ASOS CEO - being online and on mobile is not enough for e-commerce success

Profile picture for user slauchlan By Stuart Lauchlan April 5, 2017
Summary:
E-commerce retail is becoming a more complicated and demanding sector and just being online is no longer enough, says ASOS CEO Nick Beighton.

ASOS
Being online, being on mobile is no longer enough.

It’s a strong message from Nick Beighton, CEO of online and mobile fashion retailer ASOS and one that may go some way to explaining the UK-headquartered firm’s current success. The company just turned in profits for the six months to the end of February that were up 14% to £27.3 million on sales of £889.2 million, an increase of 31%.

It’s in the breakdown between UK and non-UK revenues that a clue can be found to some of the fiscal success.

Beighton has previously been bullish about Brexit, arguing that it’s got opportunity upsides to it. The fall in the value of sterling is still paying off for ASOS, with UK retail sales up by 18% year-on-year while international sales leapt by 42% as non-UK buyers took advantage of the currency exchange rates.

But that’s not going to be enough to guarantee long-term success, although Beighton still contends that ASOS is extremely well-placed:

The period we're currently operating in is one of the most economically and politically uncertain and has been for many years. Customer behavior is changing fast. ASOS has many structural adventures, being global, being online, being trend-semi-focused and being low price points. We spent many years engineering nimbleness and agility into our model.

While ASOS has always been desirable, is been built for the customer's eyes, is always being differentiated with this unique blend of fashion, content and technology and is always and this is being underpinned by great logistics.

A key element of strategy for the last two years is being enhancing these features, while significantly investing in customer pricing, he adds, which brings us back to the bold declaration above:

Being online, being on mobile is no longer enough. You have to have amazing product newness and a connected experience anchored in a core purpose with tangible brand DNAs, tangible DNA that customers believe in.
Our offer starts with great fashion at a great price, presented beautifully and this just gets better and faster each and every month. Our offer is truly unique - the combination of ASOS own brand with the most relevant creative idea of third-party brands.

We now launch 4,500 styles each week. That's a 10% improvement in velocity from a year before and we're building more studios to cope with this change and drive it even faster. In addition to the 85,000 styles on the main site and apps, which are mostly unique to us, around 62% to 65%, there are a further 100,000 items on our marketplace selected from a 1,000 boutiques. We're currently drawing our plans to how we can amplify the market experience and make it more connected by our customers.

Tech matters

Despite his headline-grabbing declaration, tech is still a bedrock of the ASOS business model:

It's fundamental to our growth plans, and is a critical enabler to how we constantly adapt to our customer's changing shopping behaviors. Our technology was always good. It's now truly great.

Over the past six months, we’ve taken a major step forward in setting up technology to underpin our future plans. A cloud-based, micro-service architecture was released in November just before peak trading. This platform will form the backbone of our entire customer experience of our site and our apps. It's fast, it's reliable and its flexible and it performed brilliantly for its first ever Black Friday.

Over 100 engineers, architects, analysts, platform, product managers and user experience designers have worked on this platform over a number of years. I’m not only really excited about how the platform is being designed and built, but critically more excited about how it forms the foundation to build on our digital product visions.

There’s also work underway on the back-office, adds Beighton:

We’ve got major core operations systems transformation underway. This includes new wins merchandising and planning systems for our retail teams. We call this truly global retail, plus the new finance system that support our ability to buy, sell and account the stock in multiple locations and in local currencies.

We're also growing our people systems to support a better, more connected service for all our ASOS's. The new systems are multi-year investments and will enable our teams to operate at even greater scale and are all proceeding to plan.

From a transactional perspective, mobile visits now accounts for around 70% of total traffic, up from 60% in 2016, and 58% of orders are placed from a mobile device, up from 51% last year. Coming up is Apple Pay and an Android app refresh, so mobile is clearly a top priority. Beighton confirms:

Mobile has already disrupted desktop e-commerce for twenty-somethings and that channel shift continues at pace. We've been at the forefront of that and we've been achieving some impressive stats too. Our call [on this] was right here several years ago, but it's become much bigger than any of us ever realized.

We are seeing over 780,000 downloads a month of our apps, which is fantastic, and customer engagement on the mobile remains very strong. Eight times a month is average frequency and 80 minutes on the site or an app.

The app also wins good reviews from users, he adds, which is important in an increasingly competitive mobile retail market:

A 2017 customer will have six shopping apps on their device. There is normally their favorite brands. It's normally an Amazon or eBay and I want [there] to be ASOS. So, our mission is to ensure one of the six apps that the customers choose is ASOS.

Content

A driver to ensure this is to deliver great content and experiences, he adds:

We are prolific publishers of content and this content supports our experience. We know what engages our customers. Our content and our experiences are designed to be relevant, engaging and to delight and being intuitively simple. We now produce, publish and share over 80,000 pieces of content every single month. That’s up from 60 a year ago.

Our global and social audience has grown by further two million people in the last six months to just over 21 million followers. As I said earlier, Instagram is now the stand out performer. We’ve also cemented our position of early adopters of emerging content formats, such as shoppable Instagram Stories, Instagram Live, Facebook Live, Facebook Canvas and Snapchat lenses across many key channels. This enables us to connect with our audience in a way that feels fresh and relevant to them and involves as quickly as they do.

All of that’s impressive, but not everything is as optimised as it might be, concedes Beighton:

The ASOS marketplace hasn’t had the level of investment as the rest of the proposition…At the moment it’s almost a disconnected experience within our main site. You have to come out of the [main area] and straight back into it. The mobile web [aspect] is not strong. So, our first mission will be to improve the mobile experience, develop its own apps, improve the payment methods and how we connect into the main site, I don’t think you'll see marketplace product alongside the main site and the main apps, but you'll see it far more readily accessible, so [customers] can dive in and out a bit easily.

That’s something we're working on. There are many businesses that have a huge business which is a purely marketplace. We're looking at it as a better advantage that we haven’t yet taken out to spin. We know customers love it. You can get unique vintage product from lots of good boutiques and enriches our offer. So, we'll be looking to see how we can augment that and fold up again with better tech, better payment proposition and something that's more folded into the user.

My take

I’ve called ASOS a UK e-commerce champion before now and I see no reason to change that opinion just yet. It will be interesting to see how the firm rides out the ups-and-downs of the next couple of years of Brexit negotiations. But investment is clearly going on the right things and Beighton’s boast of having an adaptible enought business model is one that may well stand the test of time.