Asos, The Next Online Retail Model?

1. Asos,
The Next Online Retail Model?
Helixa
16, rue Brey - 75017 Paris
Creative Commons License July 2012

2. Why Asos?
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3. ASOS is the largest european pure-player on online clothing retail
- Profitable since 2003
- Has delivered 63% CAGR over the last 5 years
- Should exceed 1b€ in revenues by 2014 on our forecasts
International business accounts for 59% of sales
- Free shipping shipping to 190 countries
- No foreign warehouse
- Top 5 most visited online fashion stores
What is the secret of Asos?
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4. Asos at a glance
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5. 2000 ASOS launched in the UK
«As Seen On Screen» sells clo-
thing and accessories as seen in
films and on stars
ASOS IPO
ASOS was admitted to AIM on the
London Stock Exchange
2001
2004 ASOS Business model
Maiden Profit
ASOS Magazine
Free magazine on last women’s
fashion trends to promote ASOS 2007
items
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6. ASOS own label
At first, a label only for women, 2008
then extended to men
ASOS sites
Launched American, German and
2010 French languages versions.
Then, Australian, Italian and Spanish
languages (2011) and Russian (2012)
ASOS marketplace
Add small business and customer
to customer sales to their 2011
e-commerce offer
ASOS offices
2012 Opened the first international
office in Sydney, Australia
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7. 495 £m +46% 190 AMBITION 2015
SALES (2012) GROWTH COUNTRIES 1 £b SALES
(2012 vs 2011)
UK
198 £m sales
(41%)
ASOS 2012
INTERNATIONAL
284 £m sales (59%)
+103% (vs 2011)
+7% (vs 2011)
BASKETS ORDERS
63.5 £ average basket 11.8 m orders
+6% (vs 2011) +52% (vs 2011)
CUSTOMERS
17.5 m unique visitors (+35%)
4.4 m active customers (+38%)
Source : ASOS 2012 Full year financial results
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8. Asos,
A clear and aligned positionning
vision Be the online Fashion destination for young adults:
inspire and power Fashion discovery
mission
Provide the best online shopping experience for fashion through one of the
largest offer (branded & own label products in womenswear, menswear, …)
for all prices and enriched with social platforms
- Young adults (16 to 34 years old), men and women
target - Highly interested in Fashion
- Digital natives
E-stores & - 7 country-specific websites for:
UK, US, Australia, France, Germany, Italy, Spain
- All devices and social networks
points of interaction - Asos Magazine
Source : ASOS website
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9. Asos: an online success story
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10. Asos, Turnover while significant Margins
Skyrocketting
CAGR 2005-2012: +66%
495 m£
CAGR 2005-2012: +71%
340 m£
223 m£
165 m£
81 m£
43 m£ 42 m£
20 m£ 20 m£ 29 m£
8 m£ 14 m£ 14 m£
3 m£ 7 m£
0m£ 0 m£ 1 m£ 1 m£
2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenues EBIT
Source: Company data, Credit Suisse estimates
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11. A Growth fueled by Innovations
00m£
00m£
ASOS for children
(2009)
Collection Mobile
ASOS maternity
00m£ Collection
(2008)
& Marketplace
ASOS Apps
ASOS for men (2010) Launch
(2007) (2012)
Australia, Spain &
Italy
(2011) ASOS Salon
Designer Store (2012)
00m£ (2009)
Facebook Store
(2011)
ASOS outlet Launch in
(2008) US, France &
Germany
Asos Magazine (2010)
1 online fashion
th
(2007)
00m£ ASOS own ASOS show UK (2006)
ASOS Life
(2009)
brand Cosmetics
(2004) (2005)
0m£
2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Company data, Credit Suisse estimates
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12. Expected sales growth over the
next years in a gloomy market
ASOS sales growth, UK & International
1 200 M£
1 000 M£
800 M£
600 M£
400 M£
200 M£
0 M£
2009 2010 2011 2012 2013e 2014e 2015e
Uk Sales International Sales Source: Wells Fargo Securities estimates, December 2011
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13. Asos compared to other Online Retailers
EBIT % of sales for majors e-tailers,
FY 2010-2011
15,4%
8,5%
It delivered its 1st operating profit in
8,3% 2003, only 3 years after its launch
Net-a-porter profitability is quite an
5,5% exception thanks to high luxury
margins
1,3%
-27,8%
-30,0% -20,0% -10,0% 0,0% 10,0% 20,0%
Source: Company data, Credit Suisse estimates, December 2010
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14. How does ASOS manage to be so
profitable online?
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15. A Very Attractive Customer Proposition
A Highly Effective International Strategy
A Constantly Improved Cost Structure
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16. An Appealing Product Offer Is the
1st Pillar of ASOS Attractiveness
ASOS sales split by product
Menswear
20%
Accessories
16%
Beauty
8%
Womenswear
56%
Source : SG Cross Asset Research
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17. A large range of products
ASOS Womenswear Range VS global peers,
Full Price, August 2011
Zappos
Forever 21
Asos
Debenhams
La Redoute
M&S
In Europe, Asos has the leading
Zara range proposition available, parti-
cularly targeting the 18 – 34 fashion
H&M forward.
0 1 000 2 000 3 000 4 000 5 000
Tops & T-shirts Blouses & Shirts Dresses Jeans
Source : Company websites, Deutsche Bank
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18. With well targeted prices and a
very competitve entry level
ASOS
URBAN 485 € 485 €
OUTFITTERS
TOPSHOP
45 € 485 € 25 € 255 € 20 € 285 € 255 €
ZARA
H&M 60 €
40 € 45 €
20 € 25 € 20 €
10 €
0€
10 € 40 € 20 € 60 € entry price top price
Source : Company websites
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19. Serve by a highly convenient
service proposition
5.95 $ - 6.95 $ for US
4 £ for UK
Free above 50 $ for US
Cost of delivery Free and above for
Free shipping
international
above 75 € for EU
Up to 4 days in UK 4 days for UK
Speed of service 4 -> 10 days up to 10 days and more and more for
in EU international
Free for UK
Ease of return Free At your own cost At your own cost
outside UK
Source : Company websites
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20. Asos,
The most «liked» Fashion retailer
ASOS facebook likes per £1m of sales VS global peers,
August 2011
4500
4000
3500
3000
2500
2000
1500
1000
ASOS is a good example of a brand
that has made of its community a
500
strong pillar of its business model
0
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&S
hk
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H&
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Source : SG Cross Asset Research
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21. The 2nd visited clothing retailer on the
planet, a strong indicator of ASOS appeal
Postion Name Average Daily Visitors (000s)
1 VANCL.com 920
2 ASOS Plc 749
3 HM.com 606
4 Nike 465
5 Moonbasa.com 458
6 Trendyol.com 380
7 Inditex Group 357
8 Bonprix 353
9 Forever 21, Inc 327
10 Limited Brands 317
Total Retail Apparel 18 001
Source : Comscore Ranking
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22. ASOS Marketplace - 2010
One of the largest Fashion Marketplace with:
• 65,000 products listed
• 500 boutique sellers from 95 countries
• 28,000 individual sellers from 98 countries
Customer Value Added
Get access to small brands and designers, but also to
vintage products. And get the opportunity to sell their own
items and creations.
ASOS Benefits
• Offer the largest range, through own & external brands,
small retailers, designers and vintage
• Engage your customers giving them the chance to sell
and get inspired by other customers
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23. ASOS Fashion Finder - 2011
Social platform to see the new trends and
the most popular looks & outfits among the
community. Around 134,000 outfits created
and 174,000 items of user generated content.
Customer Value Added
Be in the known about Fashion thanks to a large choice of
trendy looks created by other customers and get inspiration
to develop their personal style
ASOS Benefits
Establish ASOS as an authority of Fashion
Source new it brands and products for free
Make profit of a social platform with very active users (1.9m
social comments and votes)
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24. ASOS Mobile Website and Apps
[2009 – 2011]
ASOS MOBILE WEBSITE ASOS MAGAZINE
Since 2009 ASOS website is available also
on mobile phones. Mobile sales rose 800%
Y-o-Y in 2011, and should stand for 20% - 30%
of global sales in 3 years for Nick Robertson
(ASOS Ceo).
Customer Value Added
Not only get access to the ASOS offer at any time through
SCAN TO SHOP ASOS MEN’S MAGAZINE any device, but also discover new looks and brands through
the magazines
ASOS Benefits
Make buying at ASOS easier and available
on all the Internet devices
Enrich the shopping experience adding
contents through the magazines
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25. A Very Attractive Customer Proposition
A Highly Effective International Strategy
A Constantly Improved Cost Structure
25

26. ASOS highly efficient International
strategy
ASOS global strategy roadmap
ASOS fast International But ASOS has also been
expansion is in part due to its very efficient in replicating
From a UK e-tailer
online-only model, as no time its successful UK strategy
to a multi-country
is required to hunt for new of lowering delivery charges
web platform
store locations and fit out and improving services to
new outlets. drive growth in new markets.
Source : ASOS 2012 Financial Report
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27. Emerging markets, the next ASOS
growth opportunity
ASOS exposure to emerging markets vs Global peers,
% of global sales in 2010 and in 2015e
80%
ASOS is expected to make
70% much faster progress into
immature markets than other
60% traditional European retailers,
50%
especially in China.
40% China is already the 6th
largest country by sales for
30%
ASOS. And there’s a huge
20%
potential since the online
apparel market is relatively
10% underdeveloped and ASOS
proposition is likely to be
0%
Inditex Esprit ASOS H&M Marks & Spencer Debenhams Next Primark well-received.
2010 % sales in emerging markets 2015e % sales in emerging markets
Source : SG Cross Asset Research
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28. A Very Attractive Customer Proposition
A Highly Effective International Strategy
A Constantly Improved Cost Structure
28

29. Reinvesting Gains In Customer
Proposition To Drive Growth
112%
84%
6,0% 38%
16% All lines of the P&L have seen efficiency gains
1,1% since 2009. A noteworthy effort has been made
3,9% 4,8% on staff and warehousing costs.
0,6%
9,4%
4,3%
6,4% As a result delivery is now a cash investment for
13,5% ASOS while it was a source of profit in 2009.
8,5%
2009 2010 2011 2012
Delivery costs recovery Warehousing Production Costs
Payroll & staff Marketing Costs Other Opex Costs
Source : ASOS Company Reports
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30. A Model inspired from Online and Fashion
Best Practices
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31. Amazon and ASOS, same vision :
customer obsession…
« We start with
the customer, « Do what’s right for the
and we work backward » customers, not what’s right
for the business »
Jeff Bezos,
Amazon CEO « ASOS is aiming to become
the Amazon of Fashion »
Nick Robertson,
ASOS CEO
« We see our customers as invited guests to a
« It’s all about changing the perception from
party, and we are the hosts. It’s our job every day
‘what can we sell’ to ‘what customers want’ and if
to make every important aspect of the customer
we can sell some of that… then that’s fantastic! »
experience a little bit better »
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32. Amazon and ASOS, Same Pillars…
AMAZON key pillars ASOS key pillars
Serve customers, ASOS superior customer proposition
ever better and in ever more ways, is at the heart of all that we do.
by improving customer proposition Its credo: innovate restlessly to offer the best
through continued efforts to : shopping experience through:
Reduce prices The best offer & services
of products & services at the best price
Increase selection The world’s best
of products offering Fashion selection
Increase in-stock The « best in class »
inventory availability products availabilities
Source : Jeff Bezos and Nock Robertson interviews
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33. Inditex model… An Inspiration for
ASOS Fashion Best Practises
INDITEX positioning ASOS (initial) positioning
Customer value proposition: Customer value proposition:
Give to a customer segment the latest Offer red carpet replicas and copies of
Fashion trends from catwalks at dresses worn by actresses at affordable
affordable prices prices
Customer target: Customer target:
Highly sensitive to latest Fashion trends Young, net-savvy
Price conscious Fashion Forward
Price sensitive
Key resources: Key resources:
1. Highly fashionable product design 1. Highly fashionable product design
2. Fast speed to market (lead time) 2. Fast speed to market (lead time)
3. Cost structure optimization 3. Cost structure optimization
This positioning requires to design “hot” products that capture the latest consumer trends and
renew constantly your offer to stay on the edge
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34. Inditex fast-fashion, the best way to
match with the latest customer trends
INDITEX Fast Fashion System 2 key pillars
Highly fashionable product design Short production & distribution lead times
Offering consumers a product they value more Quick responsiveness enables frequent changes
elicits a greater willingness to pay from customers in product assortment and more flexibility to adapt
and make them less willing to risk waiting for a to the latest customer trends.
clearance sale and possibly experience a stockout. It yields significant value for firms by better
matching supply with uncertain demand.
Key resources: Key resources:
1. Customer trends monitoring 1. Local sourcing
2. Quick design lead times 2. Efficient supply chain
Inditex has proven that when both fast fashion pillars are combined
the firm enjoys a great incremental increase in profit
Source : The Value of Fast Fashion, G. Cachon, R. Swinney, Stanford University, 2011
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35. Inditex and ASOS… Same Highly
Fashionable Product Design Strategy
INDITEX – Highly Fashionable Products ASOS – Highly Fashionable Products
From catwalks to the street From carpets to the street
Louis Vuitton SS 2012 Catwalk
Louis Vuitton SS 2012 Catwalk Zara Spring 2012 Collection
Zara Spring 2012 Collection Alexa Chung - 2011 ASOS Autumn 2011 Collection
Both companies are very similar on these strategic points
and really more competitive than traditional retailers
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36. Inditex and ASOS…
Same Quick Response Strategy
INDITEX ASOS
quick response strategy quick response strategy
Short lead time Short lead time
From 2 weeks to 2 months Around 6 to 8 weeks
(While 6 months for traditional retailers) (While 6 months for traditional retailers)
Local sourcing Local sourcing
Only 35% of sourcing from Asia Only 30% of sourcing from Asia
(While H&M 75% of products from Far (While H&M 75% of products from Far
East) East)
Central inventory Central inventory
Warehouses only in Spain One unique warehouse
while shops around the world while ASOS delivers to 190 countries
Both companies are very similar on these strategic points
and really more competitive than other traditional retailers
36

37. Asos goes beyond Inditex by setting a
strong emotionnal relationship ist
r s me » e res t!»
itte h oic t n’t ll ea
e outf r wit ch rtan ca s wi s r
ua
l us ch po ite i so ’s g !»
us
l,
oo it» beca rban bett
e
mu y im qu but riend e d a ce it wait
y o c on ra t u fit so er s is me y f ck la o
nm is s tuff a , bu aly are it’s v res for it m he ketp day t
oo g eZ p u re , is d ve ar t c ar re
’s g es » blo like s I lik hea s us he sos Th ensi y we !» jus m o
et his « ’s c so «T A !» « p d t ave and e m
« L ebsit «T ways it d a on me ex bo a lo «I hlogs « on
w a l a n to o it
n e
What lik
b
she thinks
gree
nal de
otio
Em
She likes to read and share The dress is arrived
fashion magazines with her
mother «I can return my products for
The buying decision free»
is taken
Goes to H&M with her Zara, Urban outfitters
friends time to time and Asos are all «The shipping was fast and free»
because it’s near her house Waiting for her dress
open at the same time
Looking for her credit «Asos is a great place to
Spend 30 min by day on Openning her card and order shopping because it’s not only a
Facebook, to chat mainly web browser Goes on Asos blogs and showcase of products but a
marketplace
place to discover»
Facebook and her favorite
3 or 4 blogs that she likes fashion blog are open
and check 1/2 hour per «Asos put the last trends in an
week affordable e-store»
Phase of Past experiences Comparison Purchase Reception Post experience
the Journey
She loves fashion and always take She spends most of her shopping time comparing brands but also The product have only taken 3 days The more she goes on ASOS, the
time to check the last trend on the products. She’s looking for a product not for a brand. Her to arrive more she likes fashion world and
web, she knows ASOS because of shopping time is mixing with her social activities and even with feels close to it
her friends and blogs her studying time
37

38. Is Indi-Zon the real name of ASOS?
fast fashion pure player
model model
• Highly fashionable • Highly fashionable • Customer obsession • Customer obsession
• Product design • Product design • The largest selection • The largest selection
• Affordable Prices • Affordable Prices • The best prices • The best prices
• Short Production and • Short Production and • The best availabilities • The best availabilities
Distribution Lead Time Distribution Lead Time • The best services • The best services
• Local Sourcing • Local Sourcing
• Central Inventory • Central Inventory
38

39. Strategic Innovation to reinvent businesses
In a constantly changing world, To build such strategies, Helixa has
companies can no longer do business devised a series of new tools and
in the same way as in the past. Indeed, proceeds by combining creativity
companies now have to steer a course with analysis to imagine for its
through a world where everything is clients what has as yet never seen
changing at a high speed . It is forcing light of day.
them to rethink their strategic choices With its wealth of experience in such
along completely different lines. Those sectors as luxury goods, media,
firms able to rapidly identify disruptive retailing, chemistry, energy and
innovation and take up adequate internet and given its design thinking
strategies can gain the upper hand inspiration, Helixa can offer highly
on competitors and become the next effective tailor-made solutions.
winners. Helixa’s team mixes engineers,
strategists and designers.
39

40. For more information,
contact us:
16, rue Brey
Paris 17ème
development@helixa.com
(+33)1 45 72 55 89
This document is under
Creative Commons License
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