Five Reasons Behind ASOS’s Incredible Retail Success

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Five Reasons Behind ASOS’s Incredible Retail Success

By Katie Smith, Senior Retail Analyst, EDITED - 08/16/2017
Exclusive items constitute five percent of ASOS’s branded offering, which are undoubtedly a key contributor to its growth and strong performance.

It’s been a tough year for the retail industry - and it seems with each passing week, there’s yet another challenge to keep brands and retailers on their toes. Whether it’s store closures at a rate more than triple that of 2016, a running tally of retail bankruptcies or an over-reliance in discounting to lure customers, it’s clear the sector is struggling.

One company that is bucking the trend, however, is ASOS. In April, the company lifted its sales forecast for the year, expecting sales to grow by 30-35 percent. While it helps that ASOS avoids the issues plaguing traditional brick-and-mortar stores by operating purely online, there are a number of ways that ASOS continues to innovate to give it a competitive advantage.

Keep things new and interesting

Nearly half (41 percent) of the fast fashion retailer’s current products have been added within the last three months. Each week, a staggering 2,500 to 7,000 new products are uploaded to the ASOS site - with a total of 85,000 products available at any given time. And rather than simply pushing all of these new items out as soon as they’re in stock, ASOS groups specific styles together, which aids the perception of it being an authority on the latest trends.

With so many new styles added constantly, ASOS recently unveiled a visual search feature that allows shoppers to upload a photo of an apparel, footwear or accessory item and search for similar products on ASOS. Using computer vision to help shoppers find exactly what they need is a natural progression to text-based search to filter through the vast variety of products, particularly when the online retailer photographs 700 new items each week from its studio in the UK. When you consider that consumers are already spending an average of 80 minutes per month in the mobile app, this latest feature will also enable ASOS to keep its finger on the pulse of what’s trending from the consumer perspective.

Don’t depend on discounts

While its categorization as a “fast-fashion” retailer may evoke ideas that ASOS sells its products inexpensively, ASOS doesn’t focus on being the cheapest. Even though it sells items across 900 different brands, in contrast to other fast-fashion retailers ASOS offers “exclusive” brand products, which include its own brand, as well as collaborations with other brands. By marketing products that can be found nowhere else, it allows ASOS to merchandise these products at higher price points.

In the women's wear category, exclusive items can comprise of close to 1,000 individual products at a given time, for example. Additionally, exclusive items constitute five percent of ASOS’ branded offering, which are undoubtedly a key contributor to its growth and strong performance.

Reduce prices strategically and sparingly

While discounting products can help brands and retailers experience a boost in sales, oftentimes brands and retailers can miscalculate the extent to which they slash prices because they don’t consider critical factors into the decision around timing, product type, category and popularity. Retailers need to scrutinize the wealth of data available to them to best capture the attention of the customer without negatively impacting margins in the long term. In fact, continually relying on discounts to attract the customer can create a harmful psychological effect to the brand, as the shopper may perceive a bigger discount to indicate that the product is somehow undesirable - or come to expect to only purchase goods when they are on sale.  

Rather than allowing its latest products to mingle with stock that it wants to reduce, ASOS partitions discounted items into a separate “outlet” section, which constitute 17.6 percent of its total offering. This means that only the most ardent shoppers will know to look for outlet sales. What’s interesting is that ASOS even introduces new branded products directly into this section, rather than only inventory that is old or not selling well. Beyond this approach, ASOS’s discounts are driven primarily by promotions and email discount codes.

Stick to a reliable core - and build from there

The backbone of ASOS’s sales are its core items, which total eight percent of all its products. These include black or blue denim for men and women, Birkenstocks, Nike and Converse footwear, simple own-branded shirts and blouses, and items from its ASOS Curve and Maternity lines.

Earlier this month, ASOS announced that it would be investing $40 million in its first U.S. warehouse, aimed at propelling its sales in the region even further. The new warehouse will stock 10 million units of product, can support an annual business of $750 million, and will cut down delivery times even further with U.S. customers (currently ASOS states that orders arrive within four business days for U.S. mainland orders, with two-day shipping available for the year for a one-off $19 fee, or for orders over $140). The benefits of a strong core offering and shorter delivery times is a highly appealing proposition to the consumer.

Offer a breadth of brands and styles for your core audience

ASOS is known as a fast-fashion retailer that caters to the millennial generation, yet its assortments show that it appeals to a diverse audience within this demographic. ASOS’s own-brand assortments (which constitutes one-third of all products) extends across petite, tall, plus size and maternity lines, and it also focuses on niches like wedding and vintage assortments, meaning that ASOS can be a one-stop shop for any trend or occasion. It’s this broad focus that ASOS proudly conveys in its tagline - “Your fashion and style destination.”

ASOS’s ability to grow in an increasingly crowded marketplace is an impressive feat, based on a careful combination of factors leading to bottom line growth. By moving quickly to offer a strong depth and breadth of assortments, ASOS is viewed as both an attractive and highly convenient retailer to the consumer. While there is certainly no one-size-fits-all approach to driving greater customer sales and loyalty, what’s clear is that a critical data-based assessment of pricing, assortments, trends and opportunities is an instrumental aspect for any retailer’s success.

 

Katie Smith is Senior Retail Analyst at EDITED, a retail analytics company that evaluates over 620 million apparel, accessory and footwear products online in more than 40 countries, giving retailers a competitive edge.  

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