In a year when retailers are folding at a rate of seven a day, online fashion retailer Asos has yet again defied the downturn with sales doubling to £165m in the year ending March 31st.
It’s not the first time Asos has defied expectations. In its nine years in business, it has survived the tech crash of 2000 and a fire that wiped out almost all its stock and caused it to stop trading for two months in 2005.
But the etailer founded by Nick Robertson, the great-grandson of the founder of upmarket clothing brand Austin Reed, has survived and thrived.
What’s it doing so right?
Speed and opportunism seem to be the keys — Asos has mastered the art of newness for its young buyers, who relish affordability and variety.
Its ethos is fast fashion, from stock to supply — it is quick to interpret catwalk trends and delivery of goods is usually next day.
The business model itself has changed with the times, from a site copying celebrity clothes (called As Seen on Screen) in 2000 to its current iteration, which sells own-label, discounted and full-price brands that include such as Hackett, Mango and Mini Boden.
Arguably, its demographic insulates it from recession, with young women still spending despite the recession.
It’s also a growth market: online sales currently account for only a small part of Europe’s clothing market, which is worth about €300bn a year, says retail researcher Verdict.
E-commerce consultancy Forrester forecasts online clothing sales in the UK will grow by more than 50 per cent to £7.1bn by 2014.
But it’s also done several things at once to ensure it stays on top:
- Diversity It picked up on the discount trend with Asos Red outlet, a branded clearance section launched last year that is expected to double turnover in the next three years. It adds more than 800 new lines each week, and keeps fresh in other ways, by adding new ‘departments’ such as maternity, launched in 2008, and ‘Little Asos’ for kids, which launched in February. And the luxury end’s covered through Designers at Asos.
- International expansion The job switch of Asos FD Jon Kamaluddin to international director is a clear signal of where Asos is focusing its attention while sterling remains weak. International customers make up some 16 per cent of overall sales and Robertson’s already identified international expansion as a big focal point this year. International sales at Asos have gone stratospheric, rising 173 per cent in the four weeks to end of March, compared to 2008.
- Customer communication Underpinning this is constant communication with its 1.2 million active customers via email newsletters, which encourage visitors, and a glossy magazine that offers a secondary income stream through advertising.
- Minding the shop Asos has made a virtue of quick-change nature of websites by adding new departments and revamping the site often. It is about to launch its online shopping community, which will feature blogs and a help forum that lets customers answer each other’s questions.
- Investing in the business — Robertson hired Top Shop buying director Caren Downie in 2008, and implemented new marketing systems and warehousing to cope with a 60 per cent rise in orders.
Consolidation appears to be the trend among online retailers, with Asos amassing a huge number of brands to become a fashion portal.
It looks as if Robertson has bricks-and-clicks retailer Next in his sights — it has a seven per cent share of the online clothing market and Asos has nearly five per cent, more than Top Shop or New Look.
“Can I see 10 per cent of clothes being bought online? Yes,”, says Robertson “and I can see that two to three years away.”
