Presentation and

Case Study on ASOS.COM

Submitted by:Rishab Goenka

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Asos.com is the UK’s leading online fashion store for women and men. Launched in 2000,the online retailer targets fashion conscious 16-34 year olds. On asos.com there are 9,000 products available at any one time, with 450 new fashion items added every week. Theseinclude women’s fashion, menswear, accessories, jewellery and beauty products. asos.com attracts 3.3 million unique shoppers every month and has 1.8 million registered users.

Five years ago, asos.com had just 550 square metres of warehouse space. Today, to meet growing demand, asos.com now has 32,500 square metresof warehouse space – equivalent in area to nearly five football pitches. In April 2005, asos.com employed 47 permanent staff. By February 2008, it had 250 employees.

ASOS = AsSeenOnScreen

The company`s webpage

BRIEF HISTORY2009 Launched ASOS Life

2009Launched Little ASOS and Designer Store

2008 Launched ASOS Outlet

2007 Introduced ASOS own label for Men

2007 Launched ASOS Magazine

2006 First UK online store to launch catwalk

2005Buncefield Fuel Depot explosion closes business for 6 weeks

2005 Launched ASOS Beauty

2004 Introduced ASOS own label for Women

2004 Maiden profit

2001ASOS PLC Holdings was admitted to AIM on the London Stock Exchange

2000 ASOS launched

Asos, was founded in 2000 and built on showing young shoppers how to emulate the designer looks of celebrity magazine favourites such as Victoria Beckham, Lindsay Lohan and Jennifer Lopez for a fraction of the cost.The site still links looks to faces. Customers can click on their favourite celeb/wag/pop star and view clothes that look a bit like things they have been pictured in.

ABOVE: Inspired from Sienna Miller dress for $73BELOW: Inspired from Kate Moss white asymmetrical dress for £35

Asos.com is a public limited company (plc). This means that the business is owned by shareholders and that its shares can be purchased by the general public. Asos.com shares are traded on the Alternative Investment Market (AIM), which is part of the London Stock Exchange. Joining AIM has several advantages for a growing company such as asos.com. AIM-listedcompanies do not need to comply with the strict rules that must be followed by businesses listed on the main London stock market. They do not need to meet any size threshold, either in terms of market capitalisation or the numbers of shares that they issue. This means it is easier and cheaper to obtain an AIM listing. It provides smaller companies with a chance to raise capital through the sale of shares. This capital can be used to finance growth.

The asos.com board consists of two non-executive directors and three executive directors. Non-executive directors do not have day-to-day operational responsibilities for the business. They are invited to join the board because they bring experience and qualities that can guide the strategic direction of the company.

Chairman - Lord Waheed Alli

Chief Executive - Nick Robertson

Finance Director and Company Secretary - Nick Beighton

Non-Executive Director - Peter Williams

International Director - Jon Kamaluddin

Product and Trading Director - Robert Bready

Non-Executive Director - Karen Jones

Non-Executive Director - Mary Turner

BOARD OF DIRECTORS

Sales increased by 90% year onyear for the 12 months to 31st March2008. In April 2008, there was a dailyaverage of 220,000 unique visitors tothe asos.com website. The growth insales translates into profit. Group profitis likely to be in excess of £7 million.

Four years ago the shares were changing hands at 5p. Today they are nudging 282p, valuing the business at £206m and Robertson's stake at £28m - not bad for a business with an annual turnover of £80m.David Jeary, an analyst at the broker Investec, expects the heady growth rate to continue and has set a 12-month target price for the stock at 355p.

asos.com has achieved rapid growth internally. It has not grown by acquiring otherbusinesses. Instead, it has grown by increasing its customer base, number of brands andproducts available to buy at any one time. Moreover, it has grown rapidly without incurringthe problems that this can cause for some businesses.

Income statement

2009£'000

2008£'000

2007£'000

2006£'000

2005£'000

Revenue 165,395 81,044 42,614 20,317 14,428

Cost of sales (93,696) (43,760) (24,488) (11,668) (7,949)

Gross profit 71,699 37,284 18,126 8,649 6,479

Operating costs (57,764) (30,322) (15,262) (9,744) (5,411)

Goodwill impairment — — (188) — (228)

Insurance proceeds (1) — — 570 2,439 —

Operating profit/(loss) 13,935 6,962 3,246 1,344 840

Share of post-tax losses of joint venture (78) — — — —

Finance income 268 349 124 61 39

Profit before taxation 14,125 7,311 3,370 1,405 879

Taxation (4,116) (2,258) (951) 12 —

Profit/(loss) for the financial year 10,009 5,053 2,419 1,417 879

2009£'000

2008£'000

2007£'000

2006£'000

2005£'000

Earnings per share          

Basic 13.6p 6.9p 3.4p 2.0p 1.3p

Fully diluted 12.8p 6.6p 3.3p 1.9p 1.2p

Balance sheet          

Cash at bank 13,587 10,369 5,379 3,744 2,060

Net assets 25,709 15,944 8,385 5,522 3,612

2009£'000

2008£'000

2007£'000

2006£'000

2005£'000

MARKETING STRATEGIES

Asos has found a winning formula for its proposition “choice, presentation and

service for our customers” – Hash Ladha (marketer)

The effort invested into the visual merchandising of the site gives it a competitive advantage and, by necessity, makes it the company’s main and most effective marketing channel. The site’s “Outlet” section, which includes brands such as Alexander McQueen and Dolce & Gabbana at cut prices, displays every item of branded clothing in close-up photo stills and catwalk fashion shots, just as on the rest of the site.Social networking has played its part in raising awareness – in six months Asos has become the second largest UK fan group for any fashion retailer on Facebook, overtaking Topshop and Urban Outfitters to come just behind H&M’s 90,000 fans.

The single biggest investment made by the marketing department is Asos’s print magazine, which is sent to 500,000 active customers. Showcasing other brands’ products alongside its own, a team of seven is dedicated to layering photos of fashion icons with editorial to create content that competes with news-stand glossies.

The customers who receive their magazine spend more time on the site, have a higher basket value, and take up the promotional incentives that we offer, which drives higher conversion rates and higher spend. Nevertheless, it is an expensive investment as not all of the active customers who receive the magazine remain active because of it. Sending the print magazine to all of them is a high-cost strategy, so in the future they will be looking to send only to those customers who have a higher propensity to spend. They also put a 24-page supplement in magazines such as Glamour and Cosmopolitan to attract new customers.

The company also sends e-newsletters, which are “weekly campaigns”. A team of 10 is dedicated to crafting the two weekly newsletters, ensuring they have relevance and pace in the manner of a weekly magazine, and four million e-mails are sent out each week to the website’s database of two million registered users.

Asos is careful that it does not bombard its customers and has a strategy for dealing with those who have lapsed. They have three attempts over six weeks to try to reactivate them. If this fails, they might try a discount to entice them back. After that they would become a non-target, unless they ran a separate reactivation programme.As a small business in a cluttered marketplace, with competitors in both offline and online retail, Asos is reluctant to reveal exact click-through rate figures for its e-newsletters. But it overtook its biggest rival in terms of website hits, fashion mogul Next, for the first time in February. It has since been neck-and-neck, according to rankings by website Hitwise.co.uk, which reports on the anonymous online usage and search behaviour of eight million UK internet users.

Underpinning all of Asos’s marketing channels is a sophisticated CRM system from SmartFocus. Working with Asos’s rich pool of customer data, the software has produced some interesting insights into spending behaviour. Men are more generous than women and are more likely to include items for their wives or girlfriends in their shopping baskets.With 20,000 products live on the site at any time, and 800 new product lines being added every week, it’s crucial that a customer’s marketing message is personalised to include the kind of items they are most likely to buy. The software has created five female and three male customer profiles that identify a customer’s propensity to spend, their trigger points and whether they tend to shop at the weekend or during the week.With the varied spectrum of goods on sale, from a £5 bracelet to a £1,000 designer handbag, Asos also ensures that its communications only include items in the applicable spending bracket.

High-quality service for customers is the third prong to asos` marketing mantra. The customer care team is now available 24 hours a day, seven days a week, closing only for one day at Christmas. Team members are required to reply to customer enquiries within an hour and are judged by the speed and quality of their reply.

Asos is working on stepping up its delivery options and on a returns service that collects an unwanted garment from the customer’s house. When snow was imminent earlier this year Asos sent e-mails to customers warning them that it might delay their delivery. Once it did snow, an apology e-mail was sent offering a delivery refund and 10 per cent off next orders.

They don’t hide things from their customers – if they are offering free delivery for a spend of £75 or more, my designers put both parts of the offer in equal font and with equal emphasis, so the customer isn’t led into something only to be let down.With the recent launch of the kidswear and new high-end designer ranges, Asos plans to continue expanding its products.

asos.com has recognised that the conditions were right for an online retail business in the fashion retail sector. The company has used the Internet as the primary growth tool. It has tapped into the rapidly expanding online retailing market. As research in 2007 by the online retail consultancy Interactive Media in Retail Group (IMRG) showed:• total online spending in the UK reached £30.2 billion in 2006• the number of UK online shoppers grew from 16 million in 2003 to 25 million in 2006,an increase of 56 per cent over four years• Internet access grew by 45 per cent in the same period, with 42 million people having access in 2006 compared to just 29 million in 2003• the number of broadband connections more than tripled in four years, by 2006 there were more than 12.7 million UK broadband connections.

asos.com targets its offer at a specific market segment of young (16-34) fashion-consciousconsumers. This market segment now accounts for 20% of the Internet shopping population in the UK. According to the market research organisation Mintel, women aged 20–24 are more likely than any other segment to spend their money on clothing andfootwear. The average spend per head on clothing increased by 76% in 2006 to £1,208.asos.com offers an extensive and diverse range of products for men and women. Itsdepartments cover:• own brand clothing• brands – high-street and designer• footwear• accessories, for example, sunglasses• jewellery• swimwear.

• http://ragulan.wordpress.com/2009/04/24/marketing-strategy-for-firms-in-the-garment-industry/

• http://www.guardian.co.uk/business/2008/apr/18/retail.internet