Posted on Monday, Feb 23rd 2015
According to a recent report by Deloitte Digital, the global e-commerce market is projected to grow to $1.4 trillion by the year 2016. Here is how London-based ASOS.com entered the Billion Dollar Unicorn club by focusing on the niche market of designer products for the twenty-somethings.
ASOS was founded in 1999 by Nick Robertson and Quentin Griffiths when they came up with the idea of setting up an online business where buyers could buy clothes or accessories they had seen celebrities wearing. They called their company As Seen On Screen and it soon became known as ASOS. Within a year, ASOS was selling much more than just clothes.
ASOS wants to become the go-to online shopping site for the twenty-something demographic. Today, they sell products ranging from bags and beauty products to jewelry, and they have expanded to more than 240 countries including the United States, Australia, France, Germany, Spain, Italy, Russia, and China. They are the largest online retailer in the apparel category in the UK and Australian markets.
They sell over 75,000 designer brands and own brand label products through their mobile and web channels. They give boutiques the chance to sell new and used fashion products through their marketplace channel. Besides marketplace, ASOS also offers a Fashion Finder section that lets users create and share each other’s ideas and inspiration about outfits and trends that go with their own style.
ASOS has been focused on increasing user engagement on their site. They publish fashion-focused competitions, games, news, and feature articles on their website and mobile apps. Last year, they also added a feature called As Seen On Me that lets customers post images of themselves wearing the products directly on the site. At the end of their fiscal last year, ASOS had a following of over 8.8 million active customers.
ASOS has seen rapid financial growth since inception. Within two years of being founded, they had launched on the London Stock Exchange’s alternative investment market (AIM). For the year 2002, they reported revenues of £3.6 million (~$5.6 million) and an operating profit of £1.7 million (~$2.6 million). For the year ended August last year, ASOS saw revenues grow 27% over the year to £975.5 million (~$1.5 billion). Last year, sales from the UK market increased 35% and international markets reported a 22% growth over the year. Operating profits for the year fell 14% to £46.6 million (~$71.9 million).
This was the first time in the last three years that their margins reported a decline. ASOS attributed the decline to the weak British markets and the price pressure faced due to increasing competition. They are trying to overcome the concerns by increasing international presence. Last year they set up a standalone business in China to cater to the growing demand in the region.
ASOS’ stock is trading at £3,306.91 (~$5,105.17) with a market capitalization of £2.77 billion (~$4.28 billion). It has fallen significantly since it touched a 52-week high of £7,195.00 (~$11,107.6) in February 2014.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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