Asos steps closer to weaving a global web
Asos CEO Nick Robertson sees the company evolving into a fashion destination
Online fashion retailer Asos Plc today revealed a number of new initiatives aimed at moving it a step closer to its goal of reaching sales of GBP1bn (US$1.46bn) from its five main markets in the next five years.
“It’s full steam ahead,” CEO Nick Robertson told a media briefing in London, adding: “It’s all about changing Asos into a fashion destination, not just a fashion store.”
Among the company’s plans is a possible tie-up with one or two retailers “with a presence on every high street across the land” that will enable Asos customers to collect online orders and hand in returns in their stores.
Reiterating that negotiations are still at very early stages, Robertson is confident the scheme will be in place “at some point over the next year.”
Not only does it “raise the bar for our competitors” but it’s “another step in the easing of the perceived pain of internet shopping,” for customers who currently have to receive deliveries at home or office locations.
The retailer also revealed it has invested GBP20m in a bigger warehouse that will support its ambitious long-term sales growth.
The facility, located on a 37 acre site in Barnsley in Yorkshire, is three times the size of the existing warehouse in Hemel Hempstead and has an initial capacity to support around GBP600m in annual sales.
But the distribution hub can also be “flexed up” to a capacity of about GBP1.1-1.2bn and will be used to fulfil international orders – with shipments from its range of 36,000 branded and own-label lines currently going to 167 countries.
“We set ourselves an ambitious sales target,” he said, adding “the question mark was how we were going to support it logistically.
“So not only have we got the aspiration but we’ve now got the wherewithal to do it.”
The announcements came as Asos, which targets fashion-savvy 16-34 year olds, said pre-tax profit climbed to GBP20.3m (US$29.3m) in the year to 31 March, from GBP14.1m a year earlier.
Group revenues surged 35% to GBP223.0m, up from GBP165.4m the year before, with international sales almost doubling to GBP63m in the year and UK revenues rising 20% to GBP160.0m.
The company’s global appeal is set to rise even further with the launch of dedicated websites for customers in the US, France and Germany this autumn which remove some of the barriers to shopping online such as local payment terms.
Local delivery and returns is an issue too, and while in-country returns solutions are already up-and-running for the US and Ireland, French and German solutions aren’t being launched until later this year.
The US market, in particular, is seen as having huge potential, already sitting at number two behind the UK and growing at 180% a year. The US online apparel market is forecast to grow from $23.6bn in 2008 to $42.7bn in 2012, but as far as Asos is concerned, is virtually untapped.
“Why are we so excited about the US?” Robertson asks. “Clearly it’s a much bigger market. In numbers terms there are 15.4m 16-34-year-olds in the UK, but 75m in the US. Today we have 1.2m active customers in the UK but only 50,000 in the US, so we haven’t even started.”
He’s also encouraged by the lack of a stand-out competitor: “Nobody is as fashion forward with the same size range in the US. When we talk about a compelling opportunity, it’s definitely there.
“The key point is that the conversion of our traffic in the US is running at a third of the UK...so this isn’t about driving more traffic it’s about getting that traffic to buy. In April in the US we did over a GBP1m in sales just by taking away some of these barriers.”
He adds: “The American’s can’t get enough of British fashion at the moment, so already there’s pent-up demand.”
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