How ASOS became one of the world’s largest retailers | CNBC Explains

if you had invested a thousand pounds in asos in 2001 it would have been worth more than 235 000 pounds or 301 000 by the end of 2020. today asos is one of the largest online only fashion marketplaces in the world boasting 850 brands including doc martens abercrombie and fitch and carvin klein founded in the year 2000 shortly after the dot-com bubble burst the platform was worth 8.6 billion dollars at its peak surpassing retail store warts marks and spencer in market capitalization today asos is available in 10 languages across 200 markets at the end of 2020 asus boasted 24.5 million active customers of which 7.6 million were located in the united kingdom like many fashion startups the company was unprofitable for years had its fair share of misfortunes while a series of miscalculations saw the company exit china in 2016. so how did this fast fashion startup transform into a dominant player in the industry asos had its beginnings as a tv product placement company founded by nick robertson the great grandson of wealthy retailer austin reed in june 2000 under the name as seen on screen the company later evolved its fashion business to an online fashion marketplace selling designer outfits seen on celebrities at affordable prices after a 4.2 million dollar investment from his older brother and friends the company debuted on the junior market of the london stock exchange in october 2001 at 20p per share and raised slightly over 4 million then the e-commerce industry was struggling and asos was unable to establish a clear brand identity to break the dominance of traditional fashion retailers for example it was selling bags close to 600 to its market of 20 somethings making it unaffordable for many at the same time the company was investing heavily in technology logistics and increasing its product range it wouldn't be until 2004 that asos would post its first profit a little over two hundred thousand dollars but this success appeared short-lived a year later three massive explosions at an oil depot near its warehouse in the uk damaged 9.4 million dollars worth of stock just before the christmas holidays and along with its asus festive earnings the company was forced to cancel new orders issue refunds and suspend trading of its stock but 2007 marked a turning point so not just for asos but for the e-commerce industry as a whole broadband was increasingly becoming accessible to households apple just launched the first iphone while facebook was trying to displace myspace and friendster as the dominant social media platform investors began to pay attention to online only businesses and asos was no exception between 2007 and 2011 the company's share price shot up from 2.36 to 38.50 a source's popularity skyrocketed as celebrities sported its outfits increasing its visibility in 2014 china dominated the e-commerce space with 458 billion dollars in sales surpassing the united states to become the world's largest e-commerce market as asos expanded at breakneck speed at home and abroad china was a priority market but the country's e-commerce regulations were complex and asos struggled to compete with the local juggernauts such as alibaba and jd.com after splashing 13.5 million dollars to launch its local service in 2013 the company withdrew from china less than three years after it launched back home the competition was heating up in his backyard too traditional retailers like zara underparent company inditex were expanding their online presence while new competitors like boohoo were undercutting asos with cheaper wares in 2014 650 million dollars was wiped off its value following a stock profit warning from the company its exit from china in 2016 turned out to be a blessing in disguise free to focus on other markets it began to separate itself from the pack by adopting inclusive and sustainable strategies that appealed to fashion conscious 20-somethings besides highlighting models of various ethnicities and sizes asos also launched a fashion with integrity program in 2010 to ensure ethical and sustainable business standards in 2015 the company was ahead of its peers when it's published it stands against modern slavery and supply chains two years later the fashion retailer published a list of all its factories to improve the transparency of its supply chains while its unannounced audits of factories continued a pace even during the pandemic and the company's aggressive strategy to appeal to its target's audience and outshine its competitors didn't end there to fend off rivals such as boohoo and zolando asos used social media influences to advertise its clothing to younger consumers and collaborated with celebrities including little mixes leon pinnock and basketball player ovisoco finally in a bid to remain competitive the company provided a seamless end-to-end process that enabled consumers to track every step of the delivery on the back of its strong financial performance in 2017 the company's share price hit a record high of 94. in the fast fashion world speed matters fashion retailers were churning out new designs from the drawing board to the sales floor in as little as one week and the pandemic accelerated the shifts to e-commerce meaning only the fastest firms would survive with most people staying indoors and holiday plans cancelled fashion retailers were facing an existential crisis many analysts questioned whether asos could be as nimble as its rivals because of the sheer number of brands under its belt zara for example kept production local and close to its headquarters in spain and was used to churning out new designs quickly asos was hit severely in the first quarter of 2020 with group sales plunging as much as 25 towards the end of march but it recovered quickly producing more luxurious laundry products to cater to customers needs many of whom were now working from home as the demand shock moderated by the end of june however its sales jumped by ten percent and it posted over one billion dollars in revenues for many brick and mortar businesses the story was much different in 2020 inditex the biggest fashion group in the world announced plans to close between thousand and a thousand two hundred stores or sixteen percent of its outlets worldwide the same year l brand is the parent company of victoria's secret closed 265 stores the h m group shot 170 while hong kong listed esprit shuttered all of its 56 stores in asia outside mainland china moreover the retail empire arcadia which owned brands like topshop topman miss selfridge and hit collapsed at the end of november 2020. in february 2021 asos acquired arcadia's prized brands leaving the physical stores out of the deal this highlights asus focus on diversifying its brand and the industry's away from in-store shopping while 2020 was a successful year for asos its fortunes could change in the blink of an eye if it's not fast and agile enough to remain competitive it must be reactive to customers changing tastes fix its scaling issues abroad and continue to expand its offering thank you so much for watching our video what do you guys think of asos comment below and as usual don't forget to subscribe

Channel: CNBC International

Views: 224,025

Keywords: CNBC, ASOS, asos haul, asos haul 2021, asos haul plus size, asos ad, asos men, asos review, asos clothes, Steve Jobs, e-commerce industry, Janelle Monae, elle fanning, China e-commerce, Boohoo, Zara, HIIT, Arcadia, Topshop, Topman, Selfridge, H & M group, Victoria Secret, Esprit, Inditex, Leigh Anne Pinnock, Ovie Soko, Alibaba, JD.com, MySpace, Facebook, Friendster, steve jobs documentary, Austin Reed, Marks and Spencer, Abercombie and Fitch, Dr. Martens, Calvin Klein, Timothyna Duncan

Id: JAeqysT6Bxs

Length: 8min 31sec (511 seconds)

Published: Thu Apr 01 2021