British Invasion: Q&A With Asos’ Nick Robertson

LOS ANGELES — After taking the U.K. by storm, Asos.com now has its sights on conquering the American market.

The footwear, apparel and accessories retailer last September debuted a dedicated U.S. version of its site that is seeing sales growth of 300 percent each month, making it the company’s fastest-growing market. Asos also operates dedicated sites for France and Germany, both of which bowed in October.

In an exclusive interview with Footwear News, Asos CEO Nick Robertson described the opportunity within the U.S. as immense and noted that the country could bring significant profits for the 10-year-old company, which currently logs 1.2 billion pounds (or $1.9 billion at current exchange) in annual sales.

“The U.S. market size is at least seven or eight times bigger [than the U.K.],” he said. “I would be amazed if the U.S. wasn’t at least the same size as the U.K. business within the next three years.”

Footwear makes up about 12 percent of Asos’ total sales. Half of the business is in private label styles, while the remainder comes from a roster of brands that includes Chie Mihara, Diesel, Dolce Vita, Frye, KG by Kurt Geiger, Minnetonka, See by Chloé, Ugg Australia and Vivienne Westwood for Melissa. Price points range from $15 to $770.

While Robertson said the U.S. merchandising strategy gradually will be tweaked to suit American sensibilities, the overall concept remains the same: to offer the twentysomething female consumer a reflection of her closet, with a wide range of styles and price points from both designer and mainstream brands. It’s a formula that seems to be working: Since launching in 2001, Asos has amassed 4.7 million — and counting — registered customers.

Here, Robertson talks about Asos’ unlikely entrance into retail, its plans to win over American women and why the company will not be opening up shop on a street near you.

 

FN: A lot of people in the U.S. are still unfamiliar with the Asos story. What was the original idea behind the site?
NR: We were running a product placement business back in 1996, and [a few years later], we started looking at how we could use the Internet to progress our business. That’s when the original “As Seen on Screen” idea came about. We [conceived of] a website that would be like an information portal, where if you typed in a film name, say “Mission: Impossible,” out would come [a rundown of] the products and brands that appeared in the film. It was a nice way of combining what we were already doing — being paid by brands to represent them in programs and films — and then allowing people to identify the products and, if they wanted to, they could go out and buy them. There were some stats that came out during that time about the huge amount of telephone calls broadcasters would get when a lamp would appear on an episode of “Friends” or something, so we knew there was an idea there. That’s how we started, as an information portal. It was a little website that was really just informational; there was nothing transactional about it.

 

FN: How did you make the leap into e-commerce?
NR: We tried to get the brands to pay to be on the site — more of a PR or flash advertising model — but we realized we couldn’t make any money doing that. The only way we could monetize it was to actually sell the product. So we started buying stuff. Remember the picture frame around the peephole on the door in “Friends,” or the wallet from “Pulp Fiction”? [We’d sell] things like that. It was on a very small scale, and we were really doing it for fun. We certainly weren’t retailers. Then it grew to a scale where [we decided to hire] someone to do the buying for us because it wasn’t our skill set. The buyer would try to find items that looked similar to what the stars had been wearing in a film or TV program or music video. We’d picture the celebrities next to a “get the look” product, but make it transactional.

 

FN: How did you finance the business in those early days?
NR: In 2001, we raised 2.8 million pounds [or $4.4 million]. That’s all the money we’ve ever raised. By 2003 and 2004, we had broken even. Since then, we have never looked back and never had to raise [additional] money.

 

FN: How did you transition the site into a fashion destination?
NR: In 2004, fashion was outselling the other categories. We couldn’t really envision a fashion store being called “As Seen on Screen.” It didn’t seem particularly fashionable, not that Asos is a particularly fashionable name, but it was better than “As Seen on Screen.” We changed the company’s name and focused the business on fashion. We kept looking over our shoulders saying, “Where is everyone?” There didn’t seem to be anyone coming at us. Back then, the stores in the U.K. were different. [American] department stores were a lot quicker off the mark [in the online realm]. I understand your department stores had mail-order businesses attached to them and it was easier for a mail-order business to migrate to an online business. Our department stores literally didn’t get off the ground until the past 18 months. Selfridges over here just launched in the last 12 months, and all the individual fashion brands weren’t really getting their heads around it.

 

FN: Does the site still maintain a connection between the screen and product placement?
NR: The connection now is more about fashion icons, in exactly the same way fashion magazines portray fashion icons and talk about their style and the trends. We have a magazine where we do that. We launched that in 2006. We only do it in the U.K. at the moment, and it goes to 450,000 of our better customers each month and is a 120- to 150-page fashion magazine. We’re talking about fashion and celebrities and styles and trends.

 

FN: What made you decide to tackle the U.S. market?
NR: Quite early on, we saw we were getting customers from all over the world. That is the power of the Internet. Still, [international orders] were a small percentage, like 5 percent or 10 percent. Two years ago, it started to accelerate to the point where our international business is now nearly 45 percent of our total business in the third [fiscal] quarter. And that’s up from 37 percent in the first half of [the fiscal year]. Out of all the markets we were getting sales from, the U.S. was the biggest.

 

FN: How does the U.S. site differ from the U.K. version?
NR: Effectively, what you see today is what you see in the U.K. The homepage will be slightly different, based on seasonal messages and promotional calendars and that sort of thing. But the product range is very similar. This is phase one. The next phase, which is about six months away, will be [changing] the merchandising [of the site]. In six months, the product might not be different, but it could be merchandised differently. We also hope by then to have East Coast and West Coast versions for the U.S. It would make sense to do that.

FN: Do you see differences in consumer tastes between American and U.K. customers?
NR: Our mix in the U.K. is almost 50 percent in our own branded product and 50 percent in other brands. Instinctively, we thought that as we [went global], it would be the brands that would sell more because some of them are familiar to the U.S. customer and the Asos brand isn’t. But actually, it’s been the Asos product that the U.S. customers are loving. For them, Asos is very unique and it’s not readily available. The price is also appealing. We charge our U.S. customers the same price we charge our U.K. customers. The way the dollar is working at the moment, that appears to be an attractive price point. Our own brand [encompasses] 282 styles of women’s footwear.

 

FN: How will you evolve the product mix on the U.S. site, and will it always mirror that of the U.K. site?
NR: We don’t want to sell back to the Americans what they can easily get at home. So it’s important for us to be presenting the more unusual and harder-to-find stuff. Similarly, as we grow our U.S. business, it would make sense for us to bring U.S. brands across [the pond] to sell in the U.K.

 

FN: How important is it to offer a mix of designer and more mainstream brands?
NR: The objective is to appeal to that 20-year-old fashion lover. If you open up her wardrobe, she will have a mix of high street brands. Occasionally, she will splash out into a bit of premium, and very occasionally, she’ll dip into a bit of luxury. Really, that’s the profile of what we sell. We’ve got 40,000 products, and that whole inventory turns every eight to nine weeks. We’re adding about 1,500 new products a week across all things, sort of head-to-toe fashion.

 

FN: Are you open to taking risks on a new or unknown brand?
NR: Absolutely. Part of our appeal is that we’re not bound by traditional retail mechanics. Normally, stores are quite scientific about what they stock and at what price points they buy, because it’s all taking up very valuable shelf space. We don’t have that [issue]. We have warehouse space, which is very cheap compared with retail space, so we can be a lot more adventurous.

 

FN: How important is social media to your marketing efforts?
NR: We are big in terms of our own social network and in terms of what we do on Facebook. We have about 400,000 Facebook friends. We launched our Facebook store in the U.K. last month. If you’re a friend of Asos, you can actually shop the whole Asos offering from your Facebook page. In addition to that, what you haven’t got yet [in the U.S.] is our marketplace. In the U.K., our girls can sell their wardrobes to each other [on our site], like eBay. We launched that in November. It lets Asos customers free up some money to buy something new. [Marketplace] is also open to a select group of fashion boutiques, and we’re helping them leverage the Internet. I would hope within the next 12 months [a U.S. version will launch]. But even right now, U.S. customers can use the U.K. marketplace.

 

FN: Do you have any desire to have a brick-and-mortar business?
NR: No, definitely not. That would be totally counterintuitive. [Our customers] are spending more time on the Internet than they are doing anything else.

 

FN: How is the online retail game changing?
NR: It varies, but about 6 percent to 9 percent of clothing is now purchased online. However, when you narrow that to look at young, fashion-forward 20-year-old customers, the figure is closer to 20 percent to 25 percent. It used to be that trying on clothes and shopping with your friends was what girls did. I don’t think they do that anymore. There is a generation starting at age 15 that can’t think of anything more ridiculous than schlepping around shops and putting piles of clothes over their arms and standing in changing rooms and waiting in line to buy stuff. They think that seems ridiculous when they can tap a few buttons and their order arrives tomorrow.

 

FN: What other countries could Asos expand into next?
NR: I can’t [disclose specifics], but I can say we’ll be launching another five websites this year in new territories.

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