Fast-fashion e-commerce player Asos has upped the cadence of new styles it’s adding to the site every week, with no plans to slow down.
In its full-year results for 2017, released on Tuesday, Asos posted annual revenue growth of 33 percent, to $2.5 billion. In 2016, revenue grew by 26 percent. Part of that boost in year-over-year growth, according to CEO Nick Beighton, was due to the 20-percent increase in products released each week on the site, from 4,000 to 5,000. Sixty percent of those styles were exclusive to Asos, while 41 percent were designed in-house. (The company also sells brands including Adidas and the Zara-owned Bershka.) Over the course of the year, it added 200 new third-party brands to the site, for a total of 850 carried brands.
“Our focus is on newness and a full-price mix, and we’ve seen great results,” said Beighton, during a call with investors. “We’re going to continue that focus, as well increase our average buys and add more range of products through category expansion.”
To fuel that expansion, Asos is building up its in-house design team for Asos-owned brands. This year, it added four new private brands: Noak, Heart & Dagger, Crooked Tongues and Reclaimed Vintage. A fifth line dedicated to activewear, Asos 4505, is launching later this year. Beighton said the privately owned brands are key for differentiating from the competition: As Asos gathers customer data to increasingly personalize its mobile web and desktop e-commerce experiences, it’s also culling data as feedback to identify white space in its inventory.
“Following the success of these brands, we’re stepping up our investment here, creating a dedicated Asos brands team,” said Beighton. “This is about creating new and scalable brands with a defined point of difference for different customer segments, for different price points and with different tastes.”
Beighton added that in 2018, Asos plans to add 1,000 employees to its current count of 3,600. The company declined to specify how many hires it will be making for the Asos brands team. He also pointed out that this year, the company saw its highest level of full-price sell-through, without providing specific figures.
While Asos falls into the fast-fashion category alongside companies like Boohoo, Forever 21 and H&M, and it’s appealing to a similar demographic — digitally native, trend-chasing 20-somethings — it’s not competing on offering the lowest prices like the companies it’s compared to. Rather, its strategy is closer to Zara’s: Like Zara, Asos is bringing its manufacturing closer to its home base of the U.K. to get product to market faster. It’s also expanding its network of fulfillment centers that, thanks to automation, can process 33 orders per second and ship orders in as little as one hour.
“Fast fashion is not synonymous with low prices, nor is it a winning strategy,” said Edited senior retail analyst Katie Smith. “Asos is an example of a brand that’s tapping into the right data and insights to hone its pricing, discounting and assortment approach to win.”
According to Edited data, Asos’s average item prices are higher than Forever 21’s and H&M’s, at $57.16 per item, compared to $24.15 and $29.68, respectively. Seventy-one percent of Asos products are under $50, compared to 95 percent for Forever 21 and 93 percent for H&M.
Instead of offering the lowest price, Asos’s strategy is to increase the speed and number of products it’s putting on the site. This year, the company cut the number of factories where it sourced product from by 20 percent, generating a six-week-or-under production cycle for all products. Beighton said he also plans to triple the amount of inventory that’s produced in the U.K. over the next year.
Speed also plays into product delivery: This year, Asos made more than 200 improvements to its delivery options, including launching same-day delivery in London, plus it added click-and-collect to 11,000 retail partner locations, bringing the global total to 33,000.
Elsewhere, Asos plans to continue investing in its mobile strategy, where 58 percent of its transactions currently take place: By next year, the brand wants to up the number of its regional mobile apps from seven to 20. On the product category side, it launched a fast-fashion beauty line, Face + Body, and is investing in more plus-size and activewear products.
“Our business model is super nimble,” said Asos CFO Helen Ashton. “We make it, create it, and then we make it more nimble going forward.”