ASOS Virtual Store by Xime Marquez

ASOS Virtual Store

Non-Traditional Retailing Ana Acevedo, Shaina Levin, Xime Marquez, Sara Spicer 1 FASM 415 | Professor Meeta Roy | Winter 2015

CONTENTS

Executive Summary

ASOS Company Overview

New Strategic Initiative

Visualizations

Market Analysis

Target Consumer

Communication and Promotional Plan

Financial

Conclusion

Appendix 2

Executive Summary

As a pure-play fashion e-tailer, ASOS is the second most visited fashion website in the world. The company takes pride in being global, customer-centric, and innovative. ASOS has opportunities to provide a brick-and-mortar store space to increase customer engagement. ASOS should implement Tesco’s best practice of virtual store technology in a high traffic location that inspires m-commerce shopping. Having a physical space in Westfield’s BrandSpace in Sydney, Australia for summer ‘15/’16, ASOS will optimize omnichannel presence. The ASOS Virtual Store in Sydney is in a geographical market whose consumers have recently turned to ASOS’ key competitors. Regaining the confidence of the Australian customer is important for ASOS to remain as the world’s number one fashion destination for “20-somethings.”

ASOS History In June 2000, Nick Robertson and Quentin Griffiths founded an online fashion company called “As Seen On Screen Ltd” (ASOS Plc). In 2004, As Seen On Screen Ltd became known as ASOS.com Ltd and for the first time, the company made profit (ASOS Plc). In the same year, ASOS launched their private label brand for women. In 2005, ASOS expanded their product lines and added ASOS Beauty. During this time, ASOS operated a warehouse in the UK and endured damages caused by a fuel explosion. This pure-play E-commerce company proved to be resilient and bounced back to normalcy in 2006. ASOS not only became known for selling trendy products, but also for providing an engaging and unique customer experience. An example of this is ASOS was the first online UK retailer to have moving catwalk images. ASOS started implementing innovative online tools for customers that no one had ever seen before, which helped the company gain global recognition. In 2007, ASOS went from having 128 employees to 210 employees, which encouraged the opening of their headquarters in London. This new office space allowed ASOS to publish a company magazine. As their private label for women thrived, ASOS did not hesitate to launch a private label for men. Proving their success, ASOS was awarded “Online Retailer of the Year” by Retail Week in 2008. In 2009, ASOS began offering designer brands, as well as private label collections, including ASOS Maternity and ASOS Black. In order cater the needs of customers in specific countries. ASOS launched localized websites for France, Germany, and USA in 2010. The online retailer knew that customers would be more motivated to shop with free delivery services, which is why they made this available for UK shoppers. ASOS developed their business model even more and introduced ASOS Marketplace, a destination for customers to buy and sell second-hand products often made by independent brands and vintage stores. Progressing their company through technology, ASOS launched their iPhone and iPad apps in 2011. Customers were now able to shop ASOS using their mobile devices. ASOS joined social networks to optimize their ability to connect with customers worldwide. In 2012, ASOS noticed their Australian customer base was growing, so they opened their first international office in Australia. More recently, ASOS has promoted a mission to become a truly global company. Their efforts were displayed as ASOS opened offices in 20136 throughout cities including New York, Lille in France, Berlin, and Shanghai.

“To become the world’s number one online destination for 20 somethings”

Current Ownership Structure ASOS.com is a public traded company. According to Business Case Studies, ASOS is traded on the Alternative Investment Market, which is a sub-market of the London Stock Exchange.

Future Growth Plans ASOS is currently looking into taking other methods of payment besides credit and debit cards (Asos Plc). According to ASOS’ website, their goal is to make their “systems more userfriendly, wherever they are.” Also, ASOS will be adding websites and localized apps in different languages to be more readily available for the world (Asos Plc). Opening distribution centers in more countries is also a very important part of ASOS future growth plans (Asos Plc). As of March 2015, ASOS has no plans to open brick-and-mortar stores. In the next two years, the pureplay retailer will be starting major re-platforming. This will include new checkout and processing functions (ASOS Plc). Adding on, ASOS will be implementing zonal pricing according to the country they are selling in, which will allow them to “offer locally competitive pricing and promotional activity” and also to “sell certain brands which are otherwise restricted” in these areas (ASOS Plc).

Current Revenue: £975.5 million in 2014 9

Strengths

-The UK’s market leader in online fashion retailing (“The Product”) -Stocks over 22,000 product styles on its website and introduces up to 1,000 new products each week (“The Product”) -Optimized multi-device Ecommerce platforms (“Annual Report”) -Strong customer focus (“Company Profile”) -Innovative initiatives, such as Marketplace and Fashion Finder (“Strategic Direction”) -Award-winning delivery experience and customer service (“Strategic Direction”)

Weaknesses

-High dependence on UK & EU markets (“Company Profile”) -Global capacity in delivery and return systems need development (“Strategic Direction”) -Pricing strategy is not specific to each country -Quality of production needs to improve (“Strategic Direction”) -Losing market share to competitors in key markets (“Company Profile”)

Opportunities

-Regain the confidence of the Australian customer (Mitchell) -Creating additional localized websites and in-country marketing teams to remove barriers, such as delivery (“Strategic Direction”) -Expanding Asian market (“Strategic Direction”) -Brick-and-mortar presence in leading geographical markets

Threats

-Increased and constant global retail competition affects customer base (“Company Profile”) -Rapid changes in customer taste and expectations (“Company Profile”) -Intense online retail competition can erode market share (“Company Profile”) -Unanticipated disruptions in logistics and warehousing as a pure-play 10 E-commerce Reference Appendix A

The perceptual map for ASOS shows nine competitors to be Zara, H&M, Cotton On, Forever 21, Boohoo, Topshop, Nasty Gal, Zappos and Shopbop. When comparing these competitors to ASOS we looked at several things; similarities in categories such as swimwear, sunglasses and sandals. With this information we would total up the prices for each of these items the company has to offer and determine the average price for each category. From there, we calculated how many retail locations each company had as well as how many countries they ship to, if they have an app or not, and if they wholesale to any department stores. The results show Boohoo being the lowest in accessibility and price point and Zara being the most accessible, but not holding as high of a price point as Shopbop. It is crucial to note the gap between pureplay and omni-channel retailers. Pureplay retailers are located on the upper left quadrant of the matrix, which indicates high prices and low accessibility; while most of the omni-channel retailers are located on the lower right quadrant of the matrix, which indicates low prices but very high accessibility. This matrix shows no players located on upper right quadrant, which indicates high price and high accessibility. If seizing the opportunity, ASOS could easily move 12 to the upper right quadrant by opening brickand-mortar locations and becoming an omni-channel retailer. Reference Appendix B-C

Current Placement ASOS is an online retailer that offers its products through several electronic platforms. Customers can purchase products on the ASOS main website, iPhone app, and mobile site (Asos plc). The ASOS Facebook page and the ASOS Blog redirects customers to their online site. They have three point of sales (POS) available, including their online website, ASOS Marketplace, and the ASOS app (Asos plc). ASOS offers country specific websites for 9 countries throughout the world and ships to 240 countries (Asos plc). Their main online portals are the UK, Italy, France, Germany, Spain, Australia, Russia, U.S., and their most recent one, China. Besides from the UK main warehouse, ASOS has three main distributions centers located in different countries in order to provide their customers with the best shipping service available (Asos plc). These are located in Germany, US, and in Australia. The ASOS Virtual Store initiative will use the warehouse in Sydney, Australia for placement of product and technology

Sales Volume by Channel US retail sales in 2014 - £92.3m (ASOS Plc) UK retail sales in 2014 - £327.2m (ASOS Plc) EU retail sales in 2014 - £256.4m (ASOS Plc) RoW (China) retail sales in 2014 - £234.4m (ASOS Plc)

ASOS has made FY2014 - £955.3m (ASOS Plc) 15

Current Communication and Promotional Activities ASOS main goal is to become the number 1 brand for 20 something’s while delivering an effortless online shopping experience from whatever device the customer may access it from. Their main marketing strategy, as mentioned in the 2014 Annual Report “ we are investing in price first and marketing second”; all leading to their effortless shopping experience (ASOS). However, they do have some features for promotional purposes such as payper-click, paid search on Google, SEO, and social media practices such as #AsSeenOnMe, later discussed.

Annual Spending Figures The ASOS marketing expenditures as of 2014 were £56,007,000 (Asos plc). This represents a 37% figure increase from the annual marketing expenditures of the previous year. ASOS also allots a considerable amount to technology as they seek to improve their online platforms and consumer experience; therefore the expenditures for technology have also been taken into account. For the 2014 fiscal year, ASOS spent £15.1m in technology; this represents a 48% increase in the expenditure for technology compared to 2013 (Asos plc). This gives ASOS a lot of room to develop more engaging marketing strategies involving technology.

Current Advertising and CRM Activities ASOS is a firm believer that their “customers look for guidance not advertising”, as it is mentioned on their Annual Report. Therefore ASOS’ advertising activities are minimal, and they allocate most of their efforts on having an effective CRM strategy that will allow them to connect and serve their customers better. Several features can be found throughout the ASOS platforms in order to connect further with their consumer include Fashion Finder, ASOS Magazine, Fashion GPS. Fashion Insider - this blog allows ASOS customers to style outfits, share their looks, and get inspiration from the ASOS community. Their current #AsSeenOnMe campaign allows customers to upload their images directly into their database to be shared within their blog and social media pages. ASOS Magazine - showcases the hottest trends, different style tricks, and celebrity content for their Prime Customers; delivered free of charge. Fashion GPS - source fashion and style from all over the globe featuring ASOS clothes. ASOS features their Premier membership, a very popular feature that allows customers to have unlimited express shipping, early access to sales and promotions, as well as access to exclusive sales and benefits such as the ASOS Magazine. In order to make the customer experience more enjoyable and encourage customers to return and feel comfortable with their purchase ASOS has added to their online stores two features that have allowed their CRM to be more effective. The ASOS Stylist feature is the first one; consumers can contact a stylist through the online chat and get real time feedback and tips on what to wear and recommendations to pair their clothes with. The second feature allows their UK customers to get next day delivery on orders made until 10 PM. These two have ensures that their customers get instant gratification and reduce several of the issues that arise from being an online retailer. 18

ASOS Social Media

ASOS uses several platforms in order to target their consumers through the different social media they might be using. Their current advertising activities are mainly social platform focused such as their Twitter feed, updated several times a day with new products. Besides from twitter ASOS has a strong presence in the following social platforms: YouTube, Instagram, Pinterest, Polyvore, Tumblr, and their recently released Google+ presence. All of these platforms are constantly refreshed with new content, and featuring looks and inspiration images for their target customer.

Instagram ASOS posts from two to four times a everyday on content containing food, products they carry, and styling sessions

Twitter ASOS posts several times a day everyday on topics such as celebrity news and wardrobe tips.

Facebook ASOS posts at least twice a day that is full of content ranging from gossip articles, celebrity news, and new products on the ASOS website.

Google+ ASOS posts on beauty products, what trends are in style and comical videos once a day almost everyday. 21

Reference Appendix D

New Strategic Initiative As a pure play E-commerce company, ASOS provides an excellent customer experience through all digital platforms including computer, tablet, and mobile. According to the excellence centre team at Nunwood, ASOS uses personalization with a “customer experience strategy of targeted communications, a range of fulfillment options, ‘premier service’ facility and individual features such as “Follow My Parcel...”” This helps the company stand out from their competitors in regards to customer engagement. Asos.com now caters to over 9.1 million active customers as of December 31, 2014, which progressed 16% from the previous year (ASOS PLC). Through Fashion Finder, ASOS provides an interactive customer experience where they are able to create outfits from the products selected on Asos.com. ASOS says, “We are investing in mobile and digital innovation and services to make us faster and ever more desirable as destination for twenty-somethings.” ASOS’ new initiative based on Tesco’s best practice of the virtual store allows the customer to interact with product in a unique location, such as the Westfield mall in Sydney, Australia.

Tesco Best Practice In 2012, Tesco implemented an interactive virtual grocery store in UK’s Gatwick Airport. This is the UK’s first virtual store technology in use. The virtual grocery store is located in the departure lounge of the airport in order to satisfy the needs of consumers thinking about what they need when they come home from vacation. According to BBC, “The idea is that you can order a basket of essentials and have them delivered the day you get home.” Tesco’s best practice also optimizes their M-commerce ability, which is the fastest growing area of retail (Simpson). Consumer trends show that in 2016, 90% of all cell phones will be smartphones that have the ability to download apps and scan barcodes to shop at virtual stores (Neville).

“Tesco’s virtual store technology is a best practice that ASOS should adopt in order to achieve a more engaging customer experience that is conveyed in a brick-and-mortar form.” 23

Referenced from Scentre Group

Scentre Group is the parent company of all the Westfield properties in Australia and New Zealand (Westfield Corp). In June 2014, Westfield Group separated their Australian and New Zealand businesses from the rest of their operations and Scentre Group was created (Westfield Corp). Scentre Group is in charge of managing and developing all Westfield shopping centers in the aforementioned areas of the world. Currently, Scentre Group owns 47 shopping centers and 12,669 retail outlets. Their retail real estate assets under management valued at AUD $40.9. (Scentre Group). Scentre Group’s properties generate about 555 million customer visits a year (Scentre Group). Westfield is known for embracing technology and coming up with innovative ways to improve the retail environment. This is possible with the help of the Westfield Labs located in San Francisco, California (Scentre Group). According to the Scentre Group’s website, “Westfield Labs serves as a global digital lab focused on innovation for the retail ecosystem by leveraging the social, mobile and digital market opportunities that converge the digital shopper with the physical world.” Although Westfield Corporation and Scentre Group are completely different entities, they have an agreement stating that Scentre Group can access resources at Westfield Labs. This helps them continuously evolve with consumer trends (Scentre Group). 25

Long Term Benefits ASOS will be regaining the confidence of the Australian customer after the Australian dollar fell 5.3 per cent against the pound in 2014 (Mitchell). ASOS started a website dedicated to Australia and set up an office in Sydney because the country was their biggest market outside of the UK. As the pound strengthened and the Australian dollar suffered, product prices in Australia increased about 20 per cent. During this time, Australian consumers turned to local online retailers. Implementing the virtual shop will reintroduce ASOS to the Australian customer with a new purpose. Their mission is to create a more tangible customer experience in a brick-and-mortar form and pop-up shop style. The ASOS virtual shop will enhance the company’s M-commerce abilities. Their strategy for the future is to provide the most engaging experience as possible for their customers (“Strategic Direction”). The company is always searching for new ways to connect with their customers. This virtual shop will reach the Australian customer in a unique way, influencing sales growth and increased conversion rate. Thanks to the ASOS Virtual Shop, ASOS would be able to move into more markets and eventually have a place at every Westfield location in the world.

Redy

REF

Technology

“

What is the technology driving this initiative?

”

We will be using QR code scanning technology and interactive touchscreen displays for the development of this project. The technology used by Tesco during the Gatwick Airport virtual store trial was developed and powered by Media5, a company that develops “tailored digital solutions for consumer experiences” (Media 5). Media5 supplies the screens and the technology needed to support the screens, such as secure browser settings and the touch display feature. Located in England this company has already provided services for companies such as Tesco, Morrison’s, and Fujifilm. ASOS will be using a US-based supplier, RedyRef, for the implementation of the virtual store. This company develops the technology necessary for the touchscreens that will display our products along with scannable QR codes for the consumer to use when shopping.

In order to efficiently work, the consumers need to have an available smartphone that has the preset application to work with this program. ASOS already has an available update, for this reason, only an app update with the QR scanning technology included will be needed. This app is a transactional m-commerce app, which means that consumers will be redirected to the website in order to finalize the purchase.

Who are the key suppliers of this technology?

In order to make this campaign happen, Tesco used RedyRef ’s technology. RedyRef offers a wide variety of products for interactive store initiatives. They would be the main suppliers for the technology necessary to carry our campaign in Australia. RedyRef will be the key developers of the screen and its functionalities, as well as the providers of the platform under which we will have the means to operate the online store. RedyRef products offer interactive kiosk technology that includes features needed to comply with ASOS’ needs. Interactive kiosks offer screens that allow for bespoke branding, as well as adaptable features for several hardware components. The RedyRef technology features a modular design for fixture mounting with a 42” touch screen (RedyRef). The company provides the installation services, and the product would be delivered within 6 weeks to the ASOS Sydney warehouse (Wheeler). RedyRef will develop a browser according to the features required by each retailer. They will implement a secure browser feature to ensure that no outside device can manipulate the screen content. RedyRef will develop software for ASOS to display a design layouts and product images as touch points for customers. Customers can touch an image of a model or a clothing item to find product information and prices. RedyRef will embed QR codes next to each product that can be scanned on the mobile for purchase. Each product has a click feature that can redirect customers to a page that displays the garment on a model. In addition to having the interactive kiosk screens, the technological components required for the ASOS Virtual Store consist of the updated mobile application developed by ASOS with a QR scanner, smartphones with Internet capabilities, and the ASOS mobile app installed in the smartphones where the transaction will be completed. 31

TECHNOLOGY & IMPLEMENTATION

4-6 weeks should be allowed for the delivery of the product (Wheeler) from the UK, plus 5 days for the installation of the screens. This is assuming that all permits have been obtained. Instructions will be available for the customers as a resource for explaining the functionality of the technology. Customers will be able to access tool for the virtual shop on their own without interference from 3rd parties. Consumers will need to have Internet connection and a smartphone

with the updates app in hand in order to access the store. As they get to the screen, consumers will be able to swipe through the different options and to select combinations on a visual of a mannequin or layout of outfits displayed on the screen. The basic functions of the screen would include: swipe left or right to browse the virtual racks which feature a variety of ASOS products. Then, users select the item, see it on a model, and scan the code to purchase. 33

Virtual Store The idea behind the store is to create an ambiance for customers to shop and hang-out with friends. Our four main interactive screens allow customers to scan and shop with their phones while browsing through our latest collections. The lounge area surrounding the screens allows for interactivity, and for customers to share, like, and shop for items not being featured on the original interactive screens. At the store, bikini pouches will be sold through the counter. 35

Reference Appendix F

â&#x20AC;&#x153;

How do the interactive screens operate?

â&#x20AC;?

Intro Page

Categories Page 36

The designs for the screens are based on the ASOS aesthetic. Introducing bright colors and different patterns, the screens are meant to catch the customerâ&#x20AC;&#x2122;s eye. The intro display screen, when tapped, will lead the customer to the main product page. This page will feature the variety of categories available. Each category will then have a scroll down feature with a full product display, allowing the customers to browse through the available products. The product selected will be featured by itself on the screen along with the scannable QR code. When scanned a page with details and sized will be appear on the consumerâ&#x20AC;&#x2122;s phone for purchase.

Product Page 37

PRE-LAUNCH MAY

JUNE

AUGUST

LAUNCH SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

JAN

TECHNOLOGY VIRTUAL STORE DEVELOPMENT MOBILE APP UPGRADE MOBILE APP UPDATE VIRTUAL STORE UPDATE ASOS SYDNEY WAREHOUSE SHIPPING TRIAL WESTFIELD SYDNEY SHIPPING INSTALLATION OPENING DATA COLLECTION & EVALUATION

NCH

JULY

POST-LAUNCH PRE-LAUNCH

LAUNCH SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER MAY

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Activity Map 38

FEBRUARY JULY

MARCH AUGUST

APRIL SEPTEMBER

OCTOBER

Virtual Store Development / May-August 2015: It takes 4 months for RedyRef to develop the ASOS Virtual Store software. Once developed, it is uploaded into the TouchPoint screens. Mobile App Upgrade / July-August 2015: It will take up to two months for ASOS IT team to upgrade the mobile app. This upgrade will contain the QR code scanner.

Shipping from ASOS Sydney Warehouse to Westfield Sydney / November 2015: The interactive kiosks will be transported from the Sydney warehouse to Westfield Sydney a week before installation proceeds.

Mobile App Update / December 2015: ASOS will release the mobile app update in Australia three days before the launch of the ASOS Virtual Store.

Installation / November 2015: It takes RedyRef four to five days to install the touch screens at the desired location Opening: ASOS will be launching their Virtual Store at Westfield Sydney in December 2015.

Virtual Store Update / March 2016: After the first season is over, RedyRef will update the virtual racks with a new selection of clothing.

Collection & Evaluation: After the opening of ASOS Virtual Store at Westfield Sydney, ASOS will be collecting data regarding customer usage and technology effectiveness. Evaluation of this data is imperative to determine whether the ASOS Virtual Store should open in other Westfield locations in Australia.

Shipping / September-October 2015: RedyRef will ship the interactive kiosks from the US to Australia. It takes up to 6 weeks for the screens to arrive to their final destination. Trial / November 2015: The ASOS IT and E-commerce teams will be conducting a trial run of the ASOS Virtual Store for a month at the Sydney warehouse. During this trial period, the software and the updated ASOS app will be tested for any flaws. 39

Market Overview 40

The Australian retail market is currently valued at $22.1 billion. This is a market that has been in constant growth in both online operations and brick-and-mortar locations. The retail apparel industry has a current value of $16.7 billion as of August 2014 with a reported growth of 3.7% since 2013. The online retail market has a value of $36.4 billion, of which $5.4 billion are specifically apparel related as of August 2014. The apparel online industry accounts for 14.8% of all online retailing in Australia. (MarketLine) The apparel industry in Australia, based on the number previously detailed has a strong presence in the countryâ&#x20AC;&#x2122;s economy. Its growth allows opportunities for new retailers to expand and enter the market. This represents an opportunity for ASOS to differentiate themselves from the current online retailers. The proposed initiative will help ASOS take a step towards the future of online shopping by differentiating themselves from the growing pool of competitors caused by the low entry barriers that exist in the Australian apparel industry market.

Future Competition Leading the market with the implementation of this technology in their stores is Tesco and its division F&F, the clothing subsidiary of Tesco. Tesco has used this technology across several platforms in order to boost their sales. They have applied it in various locations, such as their retail stores, Gatwick Airport, and the subway in Hong Kong. Other companies that are currently using this initiative through RedyRef are Embassy Suites, 1-800-flowers.com, and Hershey’s (RedyRef). These nonfashion companies have brick-and-mortar facilities, with the exception of pure-play company 1-800-flowers.com. They have applied this type of initiative to improve their online sales. ASOS Virtual Store emulates Tesco’s best practice 42 that has customer-oriented efforts. Online sales are expected to improve,

as a result of creating an innovative brick-and-mortar experience. The company’s business model and mission aligns with offering virtual store technology that attracts avid shoppers and tech-savvy customers who are top drivers of revenue growth in the apparel market (IBISWorld). There are several fashion retailers that would be able to pursue this kind of initiative. Some of the leading apparel retailing companies in Australia is a perfect candidate to service their domestic target consumers. Billabong International, a top retailer in Australia, has several exclusive brands and operates as a marketing, distribution, wholesaling, and retailing business for apparel. They currently sell through their own branded retail stores and through specialized “boardsports.” Their leading position in the Australian market gives the advantage to apply and engage in new promotional activities that could resemble the Touchpoint initiative (Marketline). This initiative would serve as a new way for customers to engage in their online portal, enhancing brand image with innovation. Nasty Gal was originally a pure-play e-tailer, but introduced customers with a brick-and-mortar in Los Angeles, CA in November 2014 (Medina). Their positioning in the online market is similar to ASOS, but they have differentiated themselves quickly by expanding in the brickand-mortar sector. Nasty Gal is always looking for ways to be more accessible to customers (Nasty Gal). That is why they would be ASOS’ future competition for implementing

an interactive virtual store initiative. Nasty Gal virtual store technology would create brand awareness in lacking geographical markets and support customers’ ever-changing digital needs. As a pure-play fashion e-tailer, Shopbop is one of the leading online fashion destinations in the world. Press articles have raved about the company’s chic and diverse product offerings, as well as their accommodating customer service (Shopbop). As a part of Amazon.com, Inc., Shopbop would benefit from having physical store locations. Having a Shopbop virtual store would supporting Amazon’s business model and mission to provide technological innovation for customer-centric purposes (Amazon.com). Shopbop could engage with customers though this technology to expand brand awareness and optimize their shopping experience. Australian retail companies, such as The Just Group, Pacific Brands Limited, and Cotton On also have opportunities to implement this technological initiative (Marketline). Even if these retailers have brick-and-mortar stores, the virtual store progresses a brand’s marketing techniques and provides market growth in lacking geographical or demographical sectors. Additionally, this technology will help increase Australians’ digital usage and satisfy their need for engaging promotional activities.

“

How will that affect the long term success of your initiative?

”

The success of this initiative is dependent on the timing of release and customer satisfaction. Introducing this technology during the fourth quarter of 2015, ASOS has an advantage, as they are proposing fresh ideas and creating market interest against competitors. Launching this technology, ASOS will differentiate themselves, while also leaving room for improvement. Since technology and customer expectations evolve rapidly, the virtual store technology will need to be made with shortterm, as well as long-term goals. Future objectives for ASOS Virtual Store are planned according to projected strategies of their future competition in the fashion retail market.

PORTERS 5 FORCES

Threat of New Entrants: MODERATE-HIGH -Time and cost of entry depends on corporate structure and size of retailer

-Specialist knowledge is required for understanding technology to new location - Low economies of scale -Technology is accessible -Low barriers to entry

Competitive Rivalry: LOW

-Small number of competitors

Threat of New Entrants

-Differenciated products -High switching costs -High customer loyalty

Supplier Power: HIGH

-Leaving market has high costs

-Scarce amount

-Small number of customers -Service is unique

Supplier Power

Competitive Rivalry

-Substitution is difficult

Buyer Power

Buyer Power: LOW

-Cost to change is high

-Large number of e-tailers

Threat of Substitutes Threat of Substitutes:

MODERATE-HIGH

-Substitution is increasingly accessible

-Size of orders are small -Supplier competitors offer unique products -Quality over price -Can substitute similar products, but may have different functions

-Cost of change is high

-Costs to change is high

Reference Appendix E 45

uring this initiative, ASOS will target Australian female customers who are a fashion-lover, a frequent shopper, a digital driven consumer, and a strong media follower (ASOS Plc). The ASOS customer is described as “20-something,” which is why the ASOS Virtual Store in Westfield Sydney targets the Australian Millennial. There are approximately 4.2 million Australian Millennial consumers of the ages 19-29 (Ferguson). They are visiting or living in Sydney, which is Australia’s highest density city of 5,400 people per square mile (Rundle Mall). Out of all goods offered online, this consumer has a 13%-17% spending share for fashion E-commerce products (EMarketer Inc). A survey displays how Australian Millennials’ spending power is growing with 59% of respondents earning more than AUD$50,000 (Ferguson). Overall, Millennials are very much educated, receiving a bachelor’s degree or higher. Being more educated than previous generations serves as an advantage when it comes to

researching products and approaching sales personnel. Technological knowledge is an important quality for Australian Millennials because they have high expectations for buying valuable products from trustworthy brands (Ferguson). Using the Values Segments, ASOS virtual store technology in Westfield Sydney attracts the “Look at Me” market (Levine). They are independent, trend conscious, and socially aware. This market has bold attitudes because they like to make statements while being a part of popular activities. ASOS promotes their consumer as someone intrigued by entertainment, celebrity trends, and blogs (ASOS Plc). Having a growing spending power, Australian Millenials spend a moderate level toward E-commerce fashion products compared to necessities because they are price sensitive and value the cheaper price over high quality (EMarketer). When planning ASOS virtual store technology to Westfield Sydney, the assortment available exclusive to Westfield Sydney will have the aesthetic, style and price that supports the Australian ASOS Millennial customer. Studies show that the average Australian female consumer spends 21 hours and 48 minutes on the Internet each week (Nielsen). Regarding ASOS, it’s important to recognize that there are twice as many Australians buying from online domestic stores as opposed to international stores (EMarketer).

also consider that approximately 80% of Australian Millennials use laptops, 61% use mobiles, and 24% use tablets (Nielsen). The younger Australian consumer optimizes usage each digital device faster than older consumers. The ASOS Australian customer’s online behavior is based on their degree of loyalty. Even though Australian Millennials are price-sensitive, they are driven by quality and value (Ferguson). They are experts on researching the best products for the best price. Brand loyalty and trust is enhanced when rewards and incentives are offered. ASOS’ exclusive magazine is a form of loyalty program that encourages customers to promote the brand to friends and social media, as well as continuing shopping there in the future (Ferguson).

VICTORIA WELLS

• Age: 23 • Income: $75,000 • Occupation: Fashion Blogger • Interests: Trend concious, social circles, pop culture • Lives : Sydney, AU 47 • Shops At: Boohoo, ASOS, H&M

Communication & Promotional Plan

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PRE-LAUNCH MAY

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Outdoor Advertising Bus Stops Indoor Advertising Westfield Banners Print Advertising ASOS Magazine Online Marketing Hashtag Campaign Facebook Promo Google+ Promo Instagram Promo Twitter Promo YouTube Videos E-newsletters ASOS Website Ads Event Marketing Launch Party Fashion Bloggers

OCTOBER NOVEMBER Outdoor Advertising

LAUNCH MAY DECEMBER

JUNE JANUARY

Bus Stops Indoor Advertising Westfield Banners Print Advertising ASOS Magazine Online Marketing Hashtag Campaign Facebook Promo Google+ Promo Instagram Promo Twitter Promo YouTube Videos E-newsletters ASOS Website Ads Event Marketing Launch Party Fashion Bloggers

PRE-LAUNCH POST-LAUNCH JULY AUGUST FEBRUARY MARCH

SEPTEMBER APRIL

OCTOBE

Communication and Promotional Plan Analysis The ASOS Virtual Store at Westfield Sydney will feature exclusive collections from the ASOS private label. These collections will change every season along with updated promotional advertising. ASOS products bought from the ASOS Virtual Store will be shipped next day to the customer’s preferred location. The only product physically available at the ASOS Virtual Store will be the vibrant pink “#BeachPlease Neoprene Bikini Pouch” that costs AUD $15.50. This item represents the ASOS Virtual Store marketing campaign, as well as a summer-themed aesthetic and bold attitude.

FINANCIAL BUDGET, ASOS (IN AUD) Q4 2015 REVENUE Virtual Store 13,560,200 Goods returned 4,068,060 Total Revenue 9,492,140

Q1 2016

NOTES

8,782,294 2,634,688 6,147,606

Based on 30% returns

4,774,546 42,653 8.00 3,885 37,500 34,000 8,000 36,400 18,865 1887 149,841 1400

3,092,246 0 0 0 37,500 0 0 33,600 0 1887 46,950 0

Based on a 49.7% marg Includes four kiosks w/ Includes shipping of ki Includes five iPads Based on $150,000 a ye Includes upgrade of AS Includes testing of tech Includes two marketing Includes round sofa, tw Includes maintainance Includes all promotion Includes 10,000 brande

Total Expenses 5,108,985 EARNINGS BEFORE TAX 4,383,155

3,212,182 2,935,424

EXPENSES Cost of merchandise sold Technology from RedyRef Shipping iPads Rent App Upgrade Testing Payroll Furniture Upkeep Promotional Activities Shopping Bags

Reference Appendix H-K Virtual Store Revenue When multiplying the number of unit sales by the average unit price of each product category, and then adding up the revenue for each product category, we were able to come up with the ASOS Virtual Store revenue. Goods Returned This number is based on 30% returns (ASOS Plc). Cost of Merchandise Sold This number is based on a 49.7% gross margin (ASOS Plc). 52

PLAN Technology This number includes the cost of four kiosks with touchscreens, a screen for editorial videos, the installation of the kiosks and the screen, the software that goes into the kiosks, and 24/7 on-site maintenance of the kiosks and the software. RedyRef provides this technology.

Payroll Two ASOS marketing team members will be at the ASOS Virtual Store at all times to assist customers. The estimated hourly rate is AUD$20, and the ASOS Virtual Store will need to be attended ten hours a day all year round.

Shipping The cost includes shipment of the kiosks from the ASOS Sydney warehouse to Westfield Sydney after being tested by ASOS marketing team members.

Furniture The cost of furniture consists of a round sofa, two arm chairs, a counter, and five iPad holders. Addon Furniture is the company providing the furniture for the store.

iPads This includes five iPads that will be used to showcase ASOS magazine.

Upkeep The upkeep cost is estimated by taking 10% of the furnishing cost. This cost is included in the expenses in case anything needs to be replaced.

Rent This number is based on the cost of rent for a year at Westfield Sydney BrandSpace, which is AUD$150,000.

Promotional Activities Costs of promotion activities count for all bus stop ads, Westfield banners at non-prime locations, social media, the launch party, and the attendance of two fashion bloggers. ASOS Magazine, e-newsletters and ASOS Website ads costs are not added in since their respective departments apply these numbers.

App Upgrade This number includes the cost of upgrading the ASOS mobile app in Australia. This upgrade involves adding the QR reader capability to the existing ASOS mobile app. Testing This number accounts for the testing of the ASOS Virtual Store and ASOS QR reader at the ASOS Sydney Warehouse.

Shopping Bags There will be 10,000 ASOS branded shopping bags for the small items physically available at the ASOS Virtual Store at Westfield Sydney.

Conclusion

The research and analysis conducted throughout the plan represents the viability for ASOS to represent the brick-andmortar sector in Westfield’s BrandSpace in Sydney, Australia for summer ‘15/’16. Virtual store technology with digital interactive and m-commerce capabilities expands ASOS’ accessibility and engagement with Australian shoppers. This initiative is expected to be profitable, as ASOS provides a product assortment and marketing campaign that is exclusive to Westfield Sydney. Implementing virtual stores in this geographical market will increase brand presence in Australia and serve ASOS as an evaluation for more BrandSpaces in additional Westfield locations.

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Retailing in Australia: Market Research Report.” IBISWorld, Nov. 2014. Web.

11 Mar. 2015. "Company Profile ASOS Plc." MarketLine. MarketLine, 29 Jan. 2014. Web. 25 Feb. 2015. "Cotton:On". CottonOn.com. 2015. Web. 25 Feb, 2015. "Domestic and Cross-Border Digital Buyers in Australia, 12 Months Ending Sep 2014." EMarketer. EMarketer Inc., 26 Nov. 2014. Web. 10 Mar. 2015. "Ecommerce Companies Dipping Their Toes in Brick-and-Mortar Waters – EMarketer." Ecommerce Companies Dipping Their Toes in Brickand-Mortar Waters - EMarketer. EMarketer Inc., 27 Mar. 2014. Web. 56

09 Mar. 2015. "ECommerce Disruption: A Global Theme." Morgan Stanley Research (2013): 84-88. Rundle Mall. Morgan Stanley Research, 6 Jan. 2013. Web. 10 Mar. 2015. "Fed up of Coming Home to An Empty Fridge?". Tesco PCL. Tesco,07 Aug. 2012. Web. 25 Feb. 2015. Ferguson, Rick. "The Australian Millennial Loyalty Survey." Aimia Inspiring Loyalty (2013): 1-17. Print.

"Forever 21". forever21.com. 2015. Web. 25 Feb, 2015. Gagliordi, Natalie. "Tesco Digital Pilot Brings Online Experience to In-Store Shopping". Retail Customer Experience. Networld Media Group. 13 Feb. 2013. Web. 25 Feb. 2015. Gray, Aparna. "Australian Retailers Must Embrace New Options for Online Growth in an Increasingly Digital World, Local Study Reveals ChannelAdvisor."ChannelAdvisor. ChannelAdvisor, 11 Sept. 2014. Web. 25 Feb. 2015. Hill, David J. "Virtual Grocery And Toy Stores On The Rise Thanks To QR Codes." Singularity HUB. Singularity University, 06 Feb. 2013. Web. 09 Mar. 2015. "Home." REDYREF Interactive Kiosks. REDYREF, 2014. Web. 09 Mar. 2015. "How We Do It." Asos PLC. Asos, 16 Dec. 2014. Web. 20 Feb. 2015. "H&M". hm.com. 2015. Web. 25 Feb, 2015.

"Instore Trial". Media 5. Media 5 Solutions, 2015. Web. 25 Feb. 2015. Levine, Michele. "Look at Me." Roy Morgan Research. Roy Morgan Research, n.d. Web. 10 Mar. 2015. Martin, Russ. "Mattel and Walmart Open Virtual Store in Pearson Airport." Mattel and Walmart Open Virtual Store in Pearson Airport. Marketing Mag, 25 Nov. 2014. Web. 09 Mar. 2015. Medina, Marcy. "First Look at the Nasty Gal Store." WWD. WWD, 20 Nov. 2014. Web. 11 Mar. 2015. Mitchell, Sue. "Why Online Fashion House ASOS Isn't Talking about Jumbo Jets Any More." The Sydney Morning Herald. Fairfax Media, 17 Sept. 2014. Web. 24 Feb. 2015. "NastyGal". nastygal.com. 2015. Web. 25 Feb, 2015. Neville, Simon. "Tesco Launches UK's First Virtual Supermarket at Gatwick Airport."The Guardian. Guardian News and Media Limited, 6 Aug. 2012. Web. 25 Feb. 2015. “Online Retail in Australia.” Rep. no. 0125-2344. Beijing: Industry Associations, 2015. MarketLine. Web. 2 Mar. 2015. "Our Ambition & Strategy." ASOS PLC. Asos, n.d. Web. 20 Feb. 2015. "Ownership and Management Structure." Business Case Studies. N.p., n.d. Web. 05 Mar. 2015.

"Overview." About. Westfield Corp, n.d. Web. 8 Mar. 2015. "Overview." About. Scentre Group, n.d. Web. 9 Mar. 2015.

"QR Code Shopping & Interactive Touch Screens - The Future Supermarket." H Squared Ltd. H Squared Ltd, 2013. Web. 09 Mar. 2015. "Retail Ecommerce Spending Share in Australia, by Age and Product Category, 12 months ending Oct 2014." EMarketer. EMarketer Inc., 3 Dec. 2014. Web. 10 Mar. 2015. Rowinski, Dan. "How Long Does It Take To Build A Native Mobile App?" Readwrite. N.p., n.d. Web. 24 Feb. 2015. "Shopbop". shopbop.com. 2015. Web. 25 Feb, 2015. Simpson, Emma. "Tesco Trial Virtual Grocery Store." BBC News. BBC, 6 Aug. 2012. Web. 25 Feb. 2015. "Strategic Direction." :: Retail Week Knowledge Bank ::. EMAP Publishing Limited, n.d. Web. 24 Feb. 2015. "Tesco Builds Virtual Shops for Korean Commuters." The Telegraph. Telegraph Media Group, n.d. Web. 25 Feb. 2015. "Tesco Trial Virtual Grocery Store." BBC News. N.p., n.d. Web. 26 Feb. 2015. "Tesco Trials Interactive Virtual Shops at Gatwick Airport to Drive Up App Use and to Experiment in New Ways to Reach Customers". Internet Retailing. Networld Media Group. 13 Feb. 2013. Web. 25 Feb. 2015. "The Industry's Annual Thought-Leading Report of Today and Tomorrow's Digital Consumer." Nielsen. The Nielsen Company, 2013. Web. 11 Mar. 2015. "The Product Life Cycle and Online Fashion An Asos.com Case Study." Introduction. Business Case Studies LLP, n.d. Web. 24 Feb. 2015. 59

Thomas, Charlie. "Tesco Pilots Virtual Fridges at Gatwick". Huffington Post UK. The Huffington Post, 08 Sept. 2012. Web. 25 Feb. 2015. "Topshop". topshop.com. 2015. Web. 25 Feb, 2015. Vizard, Sarah. "Asos: 'We Are Investing in Price First and Marketing Second'" Marketing Week. Marketing Week, n.d. Web. 23 Feb. 2015. "Westfield Labs." Westfield Labs. Scentre Group, n.d. Web. 9 Mar. 2015. Wheeler, Ben. Director of Sales and Marketing. Redyref Interactive Kiosks. Phone Call. 25 Feb. 2015 Wrenn, Eddie. "The End of Coming Home to an Empty Fridge: Tesco Opens 'virtual Shop' inside Gatwick so You Can Stock up While Waiting for Your Plane." Mail Online. Associated Newspapers Ltd, 08 Aug. 2012. Web. 25 Feb. 2015. "Zara". zara.com. 2015. Web. 25 Feb, 2015. Â

APPENDIX

Appendix A Strengths ASOS is the UK’s market leader in the online fashion retailing industry and the second most visited fashion website in the world. Asos.com is a global online fashion community that sells 75,000 branded and own-brand products (“Annual Report”). Their localized mobile and web destinations offer experiences and cater to 240 countries. Stocking over 22,000 product styles online and adding 1,000 new products every week, ASOS has 8.8 million active customers and an average order frequency of 2.86. Success comes from exceeding customer’s expectation through excellent customer service and delivery. Weaknesses Asos.com’s largest markets are in the UK and EU. The UK counts for 35% of their retail sales and the EU counts for 44% of their retail sales (“Annual Report”). Although ASOS is truly global, their retail sales are highly dependent on these markets. Their global capacity is still expanding in delivery services and return systems for many of the 240 countries. Their pricing strategy needs adjustment because it is not specific to each country (Mitchell). Recently, the pound appreciated, which caused the Australian dollar to suffer and ASOS had to increase product prices. Prices those are relative to every country ASOS ships to make it confusing for the shopper and less attractive. ASOS has had issues with the quality of their products, which has encouraged stronger monitoring before product is shipped to the warehouses (“Annual Report”). ASOS has lost market share to competitors, such as H&M and Topshop because of their weak pricing strategy and quality issues. Also, their competitors have established a strong omnichannel presence for their customers. H&M and Topshop display product in both digital and physical forms, which ASOS is lacking to provide for their customers. 62

Opportunities ASOS’ mission is to become “the world’s no. 1 fashion destination for 20-somethings” (“Annual Report”). They can accomplish this by regaining the confidence of the Australian customer after the Australian dollar suffered against the strengthened pound (Mitchell). Asos.com should continue to create localized websites and establish incountry marketing teams to cater to more customers on a geographical level (“Strategic Direction”). This will decrease barriers for delivery and customer services. Globally, ASOS is continuing to implement faster delivery and more efficient payment methods (“Annual Report”). The company also strives to optimize their multi-device e-commerce platforms and create a more engaging mobile and tablet experiences. Threats Increased retail competition in global and domestic markets makes it difficult for ASOS to remain a top online retailer for 20-somethings. Consumer tastes rapidly change and their expectations become more demanding year after year. ASOS and their competitors in online retailing could be eroding market share for future players (“Company Profile”). This means that gaining customers and revenue will become increasingly challenging. ASOS is a pure-play E-commerce retailer, which runs the risk of low resilience to unanticipated disruptions in logistics and warehousing.

ASOS nastygal $ 9.17 $ 20.00 $ 11.01 $ 25.00 $ 18.34 $ 40.00 $ 22.01 $ 45.00 $ 23.84 $ 48.00 $ 25.68 $ 62.00 $ 27.51 $ 60.00 $ 29.35 $ 65.00 $ 33.02 $ 68.00 $ 44.02 $ 90.00 $ 45.86 $ 98.00 $ 49.52 $ 258.00 $ 51.37 $ 510.00 $ 64.20 $ 73.37 $ 80.54 $ 89.88 $ 137.57 $ 146.74 $ 174.25 $ 216.44 $ 229.28 $ 232.94 $ 238.45 $ 249.45 $ 251.29 $ 265.96 $ 276.79 $ 275.13 $ 276.96 $ 286.14 $ 311.81 $ 330.16 $ 333.82 $ 337.29 $ 348.50 $ 359.50 $ 338.45

Appendix B zara hm $ 25.90 $ 7.95 $ 9.95 $ 14.95 $ 29.95

f21 $ $ $ $ $ $ $ $

SUNGLASSES topshop zappos 5.80 $ 20.00 $ 12.50 5.90 $ 22.00 $ 18.20 7.80 $ 25.00 $ 34.36 7.90 $ 26.00 $ 38.00 32.00 $ 30.00 $ 39.00 36.00 $ 32.00 $ 39.95 39.00 $ 35.00 $ 40.00 44.00 $ 36.00 $ 42.00 $ 44.00 $ 44.00 $ 45.00 $ 49.00 $ 49.95 $ 49.99 $ 50.00 $ 54.55 $ 58.00 $ 59.00 $ 59.95 $ 59.99 $ 60.00 $ 62.00 $ 64.99 $ 65.00 $ 68.00 $ 69.00 $ 69.95 $ 69.99 $ 70.00 $ 72.00 $ 74.00 $ 74.95 $ 75.00 $ 78.00 $ 79.00 $ 79.95 $ 80.00 $ 84.95 $ 85.89

ASOS nasty gal zara $ 11.00 $ 40.00 $ 13.00 $ 45.00 $ 15.00 $ 48.00 $ 16.50 $ 50.00 $ 18.50 $ 55.00 $ 21.00 $ 58.00 $ 21.00 $ 60.00 $ 23.00 $ 65.00 $ 24.00 $ 68.00 $ 26.00 $ 70.00 $ 28.00 $ 75.00 $ 30.00 $ 78.00 $ 34.00 $ 80.00 $ 34.00 $ 85.00 $ 35.00 $ 88.00 $ 37.00 $ 95.00 $ 37.00 $ 98.00 $ 41.00 $ 100.00 $ 42.00 $ 105.00 $ 46.00 $ 108.00 $ 52.00 $ 110.00 $ 52.00 $ 115.00 $ 56.00 $ 120.00 $ 57.00 $ 125.00 $ 59.00 $ 128.00 $ 63.00 $ 130.00 $ 65.00 $ 132.00 $ 70.00 $ 135.00 $ 71.00 $ 138.00 $ 72.00 $ 140.00 $ 72.00 $ 145.00 $ 74.00 $ 147.00 $ 76.00 $ 157.50 $ 83.00 $ 190.00 $ 84.00 $ 198.00 $ 85.00 $ 205.00 $ 91.00 $ 210.00 $ 101.00 $ 218.00

ONE PIECE hm f21 topshop zappos $ 5.95 $ 12.90 $ 35.00 $ 29.50 $ 7.95 $ 19.80 $ 52.00 $ 29.99 $ 9.95 $ 21.90 $ 58.00 $ 34.00 $ 12.95 $ 22.80 $ 60.00 $ 34.50 $ 14.95 $ 22.90 $ 65.00 $ 34.95 $ 17.95 $ 24.90 $ 68.00 $ 35.00 $ 19.95 $ 70.00 $ 36.00 $ 24.95 $ 37.00 $ 29.95 $ 38.00 $ 34.95 $ 39.00 $ 39.50 $ 39.95 $ 40.00 $ 41.00 $ 42.00 $ 42.50 $ 43.00 $ 44.00 $ 44.95 $ 44.99 $ 45.00 $ 46.00 $ 47.00 $ 48.00 $ 49.00 $ 49.50 $ 49.95 $ 50.00 $ 51.00 $ 52.00 $ 53.00 $ 54.00 $ 54.99 $ 56.00 $ 58.00 $ 59.00 $ 59.99 65 $ 66.00

ASOS nastygal $ 33.02 $ 36.68 $ 64.20 $ 18.43 $ 165.08 $ 55.03 $ 22.01 $ 82.54 $ 89.88 $ 71.53 $ 119.22 $ 100.88 $ 45.86 $ 91.71 $ 51.36 $ 155.91 $ 73.37 $ 157.74 $ 137.57 $ 59.61 $ 40.35 $ 90.79 $ 109.13 $ 47.79 $ 126.56 $ 34.85 $ 127.48 $ 27.51 $ 86.21 $ 238.45 $ 42.17

zara

f21

SANDALS topshop

zappos

Appendix C

Company

Asos Nasty Gal Zara H&M Forever 21 Topshop Zappos Shopbop Boohoo Cotton On

Retail 0 1 2057 3511 480 667 0 0 0 1300

Shipping 144 173 26 13 35 110 1 213 215 247

App 1 1 1 1 1 1 1 1 0 1

Total (x) Swimwear Sunglasses 145 175 2084 3525 516 778 2 214 215 1547

$11 - $236 $40 - $375 -------------$5.95 - $34.95 $21.90 - $24.90 $35 - $70 $29.50 - $362 $66 - $595 $9.36 - $34.33 $19.95 - $31.17

Sandals

$9.17 - $338 $18.43 - $238.45 $20 - 98 $48 - $368 $25.90 $49.90 - $159 $7.95 - $29.95 $24.95 - $59.95 $5.80 - $44 $2.90 - $34.90 $20 - $44 $25 - $250 $12.50 - $595 $18 - $345 $98 - $595 $20 - $395 $5 - $16 $16 - $40 $3.90 - $11.67 $3.90 - $23.36

Average Total (y)

$ $ $ $ $ $ $ $ $ $

(x,y)

115.97 (145, 116) 116.20 (175, 116) 55.33 (2084, 55) 24.53 (3525, 25) 21.09 (516, 21) 56.23 (778, 56) 138.43 (2, 138) 233.01 (214, 233) 20.15 (215, 20) 16.35 (1547, 16)

Appendix D ASOS Zara H&M Cotton On Forever 21 Boohoo Topshop Nasty Gal Zappos Shopbop

Facebook 3.6m 24.1m 22.6m 672k 11.1m 2.2m 4.1m 1.2m 1.9m 1.6m

Google+ 2.3m N/A 5.1m N/A 1.6m 2.4k 2.3m 906.6k 192.7k 3.8m

Instagram 2.6m 2.8m 5.4m 272k 5.9m 666k 3.8m 1.5m 34.2k 288k

Twitter 815k 717k 4.9m 23.5k 1.9m 10.8k 1.1m 207k 33k 208k

YouTube 41.4k 19.6k 92.9k 1k 38.8k 5.1k 51k 7.8k 4.8k 882

Pinterest 403k 123k 115k 1.3k 217k 18k 100.6k 125.7k 14.5k 101.7k

Appendix E A Porterâ&#x20AC;&#x2122;s 5 forces analysis for your industry The supplier power, buyer power, threat of new entry, and threat of substitution of pure-play fashion e-tailers implementing technology in brick-and-mortar form will be evaluated to measure competitive rivalry. The e-tailing industry has opportunities to provide customers an omnichannel experience that is also innovative and engaging. Etailers can benefit from virtual stores that combine interactive touch screens and mcommerce for customers. The technology for virtual stores is easily available, but there are only a few suppliers in the world that provide this type of design. Supplier power is high with buyer power being low because they do not have high capabilities to drive prices down. The threat of new entry and threat of substitution are moderate-high because e-tailers can accomplish their virtual store initiative with low fixed costs in the industry. However customers may have trouble finding a different way of doing what e-tailers are implementing because this initiative is not widespread. Overall, the competitive rivalry is low because buyers do not have much say in this industry and e-tailers will most likely be deterred from applying virtual store technology to their company.

Supplier Power: HIGH When researching virtual store technology, there are not many suppliers worldwide for e-tailers to choose. Components used for virtual stores include touch screens, QR Codes, and m-commerce capabilities (Hill). There are few suppliers that provide all three features in one device, but there are more suppliers selling product to retailers with either a touch screen, a QR Code, or m-commerce aspect. Suppliers selling this digital interactive technology only have a handful of retailers as clients. For example, 70

teams. Companies are not buying this technology in bulk. Virtual stores or interactive technologies are incorporated either as a test for a location or to enhance a flagship store with the highest foot traffic (Martin). Buyers are not able to be price sensitive when pursuing this initiative because competitors most likely do not have the same options. The products are differentiated, which is why it is difficult to substitute. Retailers trying to substitute may find other products that are overseas as opposed to domestic, which increases the price for changing. Buyer power is low because they have little to no say in driving suppliers’ prices down.

Threat of New Entry: MODERATE-HIGH E-tailers have accessibility to enter the brick-and-mortar sector, but fixed costs can be high depending on their particular initiative (“Ecommerce Companies). Implementing technology with interactive touch screens, QR Codes, and m-commerce features have high costs because suppliers are small in number. However, specialist knowledge is not needed in this industry because e-tailers are not in charge of creating the software. All they need is the device or screens to have the proper content for their plan (“QR Code”). E-tailers may need to adjust and retrain their teams in order for everyone to be well versed on how their omnichannel structure works. Their corporate headquarters will encounter low economies of scale because the technology is not available at low fixed costs. The industry has low technology protection for e-tailers to enter the brick-and-mortar market. Their barriers to entry are low to high because providing a brick-and-mortar type of technology has higher fixed cost, but there is minimal regulation and buyers have easy access to suppliers through the Internet (Online 71

Retail in Australia). Threat of entry is moderate-high because barriers depend on the capabilities of the e-tailer even with high accessibility to enter the brick-and-mortar sector.

Threat of Substitution: MODERATE-HIGH Substitutes are easy to find even if they do not offer the exact technology that the e-tailer was originally using. Technology features including m-commerce, touch screens, and QR Codes are becoming more accessible (“QR Code”). Companies have the power to approach suppliers with requests to accomplish their specific needs. Retailers who want to substitute suppliers will have costs depending if they are domestic versus international. The functions that these suppliers offer will affect their cost to change. It is most likely that substitute suppliers do not sell the exact same digital aspects. Since suppliers are small in number, they have the ability to drive up prices, which is why changing has risk of being costly. Threat of substitution is moderate-high because implementing this technology can be achieved by any e-tailer under the right circumstances, but customers may have difficulty finding the right supplier with the right price. Competitive Rivalry: LOW There are little to no fashion e-tailers competing for market share with the implementation of the virtual store that provides a brick-and-mortar experience. The technology for virtual stores encompasses products that are differentiated and not common in fashion E-commerce (“QR Code”). There are high switching costs because launching this technology involves a company’s multichannel functions and e-tailers 72

switching may have to restructure systems and retrain employees. This takes time and money to accomplish. Suppliers are scarce, which is why this industry has high customer loyalty. E-tailers implementing a virtual store will need a reliable supplier, giving them a high quality product that will perform to the best of its ability during the duration of the initiative (“Home”). Competitors leaving this differentiated market will lose profitability opportunities and market share in a specialized industry. Competitive rivalry is low because fashion e-tailers worldwide are most likely deterred from entering the brick-and-mortar sector. There is little competition because companies may not have the feasibility to incorporate brick-and-mortar style technology. If an e-tailer wants to test out the initiative, there is risk of being locked into the brick-and-mortar sector that has high switching costs and high costs of leaving. In regards to ASOS applying virtual stores to a physical location, the company should take advantage of the low competitive rivalry. ASOS will benefit from having large market share in a specialized industry. The initiative will most likely be profitable because ASOS is a large, global company with flexibility to enter new markets. ASOS also has high customer loyalty in many geographical segments and has opportunities to expand their accessibility for customers. A physical, technological space for ASOS will satisfy customers and enhance their engagement with the brand.

Appendix F

Appendix G

Appendix H

Appendix I

Beachwear Tops Bottoms Swimwear Sandals Accessories

UNIT PROJECTIONS

UNIT SALES

Q4 2015 7,475,278 2.17% 162,214 2.66 431,488 81,983 90,612 64,723 77,668 64,723 51,779 237,318

TOTAL PROJECTED REVENUE

Beachwear Tops Bottoms Swimwear Sandals Accessories

REVENUE BY CATEGORY

Beachwear Tops Bottoms Swimwear Sandals Accessories

UNIT PRICE

Beachwear Tops Bottoms Swimwear Sandals Accessories

SALES PROJECTIONS (IN AUD)

Traffic Conversion rate Number of purchases Units per transaction Total units sold 19% 21% 15% 18% 15% 12% 100%

13,560,200

3,623,636 2,582,456 2,446,537 1,731,993 2,019,364 1,156,215

44.20 28.50 37.80 22.30 31.20 22.33

81,983 90,612 64,723 77,668 64,723 51,779

Q4 2015

2016 5,252,898 2.0% 105,058 2.66 279,454 53,096 58,685 41,918 50,302 41,918 33,534 153,700

8,782,294

2,346,856 1,672,533 1,584,505 1,121,729 1,307,845 748,825

44.20 28.50 37.80 22.30 31.20 22.33

53,096 58,685 41,918 50,302 41,918 33,534

2016

Based on the average price of each product category

NOTES

Based on average UTP (Annual Report)

NOTES Based on weekly foot traffic at Westfield Sydney BrandSpace Based on average number of international sales and visitors of ASOS.com

Appendix K

Category Beachwear

Product

Appendix J

Size

4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, Cold Shoulder Beach Cover Up 16, 18 Dungaree Beach Dress

Sheer Mesh Beach Tunic

s, m, l

Tie Shoulder Beach Playsuit Batik Beach Playsuit Malibu Kaftan Halter Neck Beack Playsuit Wrap Beach Dress Cheesecloth Beach Jumpsuit

4, 6, 8, 10, 12, 14, 16, 18 xs, s, m, l, xl 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18

Maxi Beach Dress Tops

4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 xs, s, m, l, xl

4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, Cropped Cami Top with V Neck 16, 18 Scoop Neck Singlet xs, s, m, l, xl

Crop Bandeau Top

Crop Top With Cut Away Detail Crop Top With Off Shoulder Bardot

4, 6, 8, 10, 12, 14, 16, 18

Bardot Top

4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 6, 8, 10, 12, 14, 16

Bralet Top With Crochet Trim

4, 6, 8, 10, 12, 14, 16, 18

Wrap Front Crop Top High Neck Rib Crop Top

Color

Blue, Black White White, Mango, Black Blue Batik Print Black Black Blue Tropical Print Black Geo Print

Grey Black, White, Grey White Black, White Black, White Black, White Charcoal/White Black, Ivory

Knit Crop Top Union Crop Top In Floral Broderie

Black, Khaki 6, 8, 10, 12, 14, 16 White 6, 8, 10, 12, 14, 16 Cream

Cropped Double Layer Cami Top

4, 6, 8, 10, 12, 14, 16, 18

Floral

Layered Crop Cami Top

xs, s, m, l

Aztec Print

Tie Detail Crop Top

6, 8, 10, 12, 14

Black

Strap Crop Top

6, 8, 10, 12, 14, 16, Lime 18

Retail Price

Product Category % 19%

$35.00

Average

$44.20

Average

$28.50

$39.00 $39.00 $39.00 $43.00 $47.00 $47.00 $49.00 $50.00 $54.00 21% $10.00 $10.00 $15.50 $19.50 $19.50 $24.00 $27.00 $29.00 $31.00 $34.00 $35.00 $35.00 $39.00 $49.00 $50.00

Bottoms 70s Hotpant Ribbed Short Shorts in Linen with Scallop Hem

6, 8, 10, 12, 14, 16, Blue 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18

Denim Shorts With Embroidery xs, s, m, l

Ecru/Navy Stripe White Light Blue

Extreme Rip Mom Short

6, 8, 10, 12, 14, 16, Pale Blue 18

Hipster Bikini Pant

4, 6, 8, 10, 12, 14, 16, 18

Swimwear

Micro Brazilian Bikini Pant Contrast Micro Brazilian Bikini Pant Micro Brazilian Tie Side Bikini Pant Micro Brazilian Triangle Bikini Top Contrast Micro Brazilian Triangle Bikini Top Deep Hipster Bikini Pant

4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18 4, 6, 8, 10, 12, 14, 16, 18

Black, Floral Black, Polka Dots, Floral, Red White/Black, Red/Black Nectarine Pink Black, Red, F;loral, Stripes White/Black, Red/Black Floral, Black, Hot Pink, Polka Dots

High Apex Triangle Bikini Top

4, 6, 8, 10, 12, 14, 16, 18

Black

Moulded Triangle Strappy Tie Back Bikini Top

4, 6, 8, 10, 12, 14, 16, 18

Black

4, 6, 8, 10, 12, 14, 16, 18 Tab Front Bandeau Bikini Top 4, 6, 8, 10, 12, 14, Micro Triangle Bikini Top 16, 18 Twist Bandeau Bikini top With 4, 6, 8, 10, 12, 14, Tie Back 16, 18 4, 6, 8, 10, 12, 14, Wrap Brazilian Bikini Pant 16, 18 4, 6, 8, 10, 12, 14, High-Waist Bikini Pant 16, 18 4, 6, 8, 10, 12, 14, 50s Halter Padded Bikini Top 16, 18 4, 6, 8, 10, 12, 14, Neoprene Hipster Bikini Pant 16, 18 4, 6, 8, 10, 12, 14, Longline Bandeau Bikini Top 16, 18 with Detachable Strap 80

Black Polka Dots Polka Dots Black Black, Floral White Neon Pink Black/White Stripe

15% $29.00

Average

$37.80

Average

$22.34

$35.00 $39.00 $41.00 $45.00 18% $13.50 $13.50 $15.50 $15.50 $15.50 $17.50 $19.50 $19.50 $19.50 $19.50 $19.50 $22.00 $24.00 $27.00 $27.00 $31.00 $31.00

4, 6, 8, 10, 12, 14, Cross Wrap Bandeau Bikini Top 16, 18 4, 6, 8, 10, 12, 14, Neoprene Halter Crop Bikini Top16, 18

Black Neon Pink

Sandals 4, 5, 6, 7, 8, 9, 10, Silver, Tan 11 5, 6, 7, 8, 9, 10 White

Frankie Flat Sandals French Jelly Sliders Fliss Two Part Jelly Flatforms Fated Leather Sandals Jeeze Gladiator Espandrilles Jacy Closed Toe Two Part Espandrilles

5, 6, 7, 8, 9, 10 Nude, Black 4, 5, 6, 7, 8, 9, 10, Tan, Black 11 4, 5, 6, 7, 8, 9, 10, Black 11 5, 6, 7, 8, 9, 10

Finlay Woven Leather Sandals Feather Weight Leather Flat Sandals

Silver/Tan

4, 5, 6, 7, 8, 9, 10, Brown 11 4, 5, 6, 7, 8, 9, 10, Nude, Black 11

Faithful Leather Woven Sandals

4, 5, 6, 7, 8, 9, 10, Black, Gold, Pink 11

Fuller Woven Two Part Sandals

4, 5, 6, 7, 8, 9, 10, Coral, Mint 11

Scuba Bikini Pouch

One Size

White, Black, Coral

Oversized 70s Sunglasses

One Size

Tortoise, Black

Aviator Sunglasses With Mirrored Lenses

One Size

Silver

Oversized Round Sunglasses

One Size

Tortoise

Accessories

Skinny Frame Round SunglassesOne Size

Black

Retro Sunglasses

One Size

Black

Round Sunglasses with Flash Lenses

One Size

Tortoise

Snake Beach Bag

One Size

Hologram

Chunky Mesh Shopper Bag

One Size

Black

$31.00 $43.00 15% $19.50

Average

$31.20

Average

$22.33

$19.50 $24.00 $31.00 $35.00 $35.00 $35.00 $35.00 $39.00 $39.00 12% $15.50 $19.50 $19.50 $19.50 $19.50 $19.50 $24.00 $29.00 $35.00 100%