Case Study 4
ASOS has pioneered online social shopping and is one of the most successful online fashion retailers in the United Kingdom. ASOS offers tens of thousands of branded and own-label fashion items to millions of 20-something men and women around the globe. The brand is constantly reviewing the online marketplace for threats or opportunities for expansion and responding accordingly. This case study explores the growth and competitive strategy of this iconic online retail fashion brand.
The ASOS strategic pillars (see Figure 4.18) summarise its business model, including the target audience and the importance of customer experience and sustainability.
Nick Robertson and Quentin Griffiths, founders of As Seen on Screen (ASOS), were inspired by watching American TV series Friends, and these friends set about building a website that could sell items that potential customers had seen on television. Initially, ASOS sold copies of clothing worn by celebrities, but soon the company began developing its own brand. This focus enabled the company to start to build a reputation that was attractive to young fashion shoppers.
Despite industry commentators’ doubts about selling clothing online, by 2004 ASOS had introduced its own-label women’s wear and since has achieved the following landmarks:
•2006 – became the first company in the United Kingdom to launch online catwalk shows;
•2007 – launched ASOS own-label for men;
•2010 – began expanding internationally into Europe, Russia and the United States and established sites to serve these markets and launched ASOS marketplace;
•2011 – app launch and Australian, Italian and Spanish sites established;
•2012 – began to consolidate online expansion, opening international offices in Sydney and New York;
•2015 – partnered with PayPal to connect directly with student markets;
•2016 – invested in artificial intelligence and voice recognition to improve social media applications;
•2017 – market valuations made ASOS more valuable than M&S, the United Kingdom’s largest seller of clothing;
•2019 – dip in online fashion sales, ASOS’s significant investment in restructuring and transitions costs led to lower decline in overall valuation of the brand;
•2021 – ASOS explores expansion opportunities in the United Kingdom with possible acquisition of one of its wholesale partners and leading fashion brand Topshop.
Figure 4.18 ASOS’s strategic pillars summarising its business model
Source: ASOS (2020)
Description
ASOS has grown into the United Kingdom’s largest online fashion retailer by deploying a competitive strategy, which has established a unique market position: selling a specialist range of products that have ‘the designer fashion look’. Nick Robertson, the company’s co-founder, started selling branded clothing as seen in films and on television. Not only did this enable the company the opportunity to create a market, but it also benefited from celebrity endorsements in PR and promotional campaigns. ASOS now sells over 100,000 branded and own-label clothing products and offers a much wider product range than its high-street competitors. ASOS operates as a fast-fashion retailer, which has meant overcoming many challenges to get goods to the customers on time and at the same time manage the high rate of returns. ASOS has set up systems that enable product lines to be replaced quickly. Operating at this level creates many challenges for ASOS, so, in order to deliver the promise of fast designer-look fashion, and to constantly update product ranges, ASOS has established an ‘in-house’ design team in Europe, which creates catwalk lookalike items that are produced closer to the customers, which aids delivery and helps the higher returns rate of operating online rather than in-store.
ASOS continues to be one of the top ten online retailers globally, but recently other high-street brands, Macy’s and Next plc, have grown their e-commerce operations to become more significant competitors. In 2018, faced with growing global competition, ASOS’s CEO Nick Beighton talked of how the company had invested heavily in expanding its global platform capability in order to improve customers’ experience and facilitate global expansion in new and existing markets (Skeldon, 2019). The increasingly competitive nature of online fashion means ASOS has to plan for its future growth and market development. The company’s mission is to be the world’s number one destination for fashion-loving 20-somethings (ASOS, 2019).
Online value proposition
‘Authentic, Brave and Creative’ are the key words that sum up ASOS’s company values (ASOS, 2019). Product choice is at the core of the ASOS proposition: tens of thousands of branded and own-label products available, with hundreds introduced each week. On pricing, ASOS is price competitive with its Price Promise (a price-match offer): if you see a branded (non-ASOS) product cheaper on another website, the company will match that price. ASOS describes its website as ‘evolving constantly as we find better ways of presenting our products’.
In 2010 ASOS.com launched its Marketplace platform, enabling boutiques, vintage collectors, individuals and designers – established or unknown – to trade from their own virtual market stalls to customers across the world. It differs from other online marketplaces such as eBay and Amazon in that each vendor can customise their storefront and, for £50 each month, will have access to an account manager at ASOS and some premium promotional spots on Marketplace.
ASOS service
For ASOS, speed and accuracy of deliveries to customers is a critical success factor. By offering same-day deliveries the company has increased sales by 23 per cent in the United Kingdom and even more in the EU.
Underpinning these improvements in sales is an innovative ethos that is evident across the company. ASOS invested in a customer contact management system that enables staff to respond to customer care emails more quickly and efficiently. Working with Clipper Logistics, it has introduced an innovative reverse logistics system called Boomerang, which provides quick turnaround on inventory when products are returned. A primary strategic objective is to continually innovate to ‘add convenience and choice for ASOS shoppers’.
Partnerships
ASOS focuses on its target market and looks for strategic opportunities and initiatives that can strengthen its positioning. Promotional tie-ups and associations are very important to ASOS. In 2018, the company launched a global new-to-market label, Collusion. The label was designed to represent collaborations with stand-alone designers and ASOS creative experts (Singh, 2018). The promotion received media coverage, including two full-page features in the national press. The collection sold out in minutes. The ASOS Fashion Discovery programme, launched in 2016, continues to create opportunities for young designers and students to work on their own labels, which are then stocked by ASOS for at least two seasons.
Marketing communications
e-Word of mouth is a powerful tool of this brand, able to leverage advantage through links to celebrities and fashion using the ASOS Insider community, which is a marketing initiative that uses individuals and their fashion insights to build digital content. The ‘authenticity’ of the content generated by the Insiders makes this a very powerful approach to digital communications and also links to their own social media accounts in order to extend the reach and impact of the communications network. These digital influencers not only share their fashion favourites but also have an ‘Outfit of the Day’, which helps drive sales of specific products.
The ASOS Foundation is central to the ASOS corporate social responsibility strategy, which again contributes to the brand’s market positioning. The Foundation seeks to support disadvantaged young adults in the United Kingdom, India and parts of Africa. Projects involve finding ways to develop sustainable improvements in these areas: a social enterprise in Kenya that works from an eco-factory producing African-inspired fashion designs; education in artisan skills in remote parts of Africa; and working with the Prince’s Trust in the United Kingdom to help young people develop the skills they need to get jobs.
Search marketing
ASOS generates interest in the brand from different sources: direct traffic to ASOS sites brings almost half (48.12 per cent), organic and paid search (40.65 per cent) and social (5.11 per cent) (Similarweb, 2021).
The range of terms ASOS targets for search are evident from the <title> and description tags on the home page, which are also used to communicate key brand messages:
<title>ASOS | Shop women’s fashion & men’s clothing | Free Delivery & Returns</title>
<meta name = “Description” content = “Discover the latest in women’s fashion and men’s clothing online. Shop from over 40,000 styles, including dresses, jeans, shoes and accessories from ASOS and over 800 brands. ASOS brings you the best fashion clothes online.”/>
Social media marketing
The growth of the company in recent years has largely been driven by social media. ASOS has contributed a great deal to the digital high street. Apart from showing that it is possible to sell fashion online profitably, the company has also pioneered social shopping, where customers use online social network sites to share product ideas before they buy. ASOS has successfully used social media to build a community of fashionistas who are prepared to share their views and opinions on Facebook, Twitter and Instagram, and to share ideas of what to wear, giving its young shoppers fashion inspiration. With many millions of followers on social media sites, the company has made a significant commitment to community on its own site through the ASOS blogs and the social network sites where it has over 1.3 million Likes on Facebook. It runs regular promotion events integrated across the social networks but focuses on stories. Its Instagram strategy links directly to its influencers and in doing so widens the reach of the brand.
Basket analysis
ASOS’s basket analysis approaches were described in an interview with former Marketing and Operations Director, Hash Ladha:
One of the most interesting things we found was that men tend to buy for their partners as well as themselves. We previously thought this might work the other way around. Using this data, email content was generated by the company’s in-house editorial team. Generic content included a round-up of current fashion trends and ‘best buy’ recommendations. The personalised content took into account favourite brands and budget, recommending items below a certain price limit. Emails were sent twice a week. Other strategies, such as encouraging customers to refer a friend to the company, and sending viral campaigns, were also used at this time. Our best customers visit the site every day. Shopping habits do vary, but most customers like to browse the site between spending. A twice-weekly email gives them a direct link straight to the site and keeps it fresh in customers’ minds.
ASOS also wanted to lure lapsed customers back to its website. It targeted these individuals with tailored content that aimed to remind them why they had previously shopped online for designer and high-street clothing.
Customer communications
To encourage loyalty, for many years ASOS produced a popular branded magazine. However, it now relies on more cost-effective email and social media communications to engage customers.
Ultimately, ASOS has developed a large target audience for its products through the use of digital media and it is able to communicate new product ideas very effectively to keep customers interested. ASOS’s innovative use of social media has enabled it to influence the way young shoppers interact with online fashion retailers. Moreover, this is likely to be a massive growth area and social shopping is likely to continue to reshape the way we shop for the foreseeable future. Always keen to be ahead of the competition, the main thing for the ASOS team is being where their customers are and being able to engage in the dialogue.
- Apply the SOSTAC model to ASOS and highlight why it has become such a successful online fashion brand.
- Describe how ASOS uses elements of the marketing mix as part of its digital strategy.
- Discuss how ASOS has used digital to develop its differentiated market position.