Businessmodel of ASOS

Customer Segments

ASOS has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Consumers – Individuals who want to buy the latest fashions online.
• Fashion Companies – Vendors that produce fashions and need buyers. There is also a niche market component of the business model as the company targets its offerings at people in their twenties.

Value Proposition

ASOS offers six primary value propositions: accessibility, customization, price, cost reduction, convenience, and brand/status.

The company creates accessibility by offering unique fashion options. Its website features a section called ASOS Marketplace, which includes 50,000 vintage/boutique fashion items from more than 900 boutiques in 40 countries. This enables shoppers to buy from brands that might not have physical stores in their neighborhood or their own websites. ASOS also offers clothing for various body sizes, with lines such as Little Mistress Plus Size, New Look Petite & Tall, and Glamorous Petite & Tall.

The company offers customization by creating websites tailored to different countries, specifically for Australia, Germany, France, Italy, Russia, Spain, China, and the United States. In addition, it personalizes planning and buying strategies for the merchandise on each site by country. For example, it might launch a Spring/Summer collection for Australia‘s site before it does so in others.

The company offers a price value proposition. It uses zonal pricing technology to ensure that brand costs are in line with rates at local markets; this helps it provide more competitive local pricing.

The company reduces costs by offering free delivery for any orders totaling more than £20. It also offers free returns in the UK, Germany, France, and the U.S. Further, it operates ASOS Rewards, a loyalty program that allows customers to accrue points with each purchase towards discounts.

The company creates convenience by offering next-day delivery options in France, Spain, Germany, Italy, Sweden, Denmark, the Netherlands, Ireland, and Belgium. It also provides express delivery services in over 20 smaller territories and mid-tier services in Singapore, Korea, and Hong Kong. Moreover, it provides live delivery updates so customers can receive real-time information on details such as driver’s name and expected delivery time. Lastly, its app offers product recommendations.

The company has established a powerful brand as a result of its success. Its website features over 80,000 different products, with over 3,000 new lines added each week. The lines span menswear and womenswear, accessories and footwear, and beauty and jewelry. These lines fall into 800 local and global brands, which include both third-party and private-label offerings. The website ships to more than 240 countries and territories and had more than 10.7 million active customers in 2015, up 18% over 2014. Famous fans include Taylor Swift, Zac Efron, Rihanna, Katy Perry, and One Direction. Lastly, ASOS has won many honors, including a Cosmopolitan Fashion Award for “Best Online Offering”, a Drapers Digital Award for “Best Use of Mobile”, and Reveal Online Fashion Awards for “Best One-Stop Shop”, “Best for Special Occasions”, and “Online Retailer of the Year” (2015).

Channels

ASOS’s main channel is its website, through which it acquires most customers; customers can also make purchases through its mobile app. The company promotes its offering through its social media pages and app, and through sponsorships such as of the McLaren Formula One Team.

Customer Relationships

ASOS’s customer relationship is primarily of a self-service nature. Customers utilize the website or mobile app while having limited interaction with employees. The site features video guides on topics such as how to shop on the site. In addition, the company publishes ASOS magazine, a monthly publication it sends to 475,000 select customers in hard copy, as well as to 50,000 customers in digital format. The magazine includes fashion news, celebrity interviews, and other features. Despite this orientation, there is also a personal assistance component in the form of e-mail, social media, and 24/7 phone support.

Key Activities

ASOS’s business model entails maintaining a common platform between two parties: consumers and fashion companies. It also involves designing and developing its private label offerings. It outsources manufacturing to third-party contractors.

Key Partners

ASOS maintains an affiliate programs in certain locations such as the U.S. Third parties that promote the company on their platforms (websites, mobile apps, etc.) receive a 5% commission in the event of a confirmed sale through a resulting lead. These partners also receive a newsletter providing updates on upcoming promotional activity, as well as technical support.

Key Resources

ASOS’s main resources are its collection of facilities, which include fulfillment warehouses in the U.S., Europe, and China and returns centers in Swiebodzin and Australia. The company also depends on its staff of over 650 Customer Care Center employees to provide shopper support.

Cost Structure

ASOS has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is distribution costs, a fixed expense. Other major drivers are in the areas of warehousing and marketing, also fixed costs.

Revenue Streams

ASOS has four revenue streams:

Product Revenues – The company generates revenues from sales of its private label products

Usage Fee – The company generates revenues from a £20 monthly rental fee charged to vendors on its website

Transaction Revenues – The company generates revenues from the 20% commission fee it charges vendors for each confirmed sale

Advertising Revenues – The company generates revenues from fees charged to third parties for advertising on its website and in ASOS magazine