If you had invested £1,000 in ASOS in 2001, it would have been worth more than £235,000 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 Dr. Martens, Abercrombie and Fitch, and Calvin Klein.
Founded in the year 2000, shortly after the dotcom bubble burst,
the platform was worth $8.6 billion atits peak, surpassing retail stalwart Marks and Spencer in market capitalization.
Today, ASOS is available in 10 languages across 200 markets.
At the end of 2020, ASOS boasted 24.5 million active customers,
of which 7.6 million were located in the United Kingdom.
Like many fashion start-ups, 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 start-up 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 outfit seen on celebrities at affordable prices.
After a $4.2 million investment from his older brother and friends,
the company debuted on the junior market of the London Stock Exchange in October 2001
at £0.20 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 twenty-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 $200,000.
But this success appeared short-lived.
A year later, three massive explosions at an oil depot near its warehouse in the U.K. damaged $9.4 million worth of stock,
just before the Christmas holidays, and along with it, ASOS’s festive earnings.
The company was forced to cancel new orders, issue refunds and suspend trading of its stock.
But 2007 marked a turning point, 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.
ASOS’s popularity skyrocketed, as celebrities sported its outfits, increasing its visibility.
In 2014, China dominated the e-commerce space with $458 billion 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 to launch its local service in 2013, the company withdrew from China less than 3 years after it launched.
Back home, the competition was heating up in its backyard too.
Traditional retailers like Zara, under parent company Inditex, were expanding their online presence,
while new competitors like Boohoo were undercutting ASOS with cheaper wares.
In 2014, $633 million was wiped off its value, following a stark 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 twenty-somethings.
Besides highlighting models of varying 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 published its stance against modern slavery in 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 apace, even during the pandemic.
And the company’s aggressive strategy to appeal to its target audience and outshine its competitors didn’t end there.
To fend off rivals such as Boohoo and Zalando, ASOS used social media influencers to advertise
its clothing to younger consumers and collaborated with celebrities including
Little Mix’s Leigh-Anne Pinnock and basketball player Ovie Soko.
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.
The pandemic accelerated the shift to e-commerce, meaning only the fastest firms would survive.
With most people staying indoors and holiday plans canceled,
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 loungewear 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 10% and it posted over $1 billion 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 1,000 and 1,200 stores, or 16% of its outlets worldwide.
The same year, L Brands, the parent company of Victoria Secret,
closed 265 stores, the H&M group shut 170, 107 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 HIIT, 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 ASOS’s focus on diversifying its brands
and the industry’s shift 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 isn’t 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.
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