ASOS said it can now process nearly 10 million orders and 3.5 million returns a week as it comes to the end of a long period of investment.
The fashion retailer saw an 87% drop-off in profits in the six months to February to reach £4 million, which ASOS attributed to spending on its new warehouse capacity. Sales rose 14% to £1.3 billion.
Major projects have included adding a dynamic buffer that can predict volumes of orders during the day to reduce processing times and opening a new “Euro Hub” warehouse in Berlin.
Having invested £55.1 million into technology in the six-month period, with 17% focused on efficiency and the majority of this on logistics, the company said that it was “through the peak” of the heavy investment phase and set to begin reaping the benefits of upgrading its logistics. So what’s next?
Firstly, ASOS has been testing automation at the Euro Hub warehouse with the technology set to go live later this month.
While ASOS already offers next-day delivery across Europe, automation should allow it to improve the cut-off times for it in Germany. In addition, the higher throughput speed will allow the company to move greater volumes through road freight, making it more efficient.
Secondly, ASOS plans to introduce a new system across its seven returns processing sites in five different countries. ASOS expects this to lead to a roughly 10% productivity boost in the centres, removing the need for any new facilities in the medium term.
“We are confident in the benefits that will flow from the investments we are currently making and that they are positioning ASOS well for the next stage of growth,” ASOS said in a statement.
The company recently announced it would be monitoring the number of returns from customers to take action against “unusual” behaviour.
Mike Callender, executive chairman at REPL Group, said: “Despite ASOS’s announcement yesterday on its profit drop, the company has said it has spent the first half of the year completing a “record period of investment” in technology and logistical infrastructure. The benefits of this will be realised in the second half, as large investments such as these often result in a short-term hit in order to see long-term progression.”
Callendar said that these were “growing pains” to provide for future growth in a challenging climate.
“In recent times, a fall in profits would spark short-term reactive discounting, but ASOS is looking to the long-term by identifying the root of the problem and investing in technology to sustain its market position in the future. By investing in tech and taking a monetary hit now, it prevents the potential risk of falling behind. High street shops should follow suit on this.”
