Asos continues tech investment as it eyes £2.5bn sales target

UK-based online fashion retailer Asos has today set out some of its technology investment plans for the coming months as it aims to become a £2.5 billion business in the years ahead.

In an interim results announcement, which revealed that profit before tax for the six months to 28 February 2014 was down 22% to £20.1 million, the e-tailer said that it will continue to invest in its capacity to support its goal of becoming a "truly global business".

Among the technology developments planned for the coming months, include the introduction of new mobile apps in France and Germany before the end of the year and the initial launch of its local pricing functionality in May 2014, which will allow the business to offer locally-competitive pricing and perform locally-relevant promotional activity across its nine international territories.

The online retailer is also in the process of re-platforming its websites and rebuilding its checkout process, which it says will allow the company to develop and release infrastructural software optimisations more efficiently, share its content across a wider range of languages and devices, and improve its website response times. A new data warehouse is also being constructed, allowing for more detailed reporting and analysis of customer data.

This investment comes after Asos launched a US version of its Android and iOS apps, and a multi-language magazine iOS app, last month. The e-tailer has also placed a lot of focus on behind-the-scenes technology during the past six months, as well as significantly developing its supply chain facilities, with planned warehousing capital expenditure over the next 18 months currently standing at £113 million.

UK retail sales at Asos were up 32% year on year in the reported six-month period, reaching £182 million, while international sales jumped 35% to £290.3 million, despite the company's Australian operation being impacted by adverse currency fluctuations.

Malcolm Pinkerton, research director at industry intelligence firm Planet Retail, said that the business is seemingly following the right strategy, and he supported the retailer's continuing infrastructure investment.

"Realistically you can’t expect stratospheric growth to be reported in all countries operated every time," he noted.

"There might well be some bumps in the road, and while the juggernaut that is Asos might well be slowing, it remains on course to deliver on, if not exceed, expectations."

Other recent developments at Asos included the introduction of the Quick View function on its desktop sites, which allows customers to view product detail and add products to their bag without breaking their browsing journey from the category pages. It also launched a trial of its 'asseenonme' function, which allows shoppers to engage with each other by uploading photos of them wearing Asos products.

During the second half of the financial year, Asos aims to enhance its customers' experience by providing upgraded search capability and a personalised recommendation function, as well as launch a social sign-on capability, which will give customers an opportunity to sign-in to the Asos mobile site and apps using Facebook or Twitter. 

The Asos China website has been a particular area of focus and investment since the start of the financial year, following its launch in October 2013, and the business has plans to launch on China's Tmall eCommerce platform before the end of 2014.

Pinkerton said: "Launching on China's Tmall eCommerce platform during the second half of the year will help broaden awareness, while Asos' strong brand recognition, excellent value proposition, continued investment in service and operational efficiencies certainly makes long-term sustainable growth and market share gains in China achievable."

Reflecting on the overall business strategy, he added: "Reaching its new sales target of £2.5 billion global sales requires investment, a fact that some short-term, near-sighted investors are unwilling to consider.

"Personally, I'd be concerned if Asos was not investing in growing its business in a scalable way with an eye on long-term profitability."