ASOS’s mission is to be the world’s number one online fashion destination for twenty-somethings.
After completing boarding school and spending a few years as a “ski bum”, Nick Robertson took a job as a media buyer at ad agency Young & Rubicam. The position enabled him to get a strong understanding of consumer behavior. After four years, he moved to fellow agency Carat, but soon became tired of working for others. So in 1996 he launched his own firm, Entertainment Marketing, a marketing services business. It assisted clients with opportunities such as TV product placement.
Over four years Robertson collaborated closely with the film and TV industry, and his experience gave him an idea for a new venture – a website where visitors could find and buy products (e.g. clothing, furniture, etc.) they saw celebrities using in movies or shows. He co-founded the startup in 2000 with Quentin Griffiths, naming it As Seen on Screen (ASOS for short). While the dot-com bubble burst made the move risky, they were lucky in that their families were willing to finance it.
The two raised £2.4 million in startup funds and bought several celebrity-linked items for the site’s inventory. They also hired fashion buyer Lorri Penn for guidance. She advised them that they should focus exclusively on fashion, because it would generate the highest returns. They accepted this proposal, and shifted ASOS’s emphasis accordingly. The change was actually fitting, given that Robertson’s great-grandfather was Austin Reed, founder of the eponymous British menswear chain.
The online store was marketed at 18-24 year-olds wanting to imitate a celebrity’s style. The firm sold inexpensive replicas of items worn by then-popular “It girls“ such as Sienna Miller and Kate Moss. The strategy worked, and sales grew – in 2001, revenues reached £250,000, and ASOS joined the London Stock Exchange. The company has come a long way since then. It now offers over 80,000 products aimed at 20-somethings and is the largest independent online fashion retailer in the UK.
Business model of ASOS
Customer Segments
ASOS has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:
- Consumers – Individuals who want to buy the latest fashions online.
- Fashion Companies – Vendors that produce fashions and need buyers.
There is also a niche market component of the business model as the company targets its offerings at people in their twenties.
Value Proposition
ASOS offers six primary value propositions: accessibility, customization, price, cost reduction, convenience, and brand/status.
The company creates accessibility by offering unique fashion options. Its website features a section called ASOS Marketplace, which includes 50,000 vintage/boutique fashion items from more than 900 boutiques in 40 countries. This enables shoppers to buy from brands that might not have physical stores in their neighborhood or their own websites. ASOS also offers clothing for various body sizes, with lines such as Little Mistress Plus Size, New Look Petite & Tall, and Glamorous Petite & Tall.
The company offers customization by creating websites tailored to different countries, specifically for Australia, Germany, France, Italy, Russia, Spain, China, and the United States. In addition, it personalizes planning and buying strategies for the merchandise on each site by country. For example, it might launch a Spring/Summer collection for Australia‘s site before it does so in others.
The company offers a price value proposition. It uses zonal pricing technology to ensure that brand costs are in line with rates at local markets; this helps it provide more competitive local pricing.
The company reduces costs by offering free delivery for any orders totaling more than £20. It also offers free returns in the UK, Germany, France, and the U.S. Further, it operates ASOS Rewards, a loyalty program that allows customers to accrue points with each purchase towards discounts.
The company creates convenience by offering next-day delivery options in France, Spain, Germany, Italy, Sweden, Denmark, the Netherlands, Ireland, and Belgium. It also provides express delivery services in over 20 smaller territories and mid-tier services in Singapore, Korea, and Hong Kong. Moreover, it provides live delivery updates so customers can receive real-time information on details such as driver’s name and expected delivery time. Lastly, its app offers product recommendations.
The company has established a powerful brand as a result of its success. Its website features over 80,000 different products, with over 3,000 new lines added each week. The lines span menswear and womenswear, accessories and footwear, and beauty and jewelry. These lines fall into 800 local and global brands, which include both third-party and private-label offerings. The website ships to more than 240 countries and territories and had more than 10.7 million active customers in 2015, up 18% over 2014. Famous fans include Taylor Swift, Zac Efron, Rihanna, Katy Perry, and One Direction. Lastly, ASOS has won many honors, including a Cosmopolitan Fashion Award for “Best Online Offering”, a Drapers Digital Award for “Best Use of Mobile”, and Reveal Online Fashion Awards for “Best One-Stop Shop”, “Best for Special Occasions”, and “Online Retailer of the Year” (2015).
Channels
ASOS’s main channel is its website, through which it acquires most customers; customers can also make purchases through its mobile app. The company promotes its offering through its social media pages and app, and through sponsorships such as of the McLaren Formula One Team.
Customer Relationships
ASOS’s customer relationship is primarily of a self-service nature. Customers utilize the website or mobile app while having limited interaction with employees. The site features video guides on topics such as how to shop on the site. In addition, the company publishes ASOS magazine, a monthly publication it sends to 475,000 select customers in hard copy, as well as to 50,000 customers in digital format. The magazine includes fashion news, celebrity interviews, and other features. Despite this orientation, there is also a personal assistance component in the form of e-mail, social media, and 24/7 phone support.
Key Activities
ASOS’s business model entails maintaining a common platform between two parties: consumers and fashion companies. It also involves designing and developing its private label offerings. It outsources manufacturing to third-party contractors.
Key Partners
ASOS maintains an affiliate programs in certain locations such as the U.S. Third parties that promote the company on their platforms (websites, mobile apps, etc.) receive a 5% commission in the event of a confirmed sale through a resulting lead. These partners also receive a newsletter providing updates on upcoming promotional activity, as well as technical support.
Key Resources
ASOS’s main resources are its collection of facilities, which include fulfillment warehouses in the U.S., Europe, and China and returns centers in Swiebodzin and Australia. The company also depends on its staff of over 650 Customer Care Center employees to provide shopper support.
Cost Structure
ASOS has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is distribution costs, a fixed expense. Other major drivers are in the areas of warehousing and marketing, also fixed costs.
Revenue Streams
ASOS has four revenue streams:
Product Revenues – The company generates revenues from sales of its private label products
Usage Fee – The company generates revenues from a £20 monthly rental fee charged to vendors on its website
Transaction Revenues – The company generates revenues from the 20% commission fee it charges vendors for each confirmed sale
Advertising Revenues – The company generates revenues from fees charged to third parties for advertising on its website and in ASOS magazine
