Lu Ruiqi N0527827 Industry Evaluation Report Nottingham Trent University MA International Fashion Business December, 2013
CONTENT 1.
Executive Summary
2.
Company ProďŹ le
3.
Introduction
4.
Methodology
5.
Discussion a.
The current fashion online retail market of China
b. The marketing mix of ASOS China i.
Convenience for the customer
ii.
Customer value and beneďŹ ts
iii.
Cost to the customer
iv.
Communication and customer relationships
v.
Computing and category management
vi.
Customer franchise
vii.
Customer care and service
6.
Recommendations
7.
List of Illustrations
8.
Bibliography
9.
Appendices
1
EXECUTIVE SUMMARY This report aims to evaluate the ASOS’s important strategic decision that they have entered the Chinese online retail market with a new locally-relevant operating model. Many marketing analysis tools, models and theories give the conceptual framework to explore the strengths and the possible deficiencies of ASOS China. The conducting of mixed research methods as well as primary research and secondary research would provide the evidence for the evaluation of Chinese online retail market and consumer behaviour. The major findings are the addressing of barriers and challenges faced by ASOS China regarding to the cultural difference. These include the overestimation of performance in China, the complexity of consumer behaviour, the entry model and marketing strategies of ASOS.
2
Table 1: Relevant figures of ASOS Source: www.asosplc.com, 2013
over
7.1 million
active customers at 31 August 2013 around the world
63%
proportion of international sales as of August 2013
24-hour
customer care
11
payment methods
65,000
over
800
separate items
global and local brands
8
52.3%
country-specific websites
The ASOS own-label sales from September 2012 to August 2013
237
15
countries to which they ship orders
over
payment currencies
30%
customers accessing ASOS on their mobile phone
3
COMPANY PROFILE ASOS, one of the largest UK online retailers for twenty-something, was formally founded by Nick Robertson and Quentin Griffiths in June 2000 (ASOS LPC, 2013). The Asos.com sells own label and other world-renowned brands meanwhile the online Marketplace channel gives individuals and boutiques the chance to sell new and pre-worn fashion, which includes womenswear and menswear, footwear and accessories, alongside jewellery and beauty collections (ASOS LPC, 2013). The strategies of ASOS focus on creating the most engaging online experience and their global fashion is strengthened by a wide variety of collaborative and entertaining forms through a number of social networks and devices. These include the ASOS magazine, the uncomplicated return policy, sharing shopping experience by creating personal style among members and instituting online design competitions for customers (ASOS LPC, 2013). The Table 1 is the relevant figures of ASOS which symbolize the achievement and the success of them. The Table 2 is the key financial and employee figure of ASOS which displays relatively impressive growth. The 63% proportion of international sales (Table
1)
promotes
ASOS
to
continue expanding and investing foreign market. ASOS states their ambition is that:
“
to be the world’s NO.1 fashion destination for 20-somethings
”
(ASOS LPC, 2013).
Table 2: ASOS PLC Turnover, Profit & Employees, 2007-2012 Source: FAME, 2013. ASOS PLC Report
2012 £(k).K
2011 £(k).K
2010 £(k).K
2009 £(k).K
2008 £(k).K
2007 £(k).K
Turnover
494,957
339,691
222,999
165,395
81,044
42,614
Profit
30,349
15,705
20,339
14,125
7,311
3,370
Number of Employees
842
657
547
370
176
131
4
INTRODUCTION While the Chinese online giant Alibaba Group broke its one-day sales record by CNY35.19bn ($5.78bn) in transactions with “Single Day” discounts achieved on 11 November, the largest UK online retailer announced that they has launched their Chinese standalone website which becomes their eight international territory joining the US, Australia, France, Germany, Italy, Spain and Russia (WGSN, 2013). It is undeniable that the economy development in the emerging markets, the BRICs, would be quiet prominent as the ASOS LPC (2013) claimed in their Annual Report that it will allow them to talk to ninety per cent of the world’s potential customers by adding dedicated Russian and Chinese website. However, the first steps approaching a Chinese e-commerce business could be notably expensive. ASOS made a great effort in respect of high capital expenditure on establishing a new operating model in China as they set up a Chinese-specific desktop and mobile site, available stocks of 2,000 styles, an in-country multi-disciplinary team, Chinese delivery solutions and payment methods, local customer care and a domestic distribution partner (ASOS LPC, 2013). Moreover, the complexity and unsteadiness of the Chinese online retailing market are actually not the reflection of the figures mentioned above, which may become the greatest challenges for ASOS reaching Chinese customers and achieving expected returns. This report therefore outlines the main characteristics and changes to draw a clear picture of the Chinese online market, the strengths of ASOS and proposes future solution for ASOS in China.
5
METHODOLOGY The objective of the research is to explore the strengths and possible problems associated with ASOS launch of their Chinese-specific website. The PESTEL and SWOT analysis tools are used to have an understanding of the external and internal environment to examine whether the Chinese-specific ASOS website would be adaptable to the current Chinese online retail market or not. The preliminary research of this report was conducted by questionnaire with combining qualitative and quantitative data collection techniques. It is important to ensure the sample is representative in the survey strategy to provide descriptive and inferential statistic (Saunders M, 2009). The respondents selected for the survey were Chinese frequent online shoppers who are in their twenties and live in first-tier cities. The survey aimed to target consumers of ASOS to address their attitudes and opinions about the Chinese-specific ASOS. Regarding to the time limitation and the long distance, the snowball method is used to access more aimed respondents. Meanwhile, the bias of research method is the rather small number of respondents which
may
only
provide
information
from
a
specific
group
and
less
comprehensiveness. Additional, it is difficult to access more insights of ASOS in the respects of the cooperation with third-party label, the sale performance and the information management, etc., which limits the evaluation.
6
The current fashion online retail market of China Region United States Europe China Global
Online retail sector revenues, 2012, $ billion 200.4 230.6 62.5 631.8
Percentages of Market share
Compound annual growth rate (CAGA)
31.7% 36.5% 9.9% 100.0%
11.0% 20.0% 148.7% 18.6%
Market growth Figure 1 The BCG matrix of Global online retail sector geography segmentation Source: MarketLine Industry Profile: Global Online Retail. 2013. Online Retail Industry Profile: Global, , 1-32.
180%
China 130%
Market share 50%
40%
30%
80%20%
10%
0%
30%
Europe
United State -20%
China has become the largest internet population in the world with 70.36% annual growth rate of internet users in recent years and in which produces 271 million online shopping users by the end of June 2013 (CNNIC, 2013). The approach of Boston Consulting Group matrix in this case could be used to aid market strategy by
7
analysing the market growth rate and the market share of different geography segmentation. Compare to United States and Europe, the Chinese online retail sector has been demonstrated as “question marks” which having a high market growth but a low market share (Figure 1). The “question marks” has potential opportunities to become “stars” to generate more cash than they use while it also has risks to become “dogs” to use more cash than they generate (Lee, 2012). That is, it requires ASOS to evaluate the Chinese online market carefully to determine whether it is worth to spend huge investment. The Chinese online market shows an overt concentration on few major players, in which 60% frequent online shopper purchase from a single site (CNNIC, 2013). As the survey asked which online shopping website people spend most money to buy clothing product, 55% people choose Taobao and 28% choose Tmall which both belong to Alibaba group (Figure 2).
Others (Vancl, YOHO, Yihaodian) 360buy
Tmall Figure 2 Which online shopping website you spend most to buy clothing products?
Taobao 0%
20%
40%
60%
To some extent, the growth of Chinese e-commerce business has been exaggerated through some lucrative marketing activities such as the Single Day. Despite the overwhelming figures for Alibaba group in that day, what were gained by online vendors are the largely compromised profits due to the heavy discounts and
8
the extraordinary high return rates which ranged from 25% to 40% (Kung C, 2013). Besides, the robust delivery volume far beyond the capabilities of logistics firms and the vicious price competition are likely to cause serious pressures to breed delayed delivery and declined service qualities of logistics firms (Kung C, 2013). The Figure 3 and Figure 4 give a true face of both side of Chinese online market, which the former is the outstanding performance on the screen at the Alibaba Group Holding Ltd headquarters whereas the latter is the disordered working condition of logistics firms.
Figure 3 The publicity of sale performance at Alibaba headquarters Source: ChinaFotoPress via Getty Images
Figure 4 The office of a main logistic firm in China Source: WantChinaTimes.com, Photo/CNS
The online retail market in China tends to become complicated due to historical reasons are connected with the online sector structure and the consumer behaviour. Firstly, the e-commerce business in China is significantly dominated by consumer-to-consumer (C2C) market in the long-term running which represented two-thirds of total market value by 2012 (Mintel, 2013). In addition, the average purchase amounts online market remain at a low level of RMB 283 per half year for all online users (Wang, 2012). These give the reasons that the online market has a large proportion of low price products provided by the majority of individuals at 9
marketplace such as Taobao. Secondly, the Chinese consumers behaved both price-sensitive and brand-conscious simultaneously which gives the interpretation of market demand is the preference of well-known brands with reasonable prices (Zhu, 2013). Lastly, one of the most relevant factors is that approximately 80% of consumers would be affected by product reviews that were written by other consumers (CNNIC, 2013). The serious lacking of trust in China is also an important feature that should be taken into consideration, which influence retailers to use appropriate website design and payment methods (Zhu, 2013).
10
THE MARKETING MIX OF ASOS CHINA Table 3 The 7Cs of the marketing mix adapted for e-retail Compile from: Dennis, C., Fenech, T. and Merrilees, B., 2005. Sale the 7 Cs: teaching/training aid for the (e-)retail mix. International Journal of Retail & Distribution Management, 33 (3), 179-193.
The marketing mix 1
Convenience for the customer
2
Customer value and benefits
3
Cost to the customer
4
Communication and customer relationships Computing and category management
5
6
Customer franchise
7
Customer care and service
Interpretation
Physical location Multi-channel options Virtual location Web-site design Layout Customer demands and satisfactions Problems or good feelings Closeness of product to the customer and benefits Products offer Wide and/or deep range Content Customisation of products The real cost Perception price of consumers The two-way process of promotion Supplying the right products The computer network of supply chain The techniques of stock management The cooperation between suppliers and retailers Logistics systems Profiles or images, trust and branding Safeguards Safe shopping icons Creating assortments Deliveries Help availability Return and refund facilities Addressing customer concerns
11
The 7Cs of the marketing mix (Table 3) is the consumer-oriented tools and techniques which developed from the traditional 4Ps of the marketing mix. It could be used to identify a number of measurable elements that the “total package of the goods and services that retailer or e-retailer offers for sale� (Dennis, Fenech and Merrilees, 2005 cited Lazer and Kelly, 1961). Thus, the strengths and challenges of ASOS in Chinese online market could be explored.
Convenience for the customer The ASOS Chinese-specific website uses simplified Chinese as display language and states product information according to the preference of Chinese consumers, e.g., the RMB price, the Chinese size specifications, measurement in detail of each garment, trends introduction (asos.com/cn, 2013). Consumers could easily access to both desktop and mobile site of ASOS while there was a fast growth of utilization rate of E-commerce applications in China as well as mobile shopping and online payment (CNNIC, 2013).The new distribution centre located in Shanghai would largely reduce the delivery time which dispatches the orders within 48 hours for most main cities in China (asos.com/cn, 2013).
Customer value and benefits Compare to the 65,000 separate items and over 800 brands in the ASOS UK, the ASOS China offering around 2,000 of their own-brand styles which is claimed to be locally-relevant (ASOS LPC, 2013). The difference may make the ASOS China lose attractiveness due to the product offers. The statement of a wide variety of integrated fashion content for twenties consumer would be their value proposition to surpass other competitors. The value proposition is the key element to determine why consumers choose the firm instead of others and make what consumer perceived meet their demand (Laudon, 2008). However, an efficient product plan is about the satisfactory of consumers and the minimal adaption to foreign conditions (Omar, 2009). The existing product may in different stages of product life cycle (Figure?) in different markets so that it could achieve potential extension especially from mature markets to emerging markets (Lee, 2012).
12
Figure 5 The product life cycle Source: Lee, K., 2012. Global marketing management : changes, new challenges, and strategies. Oxford: Oxford : Oxford University Press.
As part of globalization, the outsourcing manufacture in China becomes an effective way to reduce cost which needs re-evaluation in this case. Another implication of product life cycle theory demonstrates in explaining the pattern shift of international trade (Omar, 2009). In the growth stage, the products launched by ASOS are likely to be copied with much lower price and much shorter lead time. From the perspective of consumers, the 47% of people in the survey states that the made-in-china products will affect them to make purchase and would not accepted by 5% of people (Figure 6). In this case, ASOS may have to make afford to select products to meet the preference of Chinese consumers and describe the manufacture place clearly in the production information.
Figure 6 Do you mind the products sold at ASOS are made in China?
50% 40% 30% 20% 10% 0% It will not take into I do not mind if the It will aect me to make purchase account I am fond of products
It cannot be accepted
13
Cost to the customer It is difficult to achieve price standardization in global market and it frequently dictates adapted price because of the local conditions (Lee, 2012). In the case of ASOS, the price of same product in China would more expensive than UK in different degree (Table 4). From the stance of ASOS, the factors to be considered in pricing mainly relate to the costs including the currency fluctuations, transport costs, overseas operations, government taxes, etc. However, Peter (2007) stated a key issue in pricing is that the consideration of consumer-product relationship and the identifiable competitive advantage. In other word, it determines the perception price that consumers are willing to pay. The price-sensitive characteristic of Chinese consumer behavior and low average purchase amounts have been identified above which should be an essential marketing strategy for foreign entrants to take into account. Meanwhile, in the survey, 57% people would consider to compare the price between different countries so that they are probably not pleased to pay so much more (Figure 7).
Table 4 The price comparing of ASOS UK with ASOS China Note: 1 CNY = 0.101740 GBP from XE CURRENCY CONVERTER, 2013/11/20 Source: www.asos.com, www.asos.com.cn, 2013/11/20
Products
UK Price China Price
£17.50(50% Off On sales)
£28.00
£45.00
£90.00
￥404=£41.10
￥439=£44.67
￥519=£52.81
￥1039=£105.73
14
Figure 6 What is your consideration when you going to shopping at ASOS?
60% 50% 40% 30% 20% 10% 0% Choose the products available at ASOS China
Compare the price between dierent countries
Compare the product range between dierent countries
Communication and customer relationships The promotion of e-retailer has been suggested a two-way process in which persuades people to buy whereas gain feedback from customers (Dennis, Fenech and Merrilees, 2005).The communication is one of the most important strategies which ASOS has made great afford to build strong engagement with customers (ASOS PLC, 2013). ASOS China conducted a series of communication activities to achieve the closeness of relationship with consumers. The ASOS page in Sina Weibo1 frequently posted trend information, entertainment news, style guide and the shop link while also interacted with consumers by comments and conversations, which attracted 126,471 followers to the day of 15 December 2013 (weibo.com, 2013). While the 85.7% utilization ratio of instant messaging application on mobile phone creates a comprehensive platform for great business value (CNNIC, 2013), the conversations on the Wechat2 application allow ASOS send the product
1. Sina Weibo is a Chinese microblogging website. It is one of the most popular sites in China with over 30% of Internet users and high market penetration. It was launched by SINA Corporation on 14 August 2009, and has 503 million registered users as of Dec 2012. About 100 million messages are posted each day on Sina Weibo. 2. WeChat is a constant messaging mobile application developed by Tencent in China, first released in January 2011. The app is available on Android, iPhone, BlackBerry, Windows Phone, and Symbian platforms. WeChat provides multimedia communication with text messaging, hold-to-talk voice messaging, broadcast (one-to-many) messaging, photo/video sharing, location sharing, and contact information exchange.As of January 2013, it had 300 million users.
15
information to the right consumers directly. ASOS uses the same campaign and activity theme across the world. Nevertheless, they built a preference tone and format for Chinese linguistic and cultural difference in the communication and it largely closes the relationship with consumers (Lee, 2012). One of the relevant consumer behaviour feature in the fashion online retailing is that the influence of fashion trend, which the designers and the marketers of online brand tend to be affected by consumer largely (Figure 8). As identified above, there are 90% of online shoppers will write reviews after purchase and 80% of them will influenced by product reviews (CNNIC, 2013). It determines the communication of online retailer should be in a two-way process and the feedbacks from consumers are relatively important. More and more information of ASOS China are increasingly found around kinds of social network, which they are making afford in the part of sharing the product experience and communicating the fashion trends from customers.
Figure 8 The trickle-up theory of fashion change Source: Brannon, E.L., 2010. Fashion forecasting. New York: New York : Fairchild.
DIRECTION
Status markers trickle up from consumer stylists and subcultural groups
TEMPO/SPEED Depends on the sensitivitu of fashion gatekeepers
DESIGNERS
N IO SH ERS FA AD LE
DYNAMICS
PR OF GA TE ESS IO KE N EP ER AL S
and visibility of the subcultural groups
CONSUMER STYLISTS
16
Computing and category management This issue concerns offering products which satisfy consumers’ expectation by efficient management of supply chain, the stocks and speed to response, the logistics systems (Dennis, Fenech and Merrilees, 2005). To achieve accurate forecast of product demand, ASOS continued to invest in merchandising expertise, capacity and enhance the understanding, co-operation between the buying teams and the merchandising teams (ASOS PLC, 2013). In the respect of logistic system, ASOS cooperated with multiple routes and options which could reduce the degree of the dependency of one provider (ASOS PLC, 2013).
Customer franchise ASOS claimed that they are the most favourable online fashion gathering place for young people around the world and selling the own-brand designed by London designer in Chinese website (asos.com/cn, 2013). The UK background of brand image would beneficial to ASOS largely and would increase the perception of benefits for consumer from purchase due to the behaviour of brand conscious mentioned above. As a new entrant, they are still have a long way to go and far from being enough to accumulate and strengthen a long-lasting brand image. When asked whether people who are the frequently online shopper know ASOS or not, there are 36% people never heard them before (Figure 9).
Customer care and service The most needs of consumers from the customer service are not simply involving the order fulfilment but are relatively easy access
and
speedy
response
of
I have shopped at ASOS before 3% I know ASOS and I have been the website 16%
I never heard ASOS before 36%
information, in which it would increase customer loyalty (Laudon, 2008). In respects of the payment method, ASOS China chooses to cooperate with local company and uses the after-pay option,
Figure 9 Do you know any ASOS website?
I know ASOS but I have not been the website 45%
17
which would be much easier to be accepted by consumers. To the contrary, the lesson from the NET-A-PORTER3 is that the pay first model may difficult for Chinese consumer to accept due to the serious lacking of trust (Zhu R, 2013). For delivery, the S.F. Express4 has been regarded as the best logistic firm who has good quality service and reliable delivery. Moreover, the due time of returns for customers is within 28 days which is largely longer than the average level of 7 days. Because the online retail environment nowadays is full of hostile competition, countless similar products and low margins, the efficient service is an important part of online business to exceed (Kalakota, 2000).
Table 5 The customer care and service of ASOS China Source: www.asos.com/cn, 2013
ASOS has agreement with the S.F. Express. Delivery
If the orders more than 249 RMB, the delivery is free. If the orders less than 249 RMB, the delivery charges 10 RMB. The orders will be dispatched within 48 hours.
Returns Refunds Payment
The products could be returned within 28 days. Customers have to assume the delivery fee of returns. The refunds begin at the day after the returns. It takes 1 to 5 days to refund the money to the original payment account. Alipay5. Pay on delivery with cash or card. Online customer service operates from
Customer
year.
service
Call centre.
9 a.m. to 10 p.m. through the
Online Email.
3. NET-A-PORTER provide Visa, MasterCard, American Express, Visa Debit, Visa Delta and Electron cards, which should be paid before receive the products. 4. The S.F. Express have been providing domestic and international express delivery solutions to a wide array of customers since established in 1993. S.F. Express committed to improving service quality and to satisfying market demands. 5. Alipay is the China's leading third-party online payment solution which accounts for roughly half of all online payment transactions within China. The vast majority of these payments occur using Alibaba services.
18
RECOMMENDATION Foreign companies are more likely to have difficulties to understand and adapt to local market due to the lacking of political and business networks in place (Wang X, 2012). Due to the reason that the majority of online traffic concentrates on few major websites, especially the Taobao and Tmall, the most safety way could be join in the Tmall B2C platform to test the product ranges and potential problems while also accumulate customers before make a huge investment in a new standalone website. In order to minimize the investment and risks, there are many international brands choose Tmall to start their online business in China as well as MARKS & SPENCER, MANGO, UNIQLO, GAP, etc. (Tmall.com, 2013). The product page of MARKS & SPENCER in Tmall (Figure 10) shows an outstanding sale volume and a large number of comments, which the first product in Figure 10 sold 3278 unit within a month and received 1688 comments. Figure 10 The MARKS & SPENCER in Tmall Sourece: http://mango.tmall.com/?sp m=a1z10.3.0.0.4jCkIM, 18/12/2013
19
As far as product offer was concerned, it is unlikely to be competitive if there is only own-brand in the ASOS China website. In the current online business, increased buyer power and dwindled customer attention span are the trend which indicates they are seeking “more product choices” and “more personalization” (Kalakota, 2000). For ASOS China, the way to reply this customer-oriented trend and increase competitiveness is the integration of cutting-edge fast fashion. That is to say, to cooperate with third-party brands which relevant to Chinese consumer, especially the brands from UK. The most wanted brand in the survey implicates that the Chinese consumers notably looking forward to see the UK brands in ASOS website (Figure 11). It could consolidate the value proposition of ASOS to attract more website traffic and increase purchase opportunities.
Figure 11 Which brand you hope ASOS could bring into China most? (Ranking from the comments)
Others (OASIS, BUBERRY, Paul Smith, New Look, Selfridges, River Island) FRENCH CONNECTION
FRED PERRY
TOPSHOP&TOPMAN 0%
20%
40%
60%
80%
Regarding to the marketing and customer communication, there are some recommendations. Firstly, due to the majority of target consumers still have not heard or been the ASOS China, it is necessary to invest in advertising such as link with other high click rate website, place product information into influential bloggers, etc. Secondly, encourage customers to write product review and provide links for 20
them to share to other medium. Lastly, the trickle-up theory mentioned above could suggest conducting local relevant street snap to create particular ASOS street style. Figure 12 presents the key factors in the communication and the consumers have to attend this process to comprehend the information (Peter, 2007)
Figure 12 A general model of the communication process Source: Peter, J.P., 2007. Consumer behavior and marketing strategy. New York : London: New York : McGraw-Hill Higher Education ; London : McGraw-Hill distributor.
Feedback
Source
Word count: 3214
Message
Transmission
Receiver
Action
21
LIST OF ILLUSTRATIONS Cover: www.asos.com/cn Table 1: Relevant figures of ASOS, www.asosplc.com, 2013 Table 2: ASOS PLC Turnover, Profit & Employees, 2007-2012, FAME, 2013. ASOS PLC Report Table 3ďźšThe 7Cs of the marketing mix adapted for e-retail, Compile from: Dennis, C., Fenech, T. and Merrilees, B., 2005. Sale the 7 Cs: teaching/training aid for the (e-)retail mix. International Journal of Retail & Distribution Management, 33 (3), 179-193. Table 4: The price comparing of ASOS UK with ASOS China, www.asos.com, www.asos.com.cn, 2013/11/20 Table 5: The customer care and service of ASOS China, www.asos.com/cn, 2013
Figure 1: The BCG matrix of Global online retail sector geography segmentation, MarketLine Industry Profile: Global Online Retail. 2013. Online Retail Industry Profile: Global, , 1-32. Figure 2: Which online shopping website you spend most to buy clothing products? Figure 3: The publicity of sale performance at Alibaba headquarters, ChinaFotoPress via Getty Images Figure 4: The office of a main logistic firm in China, WantChinaTimes.com, Photo/CNS Figure 5: The product life cycle, Lee, K., 2012. Global marketing management : changes, new challenges, and strategies. Oxford: Oxford : Oxford University Press. Figure 6: Do you mind the products sold at ASOS are made in China? Figure 7: What is your consideration when you going to shopping at ASOS? Figure 8: The trickle-up theory of fashion change, Brannon, E.L., 2010. Fashion forecasting. New York: New York : Fairchild. 22
Figure 9: Do you know any ASOS website? Figure 10: The MARKS & SPENCER in Tmall, http://mango.tmall.com/?spm=a1z10.3.0.0.4jCkIM, 18/12/2013 Figure 11: Which brand you hope ASOS could bring into China most? Figure 12: A general model of the communication process, Peter, J.P., 2007. Consumer behavior and marketing strategy. New York : London: New York : McGraw-Hill Higher Education ; London : McGraw-Hill distributor.
23
BIBLIOGRAPHY Alibaba’s one-day online shopping festival breaks records2013. [online]. WGSN. Available at:http://www.wgsn.com.ezproxy.ntu.ac.uk/content/report/News/2013/Nov_stories/ Nov_12/News_Story_Nov_121.html [Accessed 11/14 2013]. BRANNON, E.L., 2010. Fashion forecasting. New York: New York : Fairchild. DENNIS, C., FENECH, T. and MERRILEES, B., 2005. Sale the 7 Cs: teaching/training aid for the (e-)retail mix. International Journal of Retail & Distribution Management, 33 (3), 179-193. Fashion marketing electronic resource] : contemporary issues. 2007. Amsterdam ; Boston; Amsterdam ; London: Amsterdam ; Boston : Butterworth-Heinemann. FRINGS, G.S., 2008. Fashion : from concept to consumer. Upper Saddle River, NJ: Upper Saddle River, NJ : Prentice Hall. HABERBERG, A., 2000. The strategic management of organisations. Hemel Hempstead: Hemel Hempstead : Prentice Hall. JONES, R.M., 2006. The apparel industry. Oxford ; Ames, Iowa: Oxford ; Ames, Iowa : Blackwell Pub. KALAKOTA, R., 2000. E-business 2.0 : roadmap for success. Harlow: Harlow : Addison-Wesley. KUNG, C., 2013/11/16. Singles' Day returned goods hurt Chinese online vendors [online]. WantChinaTimes. Available at: http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20131116000057&cid =1202 [Accessed 11/16 2013]. LAUDON, K.C., 1944-, 2008. E-commerce : business, technology, society. Harlow: Harlow : Prentice Hall. LEE, K., 2012. Global marketing management : changes, new challenges, and strategies. Oxford: Oxford : Oxford University Press. MarketLine Industry Profile: Global Online Retail. 2013. Online Retail Industry Profile: Global, , 1-32. 24
OMAR, O., 2009. International marketing. Basingstoke: Basingstoke : Palgrave Macmillan. Online Retail in Asia-Pacific. 2013. Online Retail Industry Profile: Asia-Pacific, , 1-30. PARK, Y. and STERNQUIST, B., 2008. The global retailer's strategic proposition and choice of entry mode. International Journal of Retail & Distribution Management, 36 (4), 281-299. PETER, J.P., 2007. Consumer behavior and marketing strategy. New York : London: New York : McGraw-Hill Higher Education ; London : McGraw-Hill distributor. Statistical Report on Internet Development in China2013/07. [online]. China Internet Network Information Center. Available at:http://www1.cnnic.cn/IDR/ReportDownloads/201310/P02013102943055870497 2.pdf [Accessed 11/16 2013]. SAUNDERS, M., 1959-, 2009. Research methods for business students. Harlow: Harlow : Financial Times Prentice Hall. SHETH, J.N., 1989. Global marketing perspectives. Cincinnati: Cincinnati : South-Western Pub. Co. SONG, S., 2013/11/13. Market will play ‘decisive’ role [online]. Global Times. Available at:http://www.globaltimes.cn/content/824462.shtml#.UoegJcS-2So [Accessed 11/16 2013]. WANG, X., 2012. Foreign direct investment and innovation in China's e-commerce sector. Journal of Asian Economics, 23 (3), 288-301. ZHU, R., 2013/11/14. Understanding Chinese Consumers [online]. Harvard Business Publishing. Available at: http://blogs.hbr.org/2013/11/understanding-chinese-consumers/ [Accessed 11/16 2013].
25
APPENDICES The Questionnaire ASOS 来中国啦！网络购物达人们，你们怎么看？希望你能点击以下链接来帮助完成这次调研： https://www.surveymonkey.com/s/STBRVY6 背景介绍：ASOS 是英国最大的面向二十多岁顾客的在线产品零售商，产品线涵盖包括 ASOS 品牌及其他 各品牌总计超过65000件商品。ASOS 中国专属网站是 ASOS 于全球启用的除英国站外第8个区域性网站， 其他区域性网站包括美国、澳大利亚、法国、德国、意大利、西班牙以及俄罗斯。ASOS 中国在秉持品牌 英伦基因的同时，为了满足中国消费者的网购习惯，度身定制了从支付方式、物流配送乃至网页设计完全 区别于其他区域的模式。 注：此问卷针对年龄在20-30岁并且有网购经历的。 ASOS came into China! Online shopper, what do you think? If you would like to take part in this survey please click the following link: https://www.surveymonkey.com/s/STBRVY6 Background briefing：ASOS, one of the largest UK online retailer for twenty -something, sells own label and other world-renowned brands products over 65000 styles. As their their eight international territory joining the US, Australia, France, Germany, Italy, Spain and Russia, ASOS China established a series of locally relevant shopping ways for Chinese consumers in the respects of payment method, delivery and web design. Note: This questionnaire is particularly for online shoppers who age from 20 to 30.
1 性别 Gender □ 女 Female
37
63.8%
□ 男 Male
21
36.2%
□ 完全不了解 I never heard ASOS before
21
36.2%
□ 知道但没有登陆过该网站 I know ASOS but I have not been the website
26
44.8%
□ 有所了解并浏览过网站 I know ASOS and I have been the website
9
15.5%
□ 已经是老顾客了 I have shopped at ASOS before
2
3.4%
□ < 100 RMB
13
22.4%
□ 100-200 RMB
24
41.4%
职业 Occupation 政府单位，设计师，销售人员，公司普通职员，旅游业，银行工作人员，会计 Government organization, Designer, Sales, Company Staff, Tourism, Bank Clerk, Accountant 城市 City 北京，上海 Beijing, Shanghai
2 你知道 ASOS 英国或中国的网站么 ? Do you know any ASOS website or Chinese-specific ASOS?
3 你在网络上购买的服装鞋帽类商品的平均单价是多少? What is your average unit cost you spend online to buy clothing products?
26
□ 200-500 RMB
16
27.6%
□ > 500 RMB
5
8.6%
淘宝 Taobao
32
55.2%
天猫 Tmall
16
27.6%
京东 360buy
3
5.2%
其他 Others (Vancl, YOHO, Yihaodian)
7
12.1%
□ 没有 No
14
24.1%
□ < 200 RMB
2
3.4%
□ 200-500 RMB
10
17.2%
□ 500-1000 RMB
14
24.1%
□ > 1000 RMB
18
31.0%
□ 不作为考虑因素 It will not take into account
10
17.2%
□ 只要喜欢商品就不介意产地 I do not mind if the I am fond of products
18
31.0%
□ 会影响购买 It will affect me to make purchase
27
46.6%
□ 不能接受 It cannot be accepted
3
5.2%
□ 直接购买中国网站上提供的商品选择 Choose the products available at ASOS China
8
13.8%
□ 会比对不同国家网站的价格差距 Compare the price between different countries
33
56.9%
17
29.3%
□ 选择在中国有销售渠道的 Choose the products available at stores
19
32.8%
□ 通过个人海外代购 Using individual oversea purchasing agents
28
48.3%
□ 直接在国外购买 Shopping abroad directly
11
19.0%
36
62.1%
4 你购买最多的服装鞋帽类的购物网站是什么? Which online shopping website you spend most to buy clothing products?
5 有在淘宝网双十一活动中购买服装鞋帽类商品么? Have you participant the Single Day promotion at Taobao and How much?
7 你在意 ASOS 的商品是中国生产的么? Do you mind the products sold at ASOS are made in China?
8 如果你打算在 ASOS 网站上购买商品会在意什么问题? What is your considerations when you going to shopping at ASOS?
会比对不同国家网站的产品区别和上新速度 Compare the product range between
□ different countries 9 你如何购买国外品牌的服装鞋帽类商品？
How could you buy the clothing products of foreign brands?
10 你最希望 ASOS 到中国带来哪个品牌？ Which brand you hope ASOS could bring into China most? TOPSHOP&TOPMAN
27
PESTEL Analysis
Political The document of Chinese Third Plenum presents an reform of updating the role of the market to become more decisive in allocating resources whereas shifting the role of the government into public service-oriented government, which arouse doubts that it was contradictory to the emphasizing of dominant state-owned economy (Song S, 2013). Meanwhile, China will accelerate to set free-trade zone to allow freely investment restrictions (Song S, 2013). The rapid growth of Chinese online payment sector may have to appreciate the policy guidance, in which there are 233 payment licenses in 6 batches issued and a series of policies introduced by People’s Bank of China, including “Management Method for Internet-based Payment Business of Payment Institution” (CNNIC, 2013). Economical As an annual growth rate of 70.36% from 1997 to 2008, China becomes the largest internet population in the world (Wang X, 2012). According to the report of China Internet Network Information Centre (CNNIC, 2013), Chinese have 591 million netizens and 271 million online shopping users by the end of June 2013 with the 44.1% internet penetration and this penetration rate had a significant rise in the rural areas of China which accounted for 54.5%. However, in spite of the RMB 16.2 billion online purchases in the first half of 2008, the average purchase amounts among the online market remain at a low level of RMB 283 per half year for all online users and RMB 1014 per half year for online shoppers specifically (Wang X, 2012). The increasingly stronger online market has not only attracted great investment and venture capitalists from the world but also intensified the fierce competition of local enterprises to stimulate the excessively promotions such as special sale, second-kill sale and transparent price (Wang X, 2012). A special online event in China was held on 11 November annually by the Chinese largest e-commerce player Alibaba group continue to achieve striking performance. This year, Alibaba’s 2013 Single Day online shopping had recorded CNY35.19bn ($5.78bn) in transactions (WGSN, 2013). 28
Social-cultural CNNIC (2013) states in the report that the Chinese Internet shoppers concentrate between 18 and 30 years of age in middle class with college educated. It is essential to understand the characteristics of Chinese consumer that they tend to be price-sensitive but brand-conscious at the same time (Zhu R, 2013). This puzzling mix is interpreted by the facts that the determining factor of Chinese consumers to make purchase decisions is price except that their fondness of luxury brands which provide them a signal of higher social and economic status (Zhu R, 2013). Another relevant behaviour of Chinese consumers would be the serious lacking of trust in China. One of the differences between EBay and Taobao is that the former uses the pay first model and the latter uses the third-party payment system which are largely accepted by Chinese consumers (Zhu R, 2013). In addition, there is relatively importance of visual design of a web which could significantly affect the trust of Chinese consumer then influences their purchase decisions (Wang X, 2012). Another vital feature of consumer behavior relates to the importance of reading online reviews before purchasing. The online shopper who will be influenced by products reviews accounts for approximately 80% and who will write reviews after purchase accounts for 90% (CNNIC, 2013).
Table: Utilization Ratios of Network Application and Mobile Phone Applications between December 2012 and June 2013 Source: compiled from CNNIC, 2013. Statistical Report on Internet Development in China Network Applications
Mobile Phone Applications
June 2013
December 2012
June 2013
December 2012
Instant messaging
84.20%
82.90%
85.70%
83.90%
Search engine
79.60%
80.00%
69.90%
69.40%
Online news
78.00%
73.00%
67.60%
58.30%
Online music
77.20%
77.30%
52.60%
50.90%
Blog/personal space
68.00%
66.10%
-
-
Online video
65.80%
65.90%
34.40%
32.00%
Online games
58.50%
59.50%
34.80%
33.20%
Microblog
56.00%
54.70%
49.50%
48.20%
Social networking websites
48.80%
48.80%
42.20%
42.00%
Online shopping
45.90%
42.90%
16.50%
13.20%
Online literature
42.10%
41.40%
43.90%
43.30%
41.80%
44.50%
27.30%
29.10%
Online payment
41.40%
39.10%
17.10%
13.20%
Online banking
40.80%
39.30%
15.60%
12.90%
Group buying
17.10%
14.80%
6.80%
4.60%
Applications
29
Technological There were up to 70.0% of 591 million netizens used mobile phones or other equipment to surf the internet. Popularity of the 3G, development of wireless networks, and innovation of mobile phone application greatly facilitated the rapid growth of mobile phone netizens (CNNIC, 2013). As the lead utilization of application, the instant messaging evolves far more than a pure communication tool but a comprehensive platform for both users and business to provide the introduction of shopping, payment and services, etc. (CNNIC, 2013). Meanwhile, the mobile online payment had 244 million users by the end of June 2013, which witnessed an fast development as a high utilization rate of E-commerce applications as well as the growth of mobile shopping and mobile online banking (CNNIC, 2013). Additional, a new business model of online payment, the personal consumer credit through third-party payment, was initiated to promote the payment services development (CNNIC, 2013).
30
SWOT Analysis Strengths The offers from ASOS own label and other world-renowned brands accounts for 65,000 styles that across wide categories. ASOS established strong engagement with consumer via different websites and applications including ASOS Fashion Finder which displays other retailersâ&#x20AC;&#x2122; collection, ASOS Marketplace as a small fashion business platform, transactional Facebook shop which provides products within social network and other entertainment forms (ASOS PLC, 2013). Weakness Regarding to the lacking of local information and business network, the foreign companies may find it is difficult to compete with local competitors (Wang X, 2012). It is becomes even harder for foreign entrants achieve e-commerce business market share in China because the business concentrates on few major players. One of the relevant features of Chinese consumer behaviour is that they usually purchase on few particular websites. Even the frequent shoppers who purchase online more than once per month account for 40%, there are 60% and 33% of online shopper purchase from a single site and from two sites respectively (CNNIC, 2013). Opportunities The time that ASOS choose to launch the Chinese-specific website could have more possible to achieve succeed as the upper level online market for twenties consumers is almost a blank. Johnson and Tellis (2008) states that the foreign investors who move into the market earlier are found empirically advantages to the success of market share (Wang X, 2012). Also, after the Chinese online retailing has been dominated by the consumer-to-consumer market for a long time, the business-to-consumer market begins to have a prominent growth in recent years. Threats The partnership with a wide range of brands is extremely important for ASOS building such an enormous product ranges but it is vulnerable in fact. Indeed, these third party labels are unlikely to have long-term running because the brands tend to provide second-choice or older lines products, which may facilitate negative impacts in the instant comparison of online shopping (Euromonitor, 2013).
31