Asos focuses on more lucrative international sales
UK-based online fashion retailer Asos plans to focus its energies on its international business, with CEO Nick Robertson today (3 November) revealing that its overseas sales are worth 30-40% more than domestic ones.
Speaking to journalists after the retailer revealed its first-half results, he said that international sales are not subject to VAT of 20% and the international emphasis on Asos brand products means that margins are better than in the UK.
"The propensity to buy own-label product [internationally] is higher," says Robertson, highlighting how UK sales are split equally between brands and private label, while in the US it's 65% own-label.
He attributes this mix to the high proportion of "early adopters" using the site abroad, and to the "pretty good" product at a "good" price point.
The difficult UK consumer environment is also driving this international shift. "Why keep growing the UK when it is harder and less profitable than other low hanging fruit," he says, adding that the company is not going to push the UK "as hard as other countries".
The retailer's global positioning also means it doesn't have to engage in the UK's heavy discounting culture. "We can either play the game in the UK or do less of that and sell the same dress with less discount and have the VAT discount of shipping abroad," says Robertson.
"I have one warehouse and one dress. That dress is sat in Barnsley. If I sell that dress in Aberdeen or Adelaide it makes no difference to me. The difference is that if I sell it in Adelaide I make more money."
However, the company will continue to use the UK as the engine for all of its distribution and operations.
Despite the company shipping the equivalent of two jumbo jets' worth of product from the UK each day, Robertson is committed to continuing to work with a "single stock pool", in the UK - although he hinted the retailer may look to hold international returns in the country and ship them to local customers when they order.
Speaking about the company's US deliveries, Robertson says he initially thought the company would need to set up a distribution centre in the there. But with the four-day delivery time it is currently achieving, and the likelihood of shaving another day off this, "now we think we can keep it in the UK".
Over the first half of its financial year Asos set up country-specific sites in Australia, Italy and Spain, but Robertson says it now plans to slow the roll-out and work towards the "big prizes" of China, India, Russia, Brazil and the Middle East.
Steps into these countries are likely to take 18-24 months as the company's current systems are unable to handle non-western character sets. It will also take time to integrate payment processing and address validation in these countries.
However, he is in "no rush" to enter these markets, saying the company has been "teeing ourselves up for more efficient long-term operations" with its IT resource focused on developing its Barnsley warehouse and buying and merchandise system.
While emerging markets are yet not a significant part of the company's business, Robertson sees great opportunities for m-commerce in these countries.
Compared with UK consumers, who might not necessarily shop using their phones for speed and display reasons, "if you look at a 20 year old girl in India, with no mobile [history] or internet at work, who now has a device with the internet...The emerging world will be big," he believes.
Industry watchers need to think beyond the UK and this sort of consumer when considering the future of m-commerce, Robertson adds.
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