ASOS doubles profits as e-commerce retailer expands global presence
- Summary:
- ASOS shows how to do e-commerce and make a success of it. Is it enough to defend itself from Amazon though?
Crucially for ASOS, growth is coming from international expansion as consumers take advantage of exchange rates. CEO Nick Beighton attributes ASOS success despite drops on consumer spending overall to a number of factors:
Being global, being online, being twenty-something-focused and having accessible price points, all now combined with greater nimbleness and agility across our entire business model and operations. We've emerged as an even bigger business having amplified our desirability and enhanced our differentiation. All combined, I believe ASOS today is more desirable, more differentiated and therefore more defensible than it ever has been.
At a time when every other online retailer is fretting about the Amazon threat, that’s a nicely bullish position to be in, although of course only time will tell when it comes to testing the ASOS defenses. But for now Beighton can point to some impressive stats to substantiate his confidence:
We have 15.4 million active customers up 24% year on year and over 10 million of which are outside the UK and the acquisition rate is growing three times faster than the UK. Average basket value's purchase frequencies are all trending in the right direction…we have raised our sales guidance for the year ahead to 25% to 30% growth year-on-year, up from the original anticipation of 20% to 25%.
He adds:
We launched 5000 new styles each and every week, 60% of the product range is unique to ASOS. We've achieved the highest level of full price sell through in our history and we continue to refresh our third party offer adding around 200 brands during the course of the year.
It’s the unique brands that are another differentiator though:
We know our unique product is one of the reasons for our customers keep coming back to us…Following the success of these brands we're stepping up our investment here creating a dedicated ASOS brands team. This is about creating new and scalable brands with a defined point of difference for different customer segments for different price points and with different tastes.
The ‘unique to ASOS’ strategy has recently expanded, adds Beighton:
We've been re-selling face and body and beauty Green products for many years now, but without any real range or authority, range credibility or width. The launch of ASOS Face And Body in September will change that. It represents a new opportunity for us to create a more positive category experience from the twenty-somethings. A fresh regional approach is far more engaging and positions us to stand out in this fast growing market.
Now we have over 6000 products including an ASOS range in this category. Our own bio-range is genderless just been launched and we've done this in our own unique ASOS way and the early customer feedback has been fabulous. We've seen customer decision making an inspiration change in this category we have tailored that accordingly giving stepping up our video content and providing an augmented reality beauty app so you can try on our products before you buy.
ASOS also remains dedicated to producing compelling online and social content to make the brand ‘sticky’ for its consumers. Beighton notes:
We remain prolific publishers of content to support our experience. Around 60,000 piece of content each and every month in fact. Our content, our experiences are designed to be relevant, engaging to delight and to be intuitively simple.
We've also seen a big switch in customer behaviour in the last 12 months. Our video content was viewed more than 66 million times up 100% on the prior year and we have operating our activity in this area accordingly.
We've also seen a big uptake in Instagram and Snapchat, Instagram stories which was introduced last year has had a 70% increase in average views to around 270,000 per the story and our branded face and body Snapchat ends was viewed by over 300,000 unique visitors, which is ahead of the Snapchat internal benchmark.
Tech talk
With my appalling click-and-collect experience at O2 still doing bad things to my blood pressure, ASOS has its own expansion plans here. Beighton says:
This year we're seeing a step up at our click-and-collect offering. We’ve launched this proposition in the US, in Italy as well as dailing up locations in the UK. We now have around 30,000 locations globally…We've also enhanced our EU Click & Collect network further improve our US domestic offer will premier through at least five more countries. We also provide customers with an auction to choose their preferred carrier and would be looking to launch ASOS refund express giving customers the ability to have a faster refund. So lots more innovation coming.
All of this is powered by a digital platform into ASOS continues to invest in order to enhance its capabilities, with Beighton boasting of 1,300 customer experience enhancements over the past year:
Our peak last year, we handled 33 orders per second at the peak hour and we have the capacity for many more…[our] global fulfillment programs are all on track…We’ve improved and extended the algorithms and the intelligence behind our ASOS Fit Assistant and ASOS Recommendations, which will further enhance customer experience and, hopefully, lower the returns rate. We've gone live with refresh site navigation in our apps. This improves our customers can search, browse and explore our products. It also speeds up downloads and product pages globally, the most significant improvement in navigation in many years. This will soon follow on the web channels.
For the year ahead, our investment will also enhance our global platform to enable us to offer more locally relevant experiences in the 200-plus markets we trade in. Currently, we have 7 country-specific websites and apps. By the end of FY '18, this will be 20 in our top 20 markets. This will be new localized, web and mobile experiences. This is the first time we've added local foreign sights for 4 years now and this year we're adding 13.
And of course, no tech innovation discussion can be complete without an Artificial Intelligence pitch. Beighton does not disappoint:
We're also on a journey towards world-class artificial intelligence capability from AI- powered customer experiences to AI-powered customer care, which not only improve the customer experience but will lower the cost of handling…We're also trying something new. With the new iOS launch, we've got ability to do augmented reality.
All of this takes tech talent and Beighton says there has been a shift here in terms of sourcing local talent in the UK:
So for many years, tech is the area where we struggles most getting engineers. Not the case anymore. ASOS is now that brand where if you have [a] particular skill set, there's a whole diversity of solutions that you can work on. So we're having a much greater attraction of tech. London, particularly where we are, there's Facebook,Google and so that's just improving the gene pool.
That said, there’s a certain irony here that a firm that has previously talked up its Brexit bravado in terms of boosting overseas sales, might end up feeling a pinch on its talent management. Beighton admits:
Over the course of the last 3 years, one of the things we've grown [is] our tech abilities by bringing European talent. So…that’s something that's an issue for us depending on where Brexit ends up.
My take
As I’ve said before, a stellar UK e-commerce and export success story that doesn’t get the recognition it deserves at a time when the Brexit-facing government is too busy fawning over Facebook, Google and Amazon. .