© BAHRIA UNIVERSITY, KARACHI CAMPUS www.cms.bukc.bahria.edu.pk

asos (AS SEEN ON SCREEN)

April 2, 2017Authored by: SUMMAYA SHARIF (STUDENT OF BAHRIA UNIVERSITY, KARACHI

CAMPUS)

02-111141-222@student.bahria.edu.pk

Report on ASOS

TO BE SUBMITTED TO: SIR AMIR MANZOOR

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Report on ASOS

[Abstract]The report will provide ample source of pragmatic information about E-busi-ness models by discussing every element in detail and applying the concepts on the famous British Clothing Brand; ASOS. The eight elements pragmatically delineated here are:

1. Value proposition2. Revenue Model3. Market opportunity4. Competitive Environment5. Competitive advantage6. Market Strategy7. Organizational development8. Management Team

The equal significance of all of the above mentioned elements has been highly taken care of. Have a Contented reading

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A. ACKNOWLEDGEMENT

I am the student of BBA 7E, BAHRIA UNIVERSITY and I’m thankful to the Almighty Allah who, in His infinite mercy, has guided me to com-plete this term report. I also wish to thank my parents for their per-sonal support and attention that inspired me to go my own way. I’m blissfully honored to have such parents and I’m grateful for them that they gave me a chance to prove myself.

Second of all, I would like to present my deep and heartily gratitude to my Ecommerce Professor; SIR. AMIR MANZOOR; who not only asked for such an informational project which made me highly conversant with new, enlightening and pragmatic information but also gifted me with preciously valuable guidance and support for the accomplishment of this report.

Lastly, I would also, gladly, like to present my thanks to Bahria Uni-versity, Karachi Campus that it provided me a platform via which I could get such an intriguing experience that’s a sine qua non for be-coming sagacious.

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[ABSTRACT].........................................................................................................1A. ACKNOWLEDGEMENT.................................................................................2 ACQUAINTANCE WITH ASOSTM....................................................................5

BUSINESS MODEL OF ASOS.......................................................................61. VALUE PROPOSITION:..................................................................................................................................7

A) PERSONALIZATION....................................................................................7B) CUSTOMIZATION.......................................................................................7C) CONVENIENCE.........................................................................................7D) REDUCTION OF PRODUCT/SEARCH AND PRICE/DELIVERY COSTS..........................7

2 REVENUE MODEL;..........................................................................................................................................8A. ADVERTISING MODEL;...............................................................................8B. SUBSCRIPTION MODEL...............................................................................8 ...................................................................................FREE-MIUM MODEL;8C. TRANSACTION FEE MODEL;.........................................................................9D. SALES MODEL;.........................................................................................9E. AFFILIATE MODEL;....................................................................................9

3 MARKET OPPORTUNITY;.............................................................................................................................9

4 COMPETITIVE ENVIRONMENT:..............................................................................................................10

5 COMPETITIVE ADVANTAGE:....................................................................................................................11

6 MARKETING STRATEGY:...........................................................................................................................11

7 ORGANIZATIONAL DEVELOPMENT:.....................................................................................................11

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8 MANAGEMENT TEAM:................................................................................................................................13A. EXECUTIVE BOARD:...........................................................................16

BIBLIOGRAPHY.............................................................................................17

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ACQUAINTANCE WITH ASOSTM

ASOS is a Britain based clothing brand that was founded by Nick Robertson and Quentin Griffiths on June 3, 2000. The company is now a global fashion and beauty retailer that offers men & women attires, footwear, accessories, jewelry, and beauty products (suc-cessfully operational in 243 countries) for 20-somethings and has grown from a 2-people’s company to 4000+ dedicated em-ployees with over 75000 products offered online and 3000 new products added each week, And don’t think that’s it, they have 13.4m active customers, 19m social followers, and sell up to 300,000 dresses each WEEK, and an annual revenue (as of year-end 2015) of 1119.9 million pounds. The company used to offer the exact replicas of celebrity attires at affordable prices so that young generation could afford it but it, then, also started to offer second hand products, for which it asks customers to sell their clothes at the web for a considerable re-turn on it. The company then expanded to marketplace as well in 2010-2011 that we shall discuss later in this report. After which the company also introduced its magazines, mobile apps (which is currently the greatest source of visits. The company targets affordability, accessibility, style, trendiness, and most of all “democratization of fashion”-THAT IS FASHION FOR ALL APPROACH. Apart from the mentioned ones sustainability and waste reduction is also equally important for ASOS since their target market is youth, and ergo they’ve been sweating blood to cut the waste down by 99%, and design all packaging with the re-cycled stuff and congeries.The company has a trait of creativity, imagination, dedication, limit-less innovation and hard work till people sweat blood, ergo they did not only rely on the bricks and mortar store that they took off from and stepped in to the online business where prof-itability can’t be put to barriers. They are incessantly driving out

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ways to drive traffic and increase the level of brand awareness when the physical stores are absent. The main reason behind ASOS success is that they are not just among the ones who live the customers, and sniff out the trends from them but they are the customers themselves. Because when they went for the market place expansion step, they actually shared the power to sell their congeries, attires etc. in return of the transaction fee charged on 20% commission. The most impor-tant reason behind its success is actually the relationship building with its customers via the Social Media Platforms and providing all that the customers want 24*7. Now the question that arises is what is the actual business model that is followed by ASOS? Or that elevated it to this level of suc-cess, rather almost near the apex of success. Let us now delve deep in to the business model thereof.

BUSINESS MODEL OF ASOSASOS can be synonymized as INDI-ZON on the basis of its busi-ness model because it’s partially Inditex and partially Amazon.

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The figure explicitly delineates the above statement but the only thing that isn’t there is that it even owns a multiple revenue model just as Amazon has. Now let’s segregate its Business Model in accord with the 8 ele-ments thereof.

1. VALUE PROPOSITION:The value proposition of the business firms is the answer to the famous aphorism “why should the customers buy from you?” and it generally includes:

a) Personalization

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b) Customization

c) Convenience

d) Reduction of product/search and price/delivery costs

Personalization refers to the process of altering the site, prod-uct/services as per the needs, wants and desires of customers make them feel who is actually reigning.Customization is the amalgam of flexibility and personalization, itself, of the custom-built products at the low unit costs related with mass-production. Convenience can simply be defines as accessibility or the level thereof. While reduction of product/service and price/delivery costs owns an explicit appellation.

ASOS is the organization that uses ALL OF THEM-literally all of them-as its value proposition to satiate the customers and con-sumers needs in the best possible way. The question now is how? How exactly a firm can use all of these all at once?But the answer is actually simpler than the question seems like, that lies in its offerings, and targeted priorities that are:

I. Dresses offered at very affordable rates that everybody can afford with a greater ease thus reducing price offered and offering free shipping all over the world leaving abso-lutely equal to zero barriers to checking out anything cus-tomer likes.,

II. The trait inheritance of trendiness, and the power to sniff it from customers with the never-ending innovative and, sometimes, improvising ways which enable ASOS to keep on innovating and altering as per the consumer needs, wants and desires so that they could feel beatifically satis-fied.

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III. It does not just keeps on altering or coming up with the new trend in accordance with the sniffed ones but also keeps on changing/altering its site to gift its YOUNG cus-tomers the thrilling, and energetic experience.

IV. It also cares about the convenience in a way that it ex-panded itself in over 243 countries plus stocked an inven-tory level of over 75000 products just so the customers can reach with the greatest ease and get whatever they

want.

2 REVENUE MODEL;It answers the typical business query; that is “how the company plans to make money from its operations?”; and ensures the re-turn on company’s investment-no matter if that’s on human capi-tal, as in this case. The revenue model includes the following:

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A. Advertising Model; where firms offer content, services and/or products and provide a platform for advertisement in return of advertising fee.

B. Subscription model; where companies offering content charge a subscription fee in return of an allowed access to some or all of its offerings.

Free-mium model; Here companies offer contents on free subscription but at a certain level, after which they charge a fee.

C. Transaction Fee model; it’s also a means of generating revenues for firms, because they charge certain fee and receive commission on the basis of the volume for trans-actions’ execution and enablement.

D. Sales model; A model via which companies drive almost most of its revenue by selling goods/services/contents etc.And,

E. Affiliate model; the model is purely based upon the coded affiliate links that the website display to drive the customers to the intended web and gets paid on commis-sion basis per click, lead, impression and sale.

ASOS being a very successful e-business owns multiple revenue models that are;

Advertising model Subscription fee model Transaction fee model Sales model

It started its famous “Market place” in 2010-11 where it allows customers to sell their congeries on reasonable prices (frauds or misrepresentation of prices are not tolerated) and are even per-mitted to promote them via promotional codes (the codes are strictly prohibited to use in return of money). The Marketplace is,

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hence, a really creative way to sniff the trends, satiate the cus-tomers, lower the prices, advertise itself and the rising talent and most importantly earn revenue in the form of a transactional fee on 20% commission.ASOS also offers subscription either via Google+, Facebook, Twit-ter, and Pinterest or simply by creating a new account. It helps ASOS in keeping a record of the customers’ searches, sniffing trends, likings and disliking and it also eases the customers as the items are shown to them as per their recommendations. However, the checkout process demands a payment to be done first but all and every content is offered to the customers to search for and view for free subscriptions. Since ASOS is an e-business that sells items it offers (men and women attires, footwear, accessories, jewelry and beauty prod-ucts) ergo it also owns a sales revenue model but it can explicitly be said a subscription based sales revenue model.

3 MARKET OPPORTUNITY;Since it deals with the intended market space and the overall po-tential financial opportunities available to the firm in the market space, ergo, the market opportunity of ASOS in 2017, when sales have been reported to boost, can be an introduction of a new product line exempli gratia: fashionable and trendy household stuff or trendy music protected or not by DRM and eradicate its weakness of being less-popular outside UK, even if operating.

4 COMPETITIVE ENVIRONMENT:Since there is equal to zero barriers to entry in clothing/apparel ergo the number of ASOS’ competitors is humungous but the most challenging DIRECT competitors include: AMAZON with Stock price: AMZ (FRA)  €819,76  +0,81 (+0,10 %)

and 135.98 bn revenue, & 4.186 bn operating income as of 2016 INDITEX with Stock price: IXD1 (ETR)  €32,63  0,00 (0,00 %) and

20.900 bn revenue in 2015

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Bershka with 1.664 bn euros as of 2014 Zara with 15.9 bn revenue in 2016IN COMPARISON TO THE ASOS’ CURRENT Share Price: 6,080.75 GBp -0.56 % and 1.158 bn GBP, But ASOS Is by far the most liked retailer with 4,664,425 facebook likings and 4,555,509 following-after

Amazon with 27,185,010 liking and 26,205,908 following. ASOS offers affordable rates for UK, but it’s the currency that’s making its products go out of reach in countries such as Russia where a pound equal 70. Something and in Pakistan where a single pound equals 130.56 rs,Inditex-intentionally-offers high rates in countries such as US, CHINA, SOUTH KOREA ETC.Zara offers its products at premium and Amazon offers products at the best prices just as ASOS does.

5 COMPETITIVE ADVANTAGE:The major competitive advantage that ASOS has is the brand dif-ferentiation strategy that it has chosen-EVOKED FEELINGS. It al-ways focuses on building strong and long term relationships with the customers and does whatever is their want by providing them highly innovative, trendy and stylish products on reasonable

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prices and caring about the preciously valuable customers via their 24*7 available customer consultancy-and this type of busi-ness is hard to imitate.

6 MARKETING STRATEGY:ASOS offers ordering ease, delivery ease (referring to time, accu-racy and care of the product), and even customer consulting on its official site and via its social media platforms. It also offers the return guarantee/offers, and the return note is even available on the website. Albeit, the company faces a tad loss due to returns but it offers it to ease the customers and is in process to work on it.The pricing strategy that ASOS has chosen is the Penetration strategy while the product strategy chosen is augmented product offerings differentiated on the basis of form, customization, per-formance and conformance quality and style. The placement strategy that it has chosen is accessibility and convenience and goes for the sales promotion strategy for promo-tions.

7 ORGANIZATIONAL DEVELOPMENT:The functional areas that ASOS works in are:

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And ASOS hires on the basis of the level of creativity, imagination, dedication, un-ending innovative mind and ability to work hard till the people sweat blood. It offers a wide range of jobs, due to the large size of firm; at its official career site: https://asoscareers.a-sos.com/ASOS/BusinessAreasJobs.htmlAnd these jobs are displayed with explicit elucidation of appella-tions as well, leaving no confusion at all.It’s said that ASOS’ Marketplace is the perfect example of the alignment of business and operating models and that the work is well organized in accord with the functional departments with special emphasis on customer relationship building.Moreover its corporate responsibility known as Fashion with In-tegrity works delicately to embed shining stars in people’s lives. It was formed in 2010 and enhanced in 2011 so that the business could flourish and work efficaciously on to what its real aim is; “become the world’s number one fashion destination for 20-some-things”. They have worked prominently for Human rights and have ensured the reflection of 10 principles stated by UN’s Global Compact thereof. Via FWI they not only support ethical trade, re-lationship with stakeholders, human rights but also work on pro-moting products that are manufactured via the use of sustainable business practices, the said promotion is done via its “Green

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Room” from where the customers can not only learn about but also grab the leading ecological fashion. Since their customers are increasingly concerned about the sustainability ergo, this step en-sures that the customers are well aware of the sustainable ways company has so far chosen plus the products that promote what the “kings” are interested in and how they can buy them.

8 MANAGEMENT TEAM:

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The board of directors of ASOS is:

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A. EXECUTIVE BOARD:Apart from the board of directors, there is the Executive board that includes the executive director and key functional director and is led by the CEO. The meeting is held weekly, and the board is held accountable for the formulation of the suggested strategic focus proposed to the board, the daily management of the group’s business & its aggregate trading, operational and finan-cial performance in fulfillment of that strategy, and the plans and budgets approved by the board of directors. Internal control pro-cedures are delegated by the board to the executive board. Apart from checking for and enhancing the skills rather traits in the employees they also make sure that the remuneration strat-egy keeps on acting as a motivating tool; even after the deduc-tions of the employee donations (that’s a part of the Fashion with integrity-CORPORATE RESPONSIBILITY). The remuneration and business strategy in the year in review of ASOS is:

The management teams all work as one unit, and prioritize cus-tomer relationship the most. They all make sure that they have a good know-how of every department and affairs, and they are well updated with all the news so they can work efficaciously.

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Bibliography ASOS. (2016). Year 2016 in review. Year in review, 1-104.

https://www.asosplc.com/mediahttps://www.asosplc.com/corporate-responsibilityhttps://www.asosplc.com/careershttps://www.asosplc.com/investorshttps://en.wikipedia.org/wiki/Zara_(retailer)https://en.wikipedia.org/wiki/Inditexhttps://en.wikipedia.org/wiki/Amazon.comhttps://en.wikipedia.org/wiki/ASOS.comhttps://rctom.hbs.org/submission/asos-effectively-delivering-style-affordability-and-accessibility/https://www.slideshare.net/Helixa/asos-the-next-online-retail-model