Asos bets on visual search, voice search and AI

Asos is trialling a number of different digital technologies, provided by small technology start-up companies, which it believes will transform customer experience in the near future.

CEO, Nick Beighton, said his top digital priorities were visual search, voice search and artificial intelligence (AI).

"The way consumers will engage with the internet, and tech businesses like ours, is going to change. Visual search, voice search and more AI to help customers navigate the offer in a better way, a more convenient way, is going to be a big trend over the next 3-5 years," Beighton explained to Essential Retail, while speaking on a conference call discussing the e-tailer's full year financial results.

"Accordingly, we've got a stake in all of those and we're watching it very carefully. So I actually think, where mobile is driving the channel shift at the moment, I think those areas where the next level of change is going to catch up. And customers adapt really quickly to them, so we will adapt just as quickly as our customers."

Today, Asos reported a 26% increase in sales to £1.4 billion for its year ending 31 August 2016. Profits also rose 37% to £63.7 million, when removing exceptional items – namely the e-tailer's hefty legal fees from a trademark dispute and its exit from China.

Customer visits to Asos grew 22%, while order growth increased 30% and average basket increased 3%. Asos ended its 2016 financial year with 12.4 million active customers, up 25% from the previous year.

Technology investment

Asos increased its investment in operating resources by 25% to £659 million over the year, while part of those costs was technology, which increased 28% to £24.5 million.

Asos said mobile is critical to its success and now has over 10 million active installs of its app, with 7.5 million new downloads over the year. On average, Asos customers shop eight timers per month on the app, spending more than 70 minutes online. Two-thirds of the e-tailer's traffic now comes from mobile and 51% of orders are being placed on its mobile platforms.

Over the last year, Asos launched its new iOS mobile app, which was built from the ground up using new technology which makes it easier for customers to navigate the range, while incorporating 3D touch for the latest iPhone owners. Asos also improved the quality of product imagery and the performance of its video catwalk function. The app already has a 5-star rating in the App Store globally.

Meanwhile, Android customers now have a new localised checkout functionality, which has allowed Asos to remove third-party proxy solutions for language, making the customer experience more responsive.

In order to keep abreast with new customer-facing technologies, including mobile, visual search and AI, Beighton said the e-tailer is continuing to work with technology startups with "young fresh ideas".

Asos has already partnered with a global technology start-up accelerator to co-invest and co-accelerate three fashion tech start-ups, with development work scheduled to take place during the new financial year.

"We've been doing that for a long time and exactly why we're continuing to do so," he said. "These new ways of customers interacting with companies, that's why we've got stakes in these young businesses so we can learn what is going to come next."

Beighton also said the e-tailer's existing large-scale technology and logistics projects were on track, and Asos is looking to step up its technology investment to £120-140 million capex up from £80 million this year. Beighton said the biggest lump of this investment over the next two years would go towards the e-tailer's new buying and merchandising solution, while also increasing investment in mobile and its base digital platform. Asos will also be developing a new finance system to support sales, while accounting for stock in multiple locations and in local currencies. These investments will be spread across multiple years and will be developed alongside established IT vendors.

The financial results are reported as the e-tailer is facing criticism over working conditions in its Barnsley warehouse. Asos denied such allegations and said they were inaccurate and misleading.