The height of fashion

Nick Robertson, the founder and chief executive of fashion retail website Asos, is face to face with his target consumer – a 20-something woman who, as he puts it, “loves shopping on the high street, but dips in and out of vintage, second hand and luxury”.

“So you’re a customer,” he says. “What do you like about the site? What don’t you like?” There is a business case for this impromptu one-to-one focus group. Asos is aiming to achieve sales of £1bn by 2015 – an ambitious figure but not one beyond Robertson.

Earlier this month, he revealed that profits had increased by 41% to £28.6m but points out: “The UK represents just 3% of all global internet traffic, which means that 97% of Asos’ potential growth lies outside its home market.”

Unlike his contemporaries Sir Philip Green at Arcadia and Natalie Massenet, the founder of high-end fashion retailer Net-a-Porter, Robertson does not come from the rag trade, rather he is a media buyer turned media owner. Having founded what was then As Seen On Screen in 2000, featuring quickly-made copies of outfits spotted on female celebrities, Asos now makes about £3m in advertising from its glossy magazine alone and is the go-to fashion store for 13 million unique visitors a month, stocking a variety of brands.

Robertson is continuing to mould Asos by pouring resources into marketing, technology and functionality. Marketing costs have increased 54% year on year, technology costs have risen 72% and staff costs by 38%.

Technology investments have included the creation of country-specific sites, such as those for the US, France and Germany, as well as mobile and Facebook facilities. These sit alongside improvements to search and recommendation tools and new offerings such as Asos Marketplace, where individual boutiques can set up shop, and Asos Fashion Finder, which offers outfit-building ideas and sometimes leads users to transactional websites outside of the host brand.

Meanwhile, one line in the results statement sums up the brand’s values: “Asos Group is considering reclassifying its delivery costs to operating expenses, as delivery investment is increasingly deployed as a marketing expenditure.” This makes reference to the free deliveries and returns Asos brought in last year and have now become its USP in the increasingly crowded online fashion sector.

Indeed, last year’s annual report included a statement from Robertson that the cost incurred by offering free deliveries and returns, which stood to threaten margins, was justified.

Combined with a £20m investment in moving to larger facilities that can accommodate an initial capacity of £600m in stock – nearly double this year’s sales of £324m – Robertson’s ambition of taking £1bn in sales by 2015 looks very real, as do his plans to make Asos a global fashion force.

He has been spurred on by an international sales increase year on year of 142%, and these overseas sales now eclipse those in the UK. Country-specific sites in Italy, Spain and Australia are being rolled out this year. The Australian operation, he says, has the benefit of being “counter-season”, giving stock coming to the end of its traditional cycle an extra lease of life. China is also on the horizon.

“The likes of H&M and Zara are truly global fashion brands and the UK is a bit short on those. Asos could be the next global fashion brand,” says Robertson.

Making Asos the darling of the international fashion world will come from continued PR in key publications such as Glamour, Company and Cosmopolitan and remaining a social media pioneer – Asos was among the first UK fashion retailers to introduce a community and blogging platform.

This will take precedence over the above-the-line activity that has helped build the Asos brand in the UK, such as sponsoring the hit Sky Living show America’s Next Top Model.

“We love building our brand but there are lots of things we can do online that don’t require as much investment as offline,” Robertson asserts.

“Our TV activity did its job and now it’s more about what we can do internationally. On a pound for pound basis I know what I’d rather be spending my money on.”

Robertson has, however, grappled with how much of the brand’s UK identity to retain to ensure success as a global platform. “Do we tailor specifically for a market, or do we keep the fashion high ground? I quite like keeping the fashion high ground, which means we aren’t going to appeal to everybody. I get that, but there is a layer of fashion lovers globally who look at the UK as being an authority on this stuff.

“So it’s important for us not to just bring to the Americans what they can get locally – the internet is all about discovering what you can’t get where you are.”

And, as all online retailers are discovering, it is also about breaking down barriers to purchase, such as the worries people have about not being able to try on clothes before buying. Robertson prides himself on Asos being the first online fashion retailer to introduce a catwalk feature in 2006, producing short videos of models in products to help customers further scrutinise a potential purchase. This helps to convince people that an item is right for them and avoids abandoned baskets.

The quest to make internet shopping a preferred experience over the traditional high street is Robertson’s mission, so continuing to create barrier-breakers like the catwalk video remain high on the agenda.

“All the time we’re trying to chip away at those little barriers. One of those barriers is: what is it going to look like on me? And what else do I have in my wardrobe that it would go with?” he says. This hints at the next evolution in online shopping technology, which could include a function where people input their measurements and ’try on’ clothes.

’Me’ is the key word here – moving towards a model of personalised advice and suggestions. Robertson says Amazon’s recommendation emails based on customer searches and purchasing activity is the “holy grail” of online retailing, but adds that it is not easy to achieve.

“If you bought the first Harry Potter film, then you are probably going to buy the next one,” he reasons. “But if you’ve bought a pair of red shoes there’s no certainty over what you are going to buy after that because you might already have a red dress. It’s more about understanding a customer’s preferred brands, styles and price point, then engineering that to a point where the product served to them is relevant.”

In a business school, it probably doesn’t make sense too direct people to other websites. But in a customer school, why wouldn’t we?

Asos marketing director Clare Dobbie, drafted in 18 months ago from agency Mother and with a background in fashion brands such as French Connection, Banana Republic, Gap and Nike, expands this point. “You’ll begin to see more personalised presentation on the website and ensuring that we make sense of that edited choice,” she says.

“People talk a lot about personalisation but technology is being developed every day so it’s important to pick the right bits of online kit.”

She adds: “The product is the most important thing. It’s why people come to our site. The next is functionality and the fact we have removed barriers in terms of free shipping and returns. We have also worked on product presentation, putting a lot of emphasis on the styling and quality.

“One of the big things I came to do was up the ante on was brand presentation; making it more fashion-oriented with international appeal, but still really accessible” (see Q&A, below).

She and Robertson want to grow Asos’ stable of brands, with international expansion something of a marketing tool on this level. “As we internationalise, it’s a good way for the brands we offer to get exposure to international 20-year-olds who might not have come across a particular label,” Robertson reasons.

This may seem at odds with Asos’ strategy to grow its competitively priced, trend-led own label, arguably one of the site’s biggest draws. But Robertson denies that Asos stocks high street names such as River Island, French Connection and Warehouse to keep the site’s entry level price point exclusively for its cheaper own-brand lines.

He says the exclusion of brands closer to Asos’ own-label pricing, such as Topshop, H&M and Zara is “not for a lack of trying”, hinting that previous approaches may have fallen on deaf ears.

“We don’t look at it as some brands cannibalising sales of our own brand,” Robertson clarifies.

“We know who our customer is. When you open her wardrobe, she buys across the whole spectrum – high street is a big part, but she will dip into a bit of value occasionally and sometimes a bit of premium and luxury. That’s the offer in its broadest terms to appeal to her. And she will occasionally buy second-hand and vintage, which is why Marketplace is there.

“There are still some brands in the UK, including H&M and Zara, that see us as competition only and in a way it’s about knocking down those walls and thinking, can we all go in together? The customer buys across all of us, so why can’t we just make it easy for her to buy in one place on the internet?”

Robertson may be able to make a strong case for Marketplace, but admits that Fashion Finder – which in many cases redirects customers to sites outside Asos.com – is more difficult to justify.

“In a business school, it probably doesn’t make sense to direct people to other websites,” he says. “But in a customer school, why wouldn’t we?

“Fashion Finder is our nod to the fact that there is lots of stuff she wants to browse and research, in outfit building and creation, but we don’t sell it today, so we can at least present it. We want to have a mix of brands (and purchasing opportunities) because that’s the way she shops.”

Marketing to men is hard. They don’t tell their mates where they shop like girls do. It will be a big challenge for our marketing team this year to crack this one

Robertson argues that initiatives such as Fashion Finder contribute to customer engagement, not to mention strengthening Asos’ brand identity as a fashion authority.

“We’re always talking about shifting that relationship with the customer. So why do I give them a free monthly magazine that contains a lot of stuff that isn’t available on Asos? Why do I allow them to recycle their own wardrobes through Marketplace? Because the strategy is to engage with our core audience on a more emotional level rather than on just a functional ’shop and purchase’ level.”

Asos’ free customer magazine, run by its own editorial team and containing big-name interviews to rival paid-for fashion glossies, has helped cement the brand’s cult following in the UK. But again, to an Asos outsider this initiative could also be a source of conflict because there is no advertising or promotional policy against brands not sold on the site.

“It has to be about the fashion,” Robertson stresses. “Like any good editorial team, we let them do what they want to do, and if they want to talk about the latest trend and it isn’t about us then we have to let them.”

The sales team is, however, encouraged to work with brands “that already have good business with Asos”, such as Diesel or Miss Sixty, which provide plentiful advertising pages to the magazine. And major partnerships that have materialised so far have come from FMCG brands wanting to develop stronger fashion links, such as Diet Coke and Nivea.

Robertson says: “In the case of Diet Coke, we do editorial features with it and it puts us on its cans. We share our audience demographic so it is a win-win scenario. It might help that I’m a former media buyer so we understand the whole space. Asos isn’t just a great shop but it is a great media channel that has 13 million 20-year- olds visiting it every month.

“It has enormous potential for advertisers. It’s about looking at Asos as a media destination; a lot of fashion magazines are only where they are because of the advertising they carry.”

Although Robertson refers to the core Asos customer as “she”, men represent 20% of the brand’s sales. Robertson admits that the company faces a challenge when marketing to men. Partnering with Diet Coke and Nivea is one thing, but doing similar things with traditionally male brands from the sports and alcohol sectors doesn’t currently appeal, he says.

“Marketing to men is hard. They don’t tell their mates where they shop like girls do. It will be a big challenge for our marketing team this year to crack this one.”

Brand extensions in the women’s range such as Asos Black, White, Reclaim and Africa have been crucial to the brand’s growth as they showcase different design strengths, brand values and price points. Future brand extensions must remain in this vein, Robertson claims – he has already mentioned H&M and Zara as allies one day, but has ruled out following in their footsteps of extending into homewares.

“Asos is still in its infancy in terms of how people perceive it as a brand. Fashion seems to be the race we can win, and by diluting the brand we would take a bit of gloss off the fashion side of things,” he says.

Not that Robertson hasn’t already learned from failed encounters. Asos Kids was folded last year and Robertson explains: “I didn’t want to put children in the magazine or the homepage, so why bother doing something if you’re not using the collateral you have to promote an offering? As we go increasingly international, it’s not about brand extensions, but about going for the same customer globally.”

Asos’ fashion authority status has been a long time coming and is certainly a far cry from its original As Seen On Screen incarnation, which was inspired by Robertson’s days in the product placement business.

“We’ve evolved from being a small UK celebrity-inspired fashion business to a very credible fashion destination,” he says. “The more fashion we represented, the more brands we’ve got on board and the better our own label became. It was in 2004/05 that we really decided we were going to be a fashion business and we haven’t really looked back.”

One of Robertson’s only regrets, perhaps, is not escalating the brand’s focus on fashion sooner, and maybe bringing in that £1bn earlier (see Marketer to Marketer, below). But it’s the least of the setbacks he has already recovered from – a fire in 2005 destroying nearly £4m worth of stock, and cautiously deciding in 2010 to reduce stock purchased to make way for an online retail crash that never materialised.

But Robertson is not one to dwell on things, as demonstrated by his desire to focus on the now household acronym that has emerged from burying the decidedly less glamorous moniker As Seen On Screen. “Whichever way you skin it, fashion is fun, and that’s part of the appeal of this business,” he smiles.