and provide internship placement to 2nd and 3rd year design students with the candidate “embedded” in the design team, shadowing a designer and going on shopping trips to scrutinize trends around the world.xviii The Corporate Culture also helps to establish the success of ASOS. According to product and trading director Robert Bready, “Our approach is simple: we work hard, and we do it because we love it. We are very proud of how far inspiration and hard work has taken us since we started in 2000, but we‟re constantly looking for new ways to go faster, bigger, better.We know how important it is for companies to develop their staff into the best and most talented individuals they can be. At ASOS this is not just desirable but vital - our business is growing so rapidly that to maintain our high levels of quality and achievement, we need to ensure our people grow at the same fast rate.”xix The company developed induction program for new comers, and talent management program to develop the emerging stars in the firm to take up bigger role. Marketing & Customer Services is another strategic area which is a key to the ASOS business. They aim for the global delivery and return proposition that is speedy, convenient and reliable. They are the first to offer free delivery globally. No minimum order amount. Free delivery even with one single item purchased. This clearly gives advantage, with new customers can try the service with minimum amount before they build up their loyalty. Free refund is another policy that can give confidence to their customers. Email to customers clearly communicating the status of the order delivery is under prepared or dispatched gives warm feeling to the customers that they care. In some countries, customers can now track their order online.xxCustomers can return the items by mail with the refund form attached in the delivery and simplify the process from the customer perspective. In-country return solution in some European countries like Spain & Ireland, and Australia, helps to further reduce the cost & time of refund.xxi In 2012, ASOS even starts up international office in Sydney and New York to provide better customer care in the regions xxii. And in the Australian ASOS web site, different products are sold due to the opposite seasons in the southern hemisphere. Meanwhile, to promote to the young fashion lovers who are students, there is a 10% student discount offer.xxiii Regular sales and online outlet are available on the ASOS web site helps clean off the stack-up items. Furthermore, special email to customers in different countries for special discount promotion (e.g. China National Days Discount to customers in China and Hong Kong) makes the customers feel the different. Despite there is no physical retail chain, ASOS allows customers to collect their order from thousands of local shops nationwide in the Collect+ network.xxiv„Our primary objective for any customer contacting our Customer Care team is that they receive an exceptional service,‟ said Susan Caesar, Head of Customer Care of ASOS.xxv Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 9. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 8 ~ ASOS knows their customers and what they want. First, they tailor their sites in various languages and allow items display in the picked currency. Shopping fashions online could be impulsive, and videos and models could be more eye-catching than plain photos of clothes. Therefore, ASOS introduced their own production of cat-walk on their web-site. Photos of products are all worn by body-well-shaped model to attract consumers. Inside the art-deco head-quarter of Great London House, there is a dedicated production team shooting videos and photos daily, with more than 300 professionally produced cat-walk video clips upload every day. This helps create noise and popularity promoting the brand and attract buyers. The ASOS Market allows customers to sell items from their wardrobes. Furthermore, ASOS Market allows customer searching products from emerging designers and vintage sellers. This is valuable to the customers as fashion lovers always want to be unique. Besides uniqueness, variety is another strategy to attract customers with the more than 1,000 brands on the ASOS site. To connect with the customers, ASOS makes best utilization of the internet and social networks. With the huge group of followers on facebook, twitter and google+, ASOS do promotions on the social network, while build up a community of fashion lovers to share photos, looks, fashion tips etc. online. Youtube and Instragram are adopted by ASOS as another tools to reach-out to the e-tail consumers. ASOS introduced their own magazine App for iPhone. In addition, ASOS has the courage to try and innovate. ASOS launched their f-store on facebook in 2011, with more applause then other f-stores, although security on facebook is a concern raised by certain customers.xxvi Exhibition 8: Digital Community of ASOS (from ASOS Annual Report 2012) Technology is the heart of ASOS. Since ASOS is an incredibly fast growing brand and the IT strategy is to go at the same pace. The online and mobile channels are consumer facing and is key revenue channel to the company. The ASOS‟ philosophy is that anything customers are doing online or on their mobile in the fashion space, they should be able to do on ASOS. xxvii So, the channel must be highly reliable, in terms of resilience and performance of services, as well as security of customer data including financial credit card data and non-financial privacy data. To give confidence to the customers, ASOS adopts robust design to defense their website and seeks external reviewer to ensure security.xxviiiOnline is the majority of the sales still, but mobile is now growing faster than expected. The online website keeps improved from the customer experience perspective. We have improved the User Experience immensely with our Checkout/Account design refresh, persistent sign-in capability and Save for Later list.xxixMobile traffic (m.asos.com) now accounts for over 10% of Global Traffic (14% UK, 9% Intl) and 16% of visits globally are now from mobile devices (which includes tablets using the main sites). Their iPhone app has over 1 million sessions a month and iPad app over 200k in 2012.xxx For ASOS, technology is playing a key role more than sales channels. In 2011,Web trend statistics drives a 142 percent growth in sales over; Webtrends has helped the company save Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 10. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 9 ~ some staff teams up to one working day a week on reporting; Webtrends Analytics and Visitor Data Mart helps analyzing the interaction with each of its country-specific websites, and to identify the best converting traffic sources and campaigns.xxxi Besides Webtrends, the Business Intelligence data is another key asset of ASOS. With the online and mobile sales channel, data consumer preference of various regions can be stored in the company‟s database immediately, and data are valuable for product design, fashion trends analysis, and marketing purpose. ASOS uses a web-based application for choosing the optimal delivery path through the supply chain for every order.IT director Dan West says this system is not only important for ensuring ASOS delivers on its core proposition to the customer, but also for operational efficiency: ASOS needs to ensure that every single item carried delivers the best deal for both itself and the customer.xxxiiThe Warehouse Management System use radio frequency network to allow data captured from handheld bar code reading terminals.xxxiiiReceipt to location times in the warehouse have been reduced by approximately 80 per cent. Exhibition 9: ASOS Strategy “ECO system” COMPETITIVE ADVANTAGE: IS THE ASOS MODEL UNIQUE FROM COMPETITORS? We now understand the strategies of ASOS. How do these strategies different from the industry and are they unique from those of the competitors? Let‟s analysis with the VRIN framework   Valuable: The ASOS model is definitely valuable with is huge profit generating online platform which can drive business growth. Their robust design website and reliable service helps to maintain ASOS‟s value and attract customers. Also, its delivery efficiency is another element that contributes to their success. Rare: Resources of ASOS is not rare. Other brands are also catching up with mobile and web online store. Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 11. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry   Page ~ 10 ~ Inimitable: ASOS‟s has been building up customer relationship through social media. Even though competitors can copy the online & mobile business model, the bonding&relationship with customer is not easily imitable. Also, their customer-oriented business model and their attitude in achieving excellent customer service is supreme. Non-substitutable: online stores can be substituted. ASOS has been following closely with the latest technology (i.e. launched mobile platform in.2011) WITH THE CURRENT SUCCESS, HOW CAN ASOS MAINTAIN THE SUSTAINABLE BUSINESS ADVANTAGE WITH CONTINUOUS GROWTH? Definitely, ASOS is very successful. The question is whether the success can be continued and sustained. We would recommend ASOS to sharpen its strategy in for following areas.     Globalization & Localization Enhanced Social Network Linkage CRM & Recommendation Engine GLOBALIZATION & LOCALIZATION Currently ASOS is very popular in UK but far less recognized in other countries. In order to capture more revenue and market share, globalization is significant. In 2012, ASOS continues their global expansion with the launch of new country specific websites in Australia, Spain and Italy, and the opening of their first overseas marketing office in Australia.xxxivWith 62% of ASOS sales coming from outside of the UK and 69% of visits are from international, ASOS is firmly established as a global business. xxxv Yet, with the statistics from Google Trends, (refer to Exhibition 10), it is a very high potential for ASOS business to bloom further when there is a much higher globalpopularity. Exhibition 10: The Google web trends of ASOS search volume around the globe.xxxvi To attract more global customers, localization and tailoring to different regions seems necessary. ASOS needs to consider the taste from different region. Similar to the corporation with the London College of Fashion, ASOS may join-up with some regional top fashion design schools for training/recruiting as well as acquiring young designers from various regions. Cross over with local top designers could be a gimmick to push into some local markets such as Korea and Japan. With the ASOS original philosophy of selling film Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 12. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 11 ~ stars‟ look As Seen On Screen to attract customers, ASOS can sponsor some regional movies/pop stars, e.g sponsorship for actors and actress from China, pop stars from Korean and China to drive sales on the East and South East Asian market. Some regional social network which is more popular than facebook and twitter in certain regions can help further promoting the band online, e.g. Weibo.com in China. With the further expansion and success on the global market, ASOS should start considering the establishment of regional warehouse around the world. At the moment, most of their products are built in China, Eastern Europe, or other low cost countries, and shipped to the UK warehouse. Once a customer order made, goods are shipped will shipped to the customers, and could be closer to the manufacturer than the warehouse. Regional warehouse could help save some shipping cost as well as delivery time potentially, while the inventory control of course could be a topic to further analysis before this idea to be realized.  ENHANCED SOCIAL NETWORK LINKAGE With the endorsement from the customers, ASOS can consider the linkage of the online orders with the social network. For example, once a customer shop online, the photo of the bought item will be should on the customer‟s social network account and share the joy of fashion with friends automatically. With this linkage, ASOS can further use the social network to promote the brand and build up popularity with low cost.  CRM AND RECOMMENDATION ENGINE Besides the traditional social network promotion to attract customer‟s friends online, ASOS may enhance the customer relationship management (CRM) system for some enhanced automatic promotion engine such as Interest Graph. With the large amount CRM and Business Intelligence data ASOS collected online, the individual customer‟s interests can be dig out thru proper data mining processes, and some personal recommendations of goods can be done automatically thru email and social networks. Tailor made suggestions of dressing styles (such as the ways to dress up or to mix-and-match) can be made thru these automatic promotion engines.The Interest Graph gives marketers the chance to demonstrably generate revenue,xxxviixxxviiiand it increases spending among existing customers. Another way to enhance CRM is to offer customer loyalty program. The more you purchased the better discount you could get. Also customers can earn points when purchase and certain amount of points can redeem vouchers. This also can retain existing customers and reinforce branding image. HOW CAN THE RETAIL FASHION AND OTHER INDUSTRIES LEARN FROM ASOS? Undoubtedly, online fashion is the trend of the industry. Besides ASOS, some fashion leaders such as ZARA and GAP are developing their online and mobile platforms. They are not the first movers but the fast movers into this big blue market. Hence, H&M, UNIQLO, Esprit and other fashion retailers should also implement both online stores as well as M-commerce. Putting store on the Internet can be an easier path for acquiring the global market. Some brand names like Zara and H&M have spent to worldwide already. They can expand new markets rapidly through online and mobile, which is faster than opening physical stores in these markets. Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 13. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 12 ~ In terms of specialization, ASOS successfully focus on a specific age group. It is difficult for fashion retailers maintaining brand identification to all customer segments with the same brand name. An example of failure on specialization would be Esprit. Esprit is targeting on the customer segment of wide age range, but the product designs for youngster, middle-ages and elderly are different and therefore the brand loses their attractiveness. Esprit failed to create its product differentiation and positions, therefore losing customers from all segments. Specialization on targeted segment is important to retail fashion. If diversification of another customer segment is required, they should establish a new brand or label. Apart from this, other fashion brands can also learn from the social strategy from ASOS. Fashion retailers can invite co-operations with more designers from designer school or public. Like ASOS, there is Market Place which is a platform for the public to sell their design, such that other retailers can then invite more innovative designers from this kind of platform. ASOS‟ another social strategy is the 2nd hand market. Customers can sell used clothes, which were purchased from ASOS or elsewhere, and the money earned can then be spent on ASOS clothes. Other retailers can bring this concept to their business so as to create their brands‟ community and then increase customer loyalty. For all industries, the innovation,especially on technology, that ASOS demonstrated is a good example. The technologies used are not cutting edge. Instead, mature and stable technology used is the key, while ASOS shown how to best utilize the now-a-days technology while embrace the latest online environment globally. They do not develop new technology which is high risk on delivering results, but adopt whatever popular in the global community. Customer centricity is the key of success for the ASOS business. From the fashion designs on the shelf, the online platform to the delivery process, all strategies are focus on the consumer needs and customers desires. Indeed, this should be a key of success for all industries. The ASOS CEO Nick Robertson said, "We believe online fashion will continue tooutperform traditional retail channels. We are at the leading edge ofour sector and see enormous potential to drive our business forward,both in the UK and internationally."xxxixThere is a good chance that ASOS‟ success will continue. Perhaps the quotes from Alexander McQueen and Coco Chanel can explain the success of the ASOS business with the linkage of the passion of ASOS toward fashionsand their restlessness of innovation on technology. "It’s a new era in fashion - there are no rules. It’s all about the individual and personal style, wearing high-end, low-end, classic labels, and up-and-coming designers all together." — Alexander McQueen “Fashion is not something that exists in dresses only. Fashion is in the sky, in the street, fashion has to do with ideas, the way we live, what is happening.” ~Coco Chanel Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 14. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 13 ~ BIBLIOGRAPHY i London Stock Exchange http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/com pany-summary.html?fourWayKey=GB0030927254GBGBXAMSM ii ASOS plc company website.http://www.asosplc.com/investors/financials/5-year-financial-summary iii ASOS plc company website, http://www.asosplc.com/who-we-are iv Maxwell Wallace, “How Much Revenue Does the Average Clothing Company Make?”, Demand Media, http://smallbusiness.chron.com/much-revenue-average-clothing-company-make-30775.htm l v ASOS plc, Annual Report and Accounts 2012, p.8 vi ASOS plc, Annual Report and Accounts 2012, p.16 vii ASOS plc, company website, http://www.asosplc.com/who-we-are/our-people viii ASOS plc, Annual Report and Accounts 2012, p.11 ix ASOS plc, Annual Report and Accounts 2012, p.11 x Weekend Weekly, Issue680, 17 Sep 2012 xi Google trends, http://www.google.com/trends/explore?hl=en-US#cat=0-18-68&q=zara%2C%20h%26m%2C %20gap%2C%20asos%2C%20esprit&cmpt=q xii IMRG, “Online retail sees highest growth this year”, 20Aug 2012, http://www.imrg.org/ImrgWebsite/User/Pages/Press%20Releases-IMRG.aspx?pageID=86&p arentPageID=85&isHomePage=false&isDetailData=true&itemID=8081&specificPageType=5& pageTemplate=7 xiii IMRG Capgemini e-retail sales index, Feburary 2012, http://www.imrg.org/imrgwebsite/user/pages/industrystatistics.aspx?pageid=58&parentpag eid=0&itemid=6881&pagetemplate=9&ishomepage=false&isdetaildata=true&specificpagety pe=10 xiv IMRG, “Lowest ever growth for clothing as April showers dampen desire for summer wares”, 17 May 2012, http://imrg.org/ImrgWebsite/User/Pages/Press%20Releases-IMRG.aspx?pageID=86&parent PageID=85&isHomePage=false&isDetailData=true&itemID=7540&specificPageType=5&page Template=7 xv IMRG, “Strong international sales boost revenues at Asos”, 10 Jul 2012, http://www.imrg.org/ImrgWebsite/User/Pages/News.aspx?pageID=57&isHomePage=false&i sDetailData=true&itemID=7925&specificPageType=0&pageTemplate=5 xvi Pual Burn, “Asos: Royal Mail to blame for sales slump”, Parcel Delivery News, 17 Nov 2009, http://www.myhermes1.co.uk/news/asos-royal-mail-to-blame-for-sales-slump-19464860.ne ws xvii Joanne Bourke, “Home Delivery Network signs contract with Asos”, Commercialmotor.com, 13 Jan 2009, http://www.commercialmotor.com/latest-news/home-delivery-network-signs-contract-with Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx
  • 15. ISOM 5100 Fall 2012 Group Assignment #1 THE ASOS STRATEGY : THE AMAZING GROWTH OF ONLINE FAST FASHION –Study on ASOS.com and the Fashion Industry Page ~ 14 ~ -asos xviii Drapers, “ASOS”, 16 Jan 2010, http://www.drapersonline.com/news/people/next-generation/asos/5009645.article xix Drapers, “ASOS”, 16 Jan 2010, http://www.drapersonline.com/news/people/next-generation/asos/5009645.article xx ASOS plc, Annual Report and Accounts 2012, p.15 xxi ASOS plc, Annual Report and Accounts 2012, p.15 xxii ASOS plc, company website, http://www.asosplc.com/who-we-are/our-history xxiii ASOS web site, http://www.asos.com/Nus/Cat/pgehtml.aspx?cid=11778&WT.ac=UK_GlobalBanner3 xxiv ASOS plc, Annual Report and Accounts 2012, p.15 xxv ASOS plc, Annual Report and Accounts 2012, p.17 xxvi Paul Marsden, “The Future of F-Commerce is Here: And It's Called ASOS [Screenshots]”, Social Commerce Today, 27 Jan 2011, http://socialcommercetoday.com/the-future-of-f-commerce-is-here-and-its-called-asos-scre enshots/ xxvii ASOS plc, Annual Report and Accounts 2012, p.12 xxviii Steve Town, “ASOS”, Safe Websites, Certified Reports, 12 Apr 2012, http://www.safe-websites.co.uk/asos/ xxix ASOS plc, Annual Report and Accounts 2012, p.12 xxx ASOS plc, Annual Report and Accounts 2012, p.13 xxxi Anh Nguyen, “ASOS’ use of web analytics helps drive international growth”, Computerworld UK, 11 Jul 2011 http://www.computerworlduk.com/news/it-business/3290528/asos-use-of-web-analytics-h elps-drive-international-growth/ xxxii CIO.UK, “Asos IT director Dan West's approach to supporting online fashion”, 9 Jan 2012, http://www.cio.co.uk/slideshow/3328518/asos-it-director-dan-wests-approach-to-supportin g-online-fashion/7/?speed=-1#content xxxiii Dan Meadows, “Asos sets the fashion in logistics”, SupplyChainStandard.com, 1 Oct 2007, http://www.supplychainstandard.com/liChannelID/13/Articles/1143/Asos+sets+the+fashion +in+logistics.html xxxiv ASOS plc, Annual Report and Accounts 2012, p.1 xxxv ASOS plc, Annual Report and Accounts 2012, p.6 xxxvi Google trends, http://www.google.com/trends/explore?hl=en-US#cat=0-18-68&q=zara%2C%20h%26m%2C %20gap%2C%20asos%2C%20esprit&cmpt=q xxxvii NadimHossain, “Why the Interest Graph Is a Marketer’s Best Friend”, Mashable, 19 Jun 2012, http://mashable.com/2012/06/19/interest-graph-marketer/ xxxviii Om Malik, “So What Comes After Social Commerce?”, GIGAOM, 19 Apr 2011, http://gigaom.com/2011/04/19/so-what-comes-after-social-commerce/ xxxix ComputerWeekly.com, “Asos boosts IT spend for £1bn sales”, 10 Jun 2010 http://www.computerweekly.com/news/1280092994/Asos-boosts-IT-spend-for-1bn-sales Cliff CHEUNG, xxxxxxxx Joseph MAN, xxxxxxxx Helen CHING, xxxxxxxx Matthew TAM, xxxxxxxx Jason YEUNG, xxxxxxxx Wonsky CHAN, xxxxxxxx