Before embarking for the Online Retailer Conference and E-Commerce Expo in Sydney, London-based Asos international director Joe Kamaluddin asked his colleagues for some “fun” trading facts. There were a lot of cold digits to get through for a half hour slot.
“The retail team told me we sell enough dresses in a year to clothe all of Paraguay,” he starts.
A rollcall of other departments reveals Asos can fit the equivalent of five Melbourne Cricket Grounds into its warehouse; shifts nine million iTunes tracks in data per day; and clocks 190 trips from earth to Mars when adding its parcel journeys together. The most telling figure for Australian retailers however, came from digital measuring service comScore, noting Asos as the largest online apparel store in this country by a factor of three.
“That’s a lot of parcels,” Kamaluddin says, clicking to a slide showing an Asos-branded airliner. “This was a gift to me from one of our carrier partners. He’s just as ambitious for Asos as I am.”
The etailer’s rise in the domestic market has been well documented by this publication, but even to Kamaluddin, who has been with the company since 2004, the figures continue to baffle for a country of 22 million. Australia is as big for the company now as their entire business was in 2007.
“That’s quite difficult for me to get my head around because when I joined the business in 2004, two months of sales in Australia are now worth the whole of that first year. We talk a lot about being domestically competitive - we look at competitors in each country and beat them.”
One of the key factors driving current growth here, aside from the addition of a localised website and returns centre in September, is the consistent offer of free shipping. Kamaluddin admits this would have wiped profits in the company’s early years, but a reshaped business and P&L model has made it a feasible proposition. He says Asos spends £60 million ($91m) on shipping costs per year, so even a minor oversight can have a “disastrous” affect on financial profitability. The investment seems to have paid off, even with the burden of global postage.
“One of the best decisions we made was to internationalise our business,” Kamaluddin confirms. “About three years ago, the sterling started to weaken against some of the world’s key currencies and we felt that was a great time to start to expand our international business. Sales were £30 million ($46m); sales will top internationally over £300 million ($459m) this year.”
Denmark, Ireland and Sweden were its three biggest markets back then, before it decided to target countries which balanced opportunity with level of difficulty in doing business there. The US, Germany and France were first on its hit list and now occupy top four market rankings. Kamaluddin’s favourite statistic is one which reveals 90 per cent of the world’s GDP is captured in 11 languages - English, German, Japanese, Spanish, Chinese, French, Italian, Portuguese, Korean, Russian and Arabic - making the task of global expansion less “overwhelming”.
But it is this internationalisation of e-commerce that is also posing a major threat to Asos, with more American and European etailers opening up to global trade. There are also the Asian giants such as Zozo Fashions, the biggest clothing store in Japan and China-based Vancl, reportedly the most trafficked apparel site globally, launching English versions. The sector is seeing more venture capital being injected into businesses - and being deployed well to boot.
“Even those who were particularly late to the party like H&M and Zara, who launched in the last year, are seeing significant revenues now coming through this channel,” Kamaluddin says. “For the pure players among us, that’s a threat because the experience of joining up your store to a mobile device to online, if it’s done well, is going to be truly compelling. The pure players have to focus on what we do best and leverage our financial advantage - no bricks and mortar stores and far fewer staff. These are unprecedented times [with] no rule book.”