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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Asos focuses on the customer experience, and plans investment in AI

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Asos focuses on the customer experience, and plans investment in AI
Asos focuses on the customer experience, and plans investment in AI

Improved customer experience, at home and abroad, from delivery to mobile, was a focus for Asos in its latest half-year, and today it unveiled rising sales and profits.

The fast fashion trader, a Top50 retailer in IRUK Top500 research, reported group revenues of £1.16bn in the six months to February 28, 27% up on the same time last year. UK retail sales grew by 22% to £414.5m, while international retail sales of £716.8m were 31% ahead of last time. Pre-tax profits of £29.9m were 10% up on last time – and first-half site visits topped £1bn for the first time.

Chief executive Nick Beighton said: "These results show strong trading at the same time as we are making substantial investment in our future. Our customer engagement is going from strength to strength and we’ve achieved more than a billion site visits for the first time. Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for £4 billion of net sales, a further step in building ASOS into the world’s number one destination for fashion loving 20-somethings."

Here’s what struck us from the retailer’s multichannel strategy.

Brand engagement
Social media remained key for Asos, which said its Instagram stories were viewed more than 30m times during the month, and its videos more than 52m times – up from 40m in the previous half. The retailer is looking to new formats in key international markets, including Snapchat promoted stories. In doing so, it said, it was "testing utilisation of the platforms that matter most to fashion loving 20-somethings", adding: "This has meant increasing reach and more immersive experiences for our customers."

The customer
Asos said it now has twice as many customers outside the UK as it does at home, after a six months in which active customer numbers grew by 17%, compared to the same time last year. It said it now engaged with customers in a range of ways, focusing, for example, of students via discounts, and on growing categories such as activewear. Average basket values rose by 2%, while order frequency was up by 8%.

Asos said its building of new ’rest of Europe’, ’rest of the world’ and UK sites would result in a more localised site experience. The new sites allow experiences to be tailored to the market, around content, visual merchandising and price zones. From the new sites, it will also be possible to manage stock and fulfilment independently. Asos also plans to add two new language specific sites over the next six months.

A UK specific site and app has also enabled the UK experience to be tailored, with new features including the ability to Try before you Buy flagged up on the UK app. Asos Premier launched in six new European markets. Over the next six months improvements to the customer experience are planned around speeding up the refund process, online gift vouchers for international customers, new payment methods, language sites and delivery propositions.

Merchandising
More than 1,200 technology updates during the half-year were focused on the customer and shopping experience, including improvements to apps around visual search and product recommendations, the launch of GooglePay on Android and refreshed site navigation for both mobile and the web. "The refreshed navigation has been the largest design change to the Asos shopping experience for many years and significantly improves how customers search, browse and explore products, further improving page download speeds."

Operations and logistics
Asos is planning its operations around sales that have grown "at the top of our medium planning assumptions". That means it now needs to invest more quickly in its business and said it was bringing forward capital investment, and in particular around distribution and logistics, programmes around the world. The retailer said its European hub was progressing well, with automated storage now 50% complete and set to be ready before peak trading, and a new warehouse management system set to be installed at the start of its next financial year. Over the Black Friday week it despatched 1.9m items manually. Phase one of its US hub would open early, it said, while a new mezzanine stock holding was being added to the Barnsley site.

Over the last six months it said it made almost 100 delivery solutions improvements to its business. They included a new returns portal for Australian customers that is to be extended to other markets and Saturday delivery in Germany. Click and collect has launched in Germany, Austria and Russia.

Strategy and innovation
Sustainability was a key concern for Asos in the results. It said its commitment to "fashion with integrity" was "a critical investment in the future of our business". Some 70% of its cotton is now sustainably sourced, it said, and it aims to get to 100% by 2025. It is also working towards circular fashion design, which will see it take back used clothing from customers, and make more use of "post consumer used textiles".

It has followed an agenda of technology change and innovation over the last six months, with 1,200 digital platform releases since the start of its financial year and largely focused on the customer experience. The retailer is now investing in AI, from the technology and the processes to the people required "to make a step change in the productivity of AI development processes." It is looking to use AI in every areas of the business, and points to examples including visual search, product recommendation, fit analytics and shopping through Facebook Messenger.

Images from Burlington PR with release around Asos’ visual search

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