Comment: How the four As are changing retail - Asos

Launched at the turn of the millennium "As seen on Screen" was created to sell products which appeared on TV and films, responding to the public's desire to emulate their celebrity idols. Nearly 15 years later the neat twist is the reversal of Nick Robertson and Quentin Griffith's original concept.

Asos is still indeed seen on screen – but nowadays it is the screens of phones, tablets, phablets and computers owned by that most fickle and fast moving retail demographic – young fashion – that Asos is seen on.

The online retailer has created a personal platform for the 20-somethings who live, breathe, tweet, blog and post fashion. Over 800 brands and a global community under one roof has secured Asos's position as the second most visited fashion website in the world. The start-up has departed from the 'Amazonian' online transactional business model to build their own business model that is sticky, social and successful. Some claim that the fairy tale is over, referring to the £190 million wiped from Asos's value over the course of three recent profit warnings. However, the nearly nine million global customers who have shopped with Asos in 2014 would argue the site has quite a few valuable lessons to share.

Asos's business has developed as technology has evolved and influenced consumer behaviour. In the early days of fashion ecommerce, shoppers were only just learning to trust online companies with their bank details whereas today consumers expect to be offered an edited range that is updated relentlessly. The e-tailer was one of the first UK retailers to understand how social media platforms can be used to enhance the brand; the Asos business model has shifted from a transactional site to a shared community experience which blends product with content while monetising the community participation. Today Asos aims to be nothing less than the world's number one fashion destination for 20-somethings.

Although some other online offerings such as Boohoo and Zalando might be snapping at their heels, Asos still remains among the largest independent online pure-plays in the UK, with total sales of £770 million (2012/2013) and is the second most visited fashion website on the planet with over 30 million unique visitors per month. On the other hand, looking at the bigger picture Asos is still relatively small with a less than one percent market share in the UK (by value), where supermarket-fashion is on the rise (e.g. Asda's George around 5% and Tesco's F&F 3% market share) and traditional high-street brick-and-mortar retailers do not seem to be disappearing anytime soon (e.g. Marks & Spencer's 11% market share). However, Asos is no doubt strongly positioned to be a significant fashion player in 2017, when the online fashion industry in the UK alone is expected to be valued at £7.5 billion of the overall £46 billion clothing and apparel market.

The Asos business model – community, curation and content:

The Asos business model is an interesting mix of careful product curation and editorial content embraced by the global fashionista community. We will now examine how community, curation and content all contribute to the business model and value proposition of Asos.

With nearly 3.5 million likes on Facebook alone, Asos has become every true fashion lovers' friend. Add Twitter, Instagram, Pinterest and Google+ and you start to gauge the scale of Asos's social media reach which, not surprisingly, is a 'built-in' feature of Asos. They are social media transformers: agile, nimble and comfortable with fashion lovers doing much more than simple online transactions.

Asos's target customer wants to belong to a community that shares fashion tips constantly, is on trend, is willing to experiment with their look, and uses the online community to help them to look their best strutting in the latest fashion. By creating an integrated set of platforms, Asos has been able to offer a 24/7 fashion lifestyle that is engaging, welcoming – and very sticky. All platforms direct traffic to the main site, which has become a living fashion co-creation space, which injects the Asos value proposition across the globe from China to Russia and beyond. Asos claims that nearly 40% of their official website page views are generated by social media, which shows it is an integral component of all stages of the customer journey, from awareness to purchasing and customer care.

Today Asos offers 75,000 lines, covering over 850 brands and combining high-street and luxury products, new and second-hand items. This would make even Vogue’s editor-in-chief Anna Wintour's head spin, and that is exactly why Asos has become so adept at product curation and editing, quietly removing ranges not fitting their proposition. They are brave with new initiatives but also know to remove them when they do not add value to the overall portfolio – look at Primark or the short-lived kids' line for example. Strong relationships with brands enable Asos to vary the depths they buy and so keep the offer relevant and interesting day-to-day, while gathering relevant customer data on what is and is not working. As Nick Robertson puts it: "What Asos has done is take what the UK is brilliant at, young fast fashion, and put all those brands together in one place, like putting a roof over Oxford Street, and then exploited it."

The online retailer's ability to interpret fashion has moved on significantly from the early days when Robertson struggled with selling long, black leather jackets before theming them ‘Matrix’ and then seeing them fly off the garage shelf in no time. Today, Asos has built a strong own-label range to complement their comprehensive brand offering for targeted customer segments – ranging from Asos White for the less price-conscious customer to Asos Curve, Maternity, Petite, Tall, and so forth, thus capturing a wide array of consumer tastes and budgets. Last year alone, Asos's own brands were 53% of overall sales, proving that having a solid offer in their own product category is a cost-efficient way to respond to fast fashion trends due to shorter lead times in commissioning and distributing new private label designs.

Whereas Vogue was the source for fashion advice and information in the 90s, today’s fashionista turns to numerous blogs, Pinterest, Instagram, Tumblr – and now Asos – for the latest insight into fashion through posts, competitions, games, news and feature articles. The combination of a great product and relevant content seems to be Asos's winning recipe, advertised either through its own print magazine and daily editorials online or inspired by and co-created with the wider community of Asos users, across all forms of social media platforms and the Asos's Fashion Finder section. The intention behind celebrating this fashion lifestyle is to drive traffic to the main site and deepen brand engagement, encourage advocacy and loyalty, and ultimately boost sales. is brave with its brand, giving the audience permission and encouragement to make their own mark (or even sell their own clothes!), all under the Asos banner.

Today, the website rewards those community members who contribute the most; and these role models are rated and celebrated by their peers. However, the interplay between in-house editors, writers, bloggers and other community members is a carefully orchestrated performance where Asos is in charge. While bloggers increase the credibility of the platform substantially, Asos is the gatekeeper for what will take centre stage (keeping in mind that content comes before the product), making sure that the customer will love Asos's suggestions.

Asos is truly a child of the social web – leading the engagement revolution that empowers customers to become stakeholders in the brands they love. Just as on the big screen, every now and again an iconoclast comes along and re-writes the rules according to their view of the world. Hitchcock, Kubrick, Spielberg, Tarantino, how fitting that Asos should have got its inspiration from the likes of them.

Paul Martin is managing director of Boxwood Insights at management consulting firm Boxwood. Find out about Amazon and the other two As which are significantly impacting the retail industry, in his regular Essential Retail column.

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