Close this search box.

ASOS sales up but admits “It can and will do better” as it looks to digital and social marketing

This is an archived article - we have removed images and other assets but have left the text unchanged for your reference

ASOS today reported that total sales grew by 14% in the six months to February 28th, with UK sales showing 16% growth and Europe 12%. But the company says it can and will do better.

“We grew sales by 14% despite a more competitive market,” says Nick Beighton, CEO. “ASOS is capable of a lot more. We have identified a number of things we can do better and are taking action accordingly. We are confident of an improved performance in the second half and are not changing our guidance for the year.”

According to Beighton: “Global online fashion is a growing, £220bn+ market. We now have the tech platform, the infrastructure, a constant conversation with our growing customer base who love our own great product and the constantly evolving edit of brands we present to them. We believe that ultimately there will only be a handful of companies with truly global scale in this market. We are determined that ASOS will be one of them”

During H1 visits were 1,085.4m, up 11% on H1 2018 whilst orders were up 15%. Active customers increased to 19.2m, up 16% year on year. However, active customer growth in the first half slowed with 0.8m active customers added in the first half compared with 1.1m in the prior year. France and Germany were the primary cause of this with first half active customer growth slowing from +9% to +2%.

While improvements in conversion and frequency have partially offset slower customer acquisition, growth in both active customers and traffic has been behind the company’s plans, says Beighton. There have been a number of contributing factors, which ASOS is currently addressing.

The retailer says that it reduced performance marketing in the second half of FY18 to manage down demand and protect profitability, while the Euro Hub was operating on a manual basis.

However, the impact has been felt to a greater extent than anticipated into the current financial year, with softness in organic traffic and new customer growth, primarily through Direct and SEO.

“There has been a clear correlation with awareness and consideration, we have seen declines across several of our key markets, most notably in France and Germany,” says Beighton. “This, in conjunction with a more competitive environment and a softer market has contributed to lower organic new customer acquisition and has weighed on our top line performance overall.”

In response to this, ASOS says that it has not only restored but begun to upweight digital marketing activity. This has begun to improve new customer acquisition and has gone some way to offsetting the softness in organic acquisition. Organic customer acquisition via brand channels remains a priority for the firm and it has renewed its focus on activity to drive reach, traffic and awareness amongst our target audience.

“This has begun with our recent ASOS Design campaign which focussed on increasing awareness of our exclusive and limited runs of ASOS Design product,” says Beighton. “This will continue during the year with our Summer of Festivals programme in the US, which will be a six month campaign driven by influencer activations at a series of top music festivals across the US. It will include ASOS as the exclusive retail sponsor of the Life is Beautiful festival in Las Vegas and will kick off with a launch party in Los Angeles in April. This represents some of our refreshed strategy around influencer engagement, where we will significantly upweight our activity year on year.”

Instagram, Facebook, and YouTube continue to be valuable platforms of engagement with ASOS’s target audience, with new features such as longer form Instagram TV providing increased visibility and engagement. These platforms will all continue to roll-out advanced shopping features which ASOS says it will continue to test in partnership with them.

But despite being clearly disappointed with results, Beighton is ultimately bullish. “Challenges in H1 aside, ASOS has built a very strong brand with great customer engagement. We have 19.2 million active customers and 23 million social media followers globally. Our market leading apps are actively installed on over 16.9 million devices across the world and our platforms were visited over 2 billion times over the course of the last year.”

According to Fiona Cincotta at “ASOS’s growing pains have been laid bare in this earnings announcement, which provides investors with more colour on the execution risks facing the business. To be fair, the company is navigating a tough retail environment, though even management has admitted that it hasn’t always gotten it right on pricing, marketing, inventory management and staffing levels.

“It had already announced last month that it was unable to cope with an unexpected surge in demand at its new US business. Today, management has revealed that the issue was related to a staffing shortage, rather limited technical capabilities,” she continues. “ASOS has since nearly doubled staff levels at its Atlanta warehouse to 1,532 but not before its customers were subjected to a four-day delay on their deliveries. Online retailing is hyper-competitive and any more hiccups like this will be hard to forgive.”

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on