Business

Company Background

ASOS plc was established in 2000 as an online fashion store. It survived the .com bubble by adapting to changes in the business environment (Card, 2008). Since then, ASOS has grown as a company with 250 staff up from 47 employees in 2000. It has also expanded its warehouse space from 550 to 32,500 square metres to accommodate 26.6 million online shoppers in the UK market alone. Out of this number, 3.3 million are new customers. (Strategic growth, 2010) ASOS funded its expansion by offering shares. Its revenue grew by 101 percent between 2008 and 2009 and its profit also increased by 92 percent in the same period. In 2009, ASOS became the second largest online fashion retailer in the UK with 5.13 percent market share to narrow the gap with its closest competitor NEXT plc with a market share of 6.31 percent. (ASOS plc, 2010) ASOS is an example of growing company even with the global recession. As long it can sustain its growth rate and competitiveness, it can remain a successful retail story or even the leading online fashion store in the UK.

Retail Strategy
A number of strategic factors contributed to its success. As a company established during the tail of the .com bubble, it employed an adaptive strategy (Aertsens et al., 2009) to enter the online fashion by using the As Seen On Screen (ASOS) approach. The business idea was to replicate the fashion of known television and movie celebrities. This worked by riding on (Griffin  Thomas, 1999) the appeal and authority of celebrity fashion to consumers without spending much on advertising. After establishing its presence in the online fashion market, ASOS shifted to a leadership strategy (Aaker, 2001) by establishing its own fashion brand. This also succeeded by enhancing the business value (Kotler  Armstrong, 2000) of being an authority in fashion. It reinforced the business by retailing a wide range of fashion brands from Adidas to French Connection to Levis (ASOS plc, 2010). ASOS experienced difficulties in obtaining retail agreements with known brands (Strategic growth, 2010). However, as soon as it successfully retailed some brands, others followed. The retail strategy of ASOS is constantly evolving (Hitt et al., 2003) to address new needs and capture emerging opportunities. The ability to evolve as fast as fashion turnover ushered ASOS success.

Another retail strategy of ASOS is internal or organic growth (Daft, 2000 Aaker, 2001), which involves the focus on continuously increasing the fashion items offered to boost sales. To succeed in this strategy, firms need to have a thorough knowledge of its market and market changes and develop efficiency (Daft, 2000). ASOS was able to meet both requirements. Its wide information of celebrity fashion trends and understanding of the fashion influences of the younger age group allowed ASOS to address changing demand. The evolution of its organisational structure, from a group of people managing all odds and ends to departments and a hierarchy of management (Griffin  Thomas, 1999 Robbins et al., 2004), together with acquired lessons on ways to develop fashion products at low cost made ASOS an efficient company. The use of multiple retail strategies that aligned with its needs and developed its competencies enabled ASOS to grow and become a successful retailer.

Target Market
The retail strategies adopted and developed by ASOS closely aligned with the characteristics and demands of its target market. ASOS targeted the 16 to 34 age group as its market (ASOS plc, 2010). As an online fashion retailer, this age group showed the biggest increase in online shopping and the likely group to actually spend on fashion items (Strategic growth, 2010). Targeting this market segment provided ASOS with a big potential market. Identifying this market segment contributed to its success since its thrust of celebrity fashion appeals to the market regardless of gender and income class. While it has many competitors in this market, developing the appropriate marketing mix enabled ASOS to succeed as one of the top online fashion retailers in the UK.

Marketing Mix
ASOS targeted a large market segmented only through age group. This means that the market is likely to have varying fashion demands and preferences. ASOS developed a range of fashion products under its brand and retailed a diverse range of fashion brands to meet different demands. The fashion products ranged from clothes to shoes, bags, accessories and even cosmetics. The fashion products under its brand change every season. There are also a range of fashion selections for men, women and children, for different occasions from formal, cocktail, office, sports, swimwear and casual wear. There are different colour and size selections. The company has accumulated 24,000 lines of fashion items and it is adding new items every week. In addition, ASOS also retail 400 brands to further diversify options. With a wide range of fashion products, ASOS ensured that it has something for everybody. This enabled ASOS to establish a customer base of at least 1.2 million regular shoppers and 5.2 million visitors to its online site every month. (ASOS plc, 2010) The difficulty is ensuring sufficient stocks of specific products with varying demand (ASOS, 2009).

The pricing strategy is mixed to meet the expectations of its diversified market. The fashion items retailed by ASOS cut across price ranges but remain lower than luxury brands. However, by developing and reinforcing the value of its retail products (Churchill  Peter, 1995 Solomon et al., 2002) as fashion keepsakes, it is able to provide value that to consumers would likely perceive as exceeding the price. When compared to high street shops, ASOS prices are also competitive.

As an online retailer, all sales happen in the virtual world. As the point of contact with online customers (Fill, 2001), ASOS recognised the need to make an immediate impact, maintain interest, and motivate actual purchases. ASOS developed its website as a catalogue, magazine, runway show, and fashion consultancy combined to address various needs. Its catalogue allow for easy scanning and comparison of products. The site also has fashion news and feature articles on different fashion ideas. The site also provides runway video clips of its fashion to provide consumers with a live feel of the fashion items. The site also has a page on how to shop, customer feedback, and contact links for any comment, questions or problems raised by consumers. As a marketing venue, the ASOS site offers all that a consumer may want from an online retail store. Its website was a key to its success.

While ASOS is an online retailer, it opted to use promotional channels that allow personal communication (Fill, 2001 Smith  Taylor, 2004) with consumers. ASOS does not allocate much for advertising because its focus is on its fashion products (Midgley, 2008). Apart from capitalising on the idea of recreating celebrity fashion for everybody that in itself comprises a promotional strategy, ASOS also has a print magazine, titled Seven Squared, which reflects its fashion values. Most of its magazine subscribers are also online shoppers and vice versa. ASOS is also linked to many social networking sites that share its target market including Twitter and Facebook. Overall, its promotional activities are akin to viral marketing by establishing a wide network (Boone  Kurtz, 1992) linking ASOS with its market. ASOS customer support team also enhances personalised service by decreasing the lag time from 6 to 1 hour so that consumers expect a response within the hour (ASOS plc, 2010). Although not real time, this is still a relatively laudable record.

Conclusion
ASOS is a successful online fashion retailer within the context of the industry and the fashion market. Its retail strategy, target market, and marketing mix are aligned to address changing market demand. However, there are key areas that require monitoring to prevent problems such as managing the supply chain from sourcing to production to delivery to minimise errors and delays (Hitt et al., 2003) as well as continuously updating market information (Rice, 1997) to match the volume and range of production with demand ensure high inventory turnover sufficient to meet demand.