ASOS - building e-commerce success on tech investment

Stuart Lauchlan Profile picture for user slauchlan April 14, 2016
Summary:
Ongoing investment in technology has made ASOS one of the e-commerce survivors of the dot com boom of the early 2000s.

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Over the past 12 months, over 20% of the UK population placed an order with an ASOS website.

It’s testimony to the success of the online-only reatailer, which has become one of the UK’s biggest e-commerce success stories since it launched in 2000. For the first six months of its current fiscal year, the firm turned in pre-tax profits of £21.2 million, up 18% year-on-year on sales up 24% to £648.6 million.

As an online-only retailer, ASOS is built on its technology investment. CEO Nick Beighton says:

I'm really proud of the work we've done in technology. Our tech team continues to grow. We now have around 700 people in technology and developments are getting faster. In essence, the scale and pace of the innovation in our technology is unrecognizable to me from a few years ago.

ASOS can make a couple of interesting technology boasts. It is now the largest UK user of Microsoft cloud services, for example, while in the DevOps world, it claims to be the largest contributor of open source code to leading deployment automation technologies.

Over the past 6 months, the firm has had 230 tech releases with Beighton affirming plans to accelerate this rate:

We've deployed an in-house software craftsmanship style, to develop an in-house code approach which gives us an increase pace of code and increased quality of code output.

This technology investment is allowing ASOS to spped up some necessary legacy re-platforming. Beighton expects to see “a major chunk” of the software re-platforming completed this summer:

This enhanced code, particularly in checkout, will be deployed within our mobile solutions first. Not only is this program going to be a key plank for future growth, giving us faster processing times and more capability, it's been rebuilt in a state-of-the-art architecture.

Earlier this month, Asos took a strategic decision to pull out of its operations in China with a view to keeping UK and European business “hot” as well accelerating growth in the US. The company now boasts 10.9 million active customers, a 17% increase year-on-year, with 1.4 million of those in the US, up 25% year-on-year.

In terms of international expansion, the UK, as the mature market, is effectively the test bed for other countries. Beighton says:

The content and all our best propositions and all our technology, tends to get deployed in the UK first. We tend to innovate early in the UK and then we spread it through the international. Once we're really happy with the UK, we spread it internationally.

Mobile shift

In common with other e-commerce retailers, ASOS has seen a shift to mobile platforms for transactions, which now play an integral part in future planning. Some mobile stats of note:

  • Mobile revenues now account for 60% of the entire group, 70% in the UK.
  • Over the past 6 months, ASOS reports 3.2 new milion mobile users downloading apps.
  • Since its launch late last month, a new iOS app has had 7.5 million downloads.
  • Over the last 12 months, 1.4 billion product views have been made through a mobile device.
  • Average dwell time through a mobile is 9.1 minutes, compared to 12 minutes for the website.

Tablet usage has plateaued after a period of acceleration and it’s now all about the smartphone. iOS apps have predominated, but are not the exclusive focus, says Beighton:

With our customer base, the majority of the growth is coming through an iOS system rather than Android, albeit we still have significant numbers within Android. The iOS app [has] just been launched, the Android one's coming in the next couple of weeks. So we're developing both in sync.

The firm has placed great emphasis on creating compelling content to push out though social channels. ASOS has over 17 million followers on Facebook, Twitter, YouTube, Snapchat, Instagram and Tumblr. Beighton says:

We're now creating content at a greater scale than ever before, in a more localized way than ever before. We publish tens of thousands of new content each and every month across every social channel. The combination of our great product and great prices and great content drives an amazing customer experience.

Just in the last six months, we've launched ASOS A-Listers, a rewards program done in the ASOS way. Following an extensive trial, we did during last year, we launched this in February. It gives customers points or hearts and building into ASOS vouchers. Customers are also able to unlock a wide variety of rewards, such as birthday discounts, free next-day delivery, access to exclusive competitions and events.

The company has also launched Access all ASOS, a program promoting 1000 ASOS advocates, “simply love us”, says Beighton, and whose network effect is “simply lovely”. This personal element is important, he argues, adding that it’s important to keep the power of machine learning in its place:

Machine learning is an important part of e-commerce, but you've got to very careful how close you deploy the machine to the customer, otherwise, you get a response that might not be what the customer wants. So we deploy machine learning to improve our understanding for our customers, to analyze customer behaviors better, to make recommendations that are appropriate based on customer behavior. That's the only place we put the machine learning directly in front of the customer.

Personalization and recommendations however are built on human endorsements combined with new tech innovations:

The recommendations piece, that's been deployed all over mobile now and all over our key channels and we've now put it into You May Like piece, we've had that for a long, long while, but the improved algorithms have given it a much better experience based on what you browse, what you've liked, what you've added to bag and may not have purchased, based on your behavior on other parts of the channel.

In terms of personalization, it's a never-ending approach; there's no start, middle and end to it. So personalization can go from here's an edited choice of 900 brands that we've chosen for you, for customers like you, endorsed by customers through social media. Our content is personalized through many channels. Customers upload pictures of themselves so they're part of the conversation, they're part of shaping the offer. So it's a continual journey that we'll never stop on.

My take

A UK success story in e-commerce from a survivor of the dot com boom.

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