Case study 4: ASOS shifts the focus of high-street retailing

ASOS has pioneered online social shopping and is one of the most successful online fashion
retailers in the UK. ASOS offers tens of thousands of branded and own-label fashion items to
millions of twenty-something men and women around the globe. This case study explores the
growth and competitive strategy of this iconic online retail fashion brand.
Nick Robertson and Quinten Griffiths, founders of As Seen on Screen (ASOS), were inspired by
watching American TV series Friends, and these friends set about building a website that could
sell items that potential customers had seen on television. Initially, ASOS sold copies of clothing
worn by celebrities, but soon the company began developing its own brand. This focus enabled
the company to start to build a reputation that was attractive to young fashion shoppers.
Despite industry commentators’ doubts about selling clothing online, by 2004 ASOS had
introduced its own-label women’s wear and since has achieved the following landmarks:
2006 – became the first company in the UK to launch online catwalk shows
2007 – launched ASOS own-label for men
2010 – began expanding internationally into Europe, Russia and USA and established sites to
serve these markets and launched ASOS marketplace
2011 – app launch and Australian, Italian and Spanish sites established
2012 – began to consolidate online expansion, opening international offices in Sydney and New
York
2015 – partnered with PayPal to connect directly with student markets
2016 – invested in Artificial Intelligence and voice recognition to improve social media
applications
2017 – market valuations made ASOS more valuable than M&S, the UK’s largest seller of
clothing.
ASOS has grown into the UK’s largest online fashion retailer by deploying a competitive
strategy, which has established a unique market position: selling a specialist range of products
that have ‘the designer fashion look’. Nick Robertson, the company’s founder, started selling
branded clothing as seen in films and on television. Not only did this enable the company the
opportunity to create a market, but it also benefited from celebrity endorsements in PR and
promotional campaigns. ASOS now sells over 50,000 branded and own-label clothing products
and offers a much wider product range than its high-street competitors. ASOS operates as a fast-
fashion retailer, which has meant overcoming many challenges to get goods to the customers on
time and at the same time manage the high rate of returns. ASOS has set up systems that enable
product lines to be replaced quickly. Operating at this level creates many challenges for ASOS,
so, in order to deliver the promise of fast designer-look fashion, and to constantly update product
ranges, ASOS has established an ‘in-house’ design team in Europe, which creates catwalk
lookalike items that are produced close to the customers, which aids delivery and helps the
higher returns rate of operating online rather than in-store. ASOS continues to be ‘third-most-
visited fashion website on the planet’, after HM.com and
Zara.com.
Online value proposition
Product choice is at the core of the ASOS proposition: tens of thousands of branded and own-
label products available, with hundreds introduced each week. On pricing, ASOS is price
competitive with its Price Promise (a price match offer): if you see a branded (non-ASOS)
product cheaper on another website, the company will match that price. ASOS describes its
website as ‘evolving constantly as we find better ways of presenting our products’. The essence
of the brand communicated in its annual report is ‘restless innovation for our customers’. The
main elements that ASOS aspires to are: ‘Inspire and power your fashion discovery’.
Other elements of the ‘brand wheel’ (see Figure 4.21) are:

External. The world’s best fashion, the best fashion experience, and the service I want, inspire
and engage me.
Internal. Passionate about people, continuous improvement, fashion with integrity.
In 2010 ASOS.com launched its marketplace platform, enabling boutiques, vintage collectors,
individuals and designers – established or unknown – to trade from their own virtual market
stalls to customers across the world. It differs from other online marketplaces like eBay and
Amazon in that each vendor can customise their shop front and, for £50 each month, will have
access to an account manager at ASOS and some premium promotional spots on Marketplace.
ASOS service
For ASOS, speed and accuracy of deliveries to customers is a critical success factor. By offering
same-day deliveries the company has increased sales by 23 per cent in the UK and even more in
the EU.
Underpinning these improvements in sales is an innovative ethos that is evident across the
company. ASOS invested in a customer contact management system that enables staff to respond
to customer care emails more quickly and efficiently. Working with Clipper Logistics, they have
introduced an innovative reverse logistics system called Boomerang, which provides quick
turnaround on inventory when products are returned. A primary strategic objective is to
continually innovate to ‘add convenience and choice for ASOS shoppers’.
Partnerships
ASOS focuses on its target market and looks for strategic opportunities and initiatives that can
strengthen its positioning. Promotional tie-ups and associations are very important to ASOS. In
June 2008 the company launched a limited 100-design collaboration with the London College of
Fashion. A capsule collection of 100 one-off pieces each sold on the ASOS website. The
promotion received media coverage, including two full-page features in the national press. The
collection sold out in minutes. The ASOS fashion discovery programme, launched in 2016,
continues to create opportunities of young designers and students to work on their own labels,
which are then stocked by ASOS for at least two seasons.
Marketing communications
ASOS brand magazine has a circulation of nearly 500,000 and reportedly is the ‘most widely
read quarterly fashion magazine’. The magazine reaches more than 700,000 when including
France, Germany and the US in the circulation figures and this communication vehicle is used to
reach out to new markets by expanding the readership. Word of mouth is a powerful tool of this
brand and able to leverage advantage through links to celebrities and fashion using the ASOS
Insider Community, which is a marketing initiative that uses individuals and their fashions
insights to build digital content. The ‘authenticity’ of the content generated by the Insiders makes
this a very powerful approach to digital communications and also links to their own social media
accounts in order to extend the reach and impact of the communications network. These digital
influencers not only share their fashion favourites but also have an ‘Outfit of the Day’, which
helps drive sales of specific products.
ASOS Foundation is central to the ASOS corporate social responsibility strategy, which again
contributes to the brand’s market positioning. The Foundation seeks to support disadvantaged
young adults in the UK, India and parts of Africa. Projects involve finding ways to develop
sustainable improvements in these areas: a social enterprise in Kenya that works from an eco-
factory producing African-inspired fashion designs; education in artisan skills in remote parts of
Africa; and working with the Prince’s Trust in the UK to help young people develop the skills
they need to get jobs.
Search marketing
The range of terms ASOS targets for search are evident from the <title> and description tags on
the home page, which are also used to communicate key brand messages:
<title>ASOS | Shop women’s fashion & men’s clothing | Free Delivery & Returns</title> <meta
name = “Description” content = “Discover the latest in women’s fashion and men’s clothing
online. Shop from over 40,000 styles, including dresses, jeans, shoes and accessories from ASOS
and over 800 brands. ASOS brings you the best fashion clothes online.”/>
Social media marketing
The growth of the company in recent years has largely been driven by social media. ASOS has
contributed a great deal to the digital high street. Apart from showing that it is possible to sell
fashion online profitably, the company has also pioneered social shopping, where customers use
online social network sites to share product ideas before they buy. ASOS has successfully used
social media to build a community of fashionistas who are prepared to share their views and
opinions on Facebook, Twitter and Google Plus and to share ideas of what to wear, giving its
young shoppers fashion inspiration. With approaching 12 million followers on social media sites,
the company has made a significant commitment to community on its own site through the
ASOS blogs at https://marketplace.asos.com/community/ and the social network sites where it
has over 1.3 million Likes on Facebook. It runs regular promotion events integrated across the
social networks but focuses on stories and its Instagram strategy links directly to its influencers
and in doing so widens the reach of the brand.
Basket analysis
Basket analysis approaches were described in an interview with marketing and operations
director Hash Ladha:
One of the most interesting things we found was that men tend to buy for their partners as well
as themselves. We previously thought this might work the other way around. Using this data,
email content was generated by the company’s in-house editorial team. Generic content included
a round-up of current fashion trends and ‘best buy’ recommendations. The personalised content
took into account favourite brands and budget, recommending items below a certain price limit.
Emails were sent twice a week. Other strategies, such as encouraging customers to refer a friend
to the company, and sending viral campaigns, were also used at this time. Our best customers
visit the site every day. Shopping habits do vary, but most customers like to browse the site
between spending. A twice-weekly email gives them a direct link straight to the site and keeps it
fresh in customers’ minds.
ASOS also wanted to lure lapsed customers back to its website. It targeted these individuals with
tailored content that aimed to remind them why they had previously shopped online for designer
and high-street clothing.
Ultimately, ASOS has developed a large target audience for its products through the use of
digital media and it is able to communicate new product ideas very effectively to keep customers
interested. ASOS’s innovative use of social media has enabled it to influence the way young
shoppers interact with online fashion retailers. Moreover, this is likely to be a massive growth
area and social shopping is likely to continue to reshape the way we shop for the foreseeable
future. Always keen to be ahead of the competition, the main thing for the ASOS team is being
where their customers are and being able to engage in the dialogue.
Sources: ASOS (2011, 2013); BBC (2013); Kollewe, (2014); Wood, (2017); Armstrong, (2016);
Logistics Manager (2018); Kakar (2018).
Questions
1. Apply the SOSTAC model to ASOS and highlight why it has become such a successful online
fashion brand.
2. Describe how ASOS uses elements of the marketing mix as part of its digital strategy.
3. Discuss how ASOS has used digital to develop its differentiated market position.