NEW MARKET DEVELOPMENTS AND RISKS
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3.1. New market developments
The Company has created a major fashion platform which has reeled in 6.5 Mn followers on the Company’s website, 2.8 Mn followers on Google+, 7.4 Mn followers on Instagram and 1.5 Mn followers on twitter (ASOS, 2016). With the development of each of these social media platforms, the Company is better able to market and sell their products. Each social media platform is conducted by means of a specific algorithm. The Company must be able to “roll with the changes” as and when such changes occur, which in my opinion the Company has weathered such changes as smoothly in a profit retaining manner as possible.
By opening up the Company on to social media and internet marketing, the Company effectively channels in new market segments which was left unexplored previously. Although the Company’s product portfolio in 2012 consisted of approximately 85% fashion products (shoes, clothes, handbags, accessories for men and women), by 2017 the Company had e’xpanded its portfolio to include skincare, makeup, stationery, tech-items and etc. (ASOS 2012 and 2017). Instagram especially has completely revamped its algorithm, the impact is felt by the Company as the frequency of uploads would no longer affect its hit rate as it did prior to the change in the algorithm. Companies which market on Instagram now would need to ensure an ardent and revisiting following to truly reap the benefits of its marketing campaign. (Instagram, 2014 and 2017)
YouTube has proven to reel in new market opportunities by means of marketing via social media influencers. Although the Company may have a consolidated social media following of approximately 8-9 Mn, social media influencers (paid or unpaid) may have access to new segments of the market which had not previously been tapped in to by the Company. For example, YouTube influencer “Zoella” Zoe Sugg, has a total following on YouTube of approximately 12 Mn. She has uploaded approximately 9-10 “haul videos” which had gotten 1-3 Mn views. With each upload of such influencers, they would typically leave links to the items which were hauled and this would be additional marketing done on behalf of the Company (YouTube, Zoella Channel). These influencers could be paid as part of the Company’s social media marketing strategy. The recent trend on social media to review certain online retailers however, has provoked a degree of free social media marketing for the Company.
Instagram has recently revamped its application to allow posts of companies which market their products online to tag the prices of each product and once tapped on the price, the application redirects the target customer to the website of the Company and if the target customer has the Company’s application downloaded on his/her mobile, it would be redirected to the app. This fluid swap from one social media platform to the Company’s app would reel in customers of a younger demography more enticed by the smooth shift and ease of use of the application and the whole retail experience.
The Company’s R&D and innovations teams are consistently designing new products and expanding their product portfolio. In addition to the Company having their own products, they are also entering in to many partnerships with various companies (ASOS, 2016). The marketplaces of Amazon and Alibaba have reached incredible scales and the Company cannot match the scale of retail trade conducted daily via such platforms. However, evidence suggests that the Company has drawn in inspiration of such marketplace models to widen its scope. In 2010, ASOS Marketplace was introduced on the website. This is a virtual platform for individual designers and boutique stores to market their products via ASOS. It’s vastly different from the likes of major virtual marketplaces such as Amazon, eBay and Alibaba as the Company enables the vendors to have a customisable shop front at a monthly charge and provides the vendors with an Account Manager who provides advice on methods of attaining optimum sales via the website and app alike (Milligan, 2010).
The Company has in addition to its own brand clothing has introduced its own brand cosmetics line, which is an all-inclusive portfolio of products costing no more than £10 (Young, 2017). The ASOS Face and Body line, introduced in September 2017, was targeted to capture the market segment of younger women, ideally aged 16-24. In addition to launching its own brand cosmetics, the Company has partnered with the world renowned crayon company, Crayola and released the cosmetics as an exclusive item on the website. The press release was said to have captured all genders and persons of colour and persons of varying ethnicities (Rodulfo, 2018). These kinds of exclusive and innovative products can be said to be new developments to the product portfolio encapsulating new markets which the Company had not previously ventured into.
3.2. Qualitative research on market opportunities
The Company in comparison to its competitors such as Net-a-Porter, Nasty Gal, and etc., curates a product portfolio which is vastly different to retain its global market presence. The Company affords major benefits which its key competitors up to date do not offer such as free shipping. The up and coming competitors of a similar nature yet catering to a more “frugal” market would be She In, Ali-Express, Zaful, and etc. which have thus far been notoriously unreliable in terms of quality and the aspect of you-get-what-you-see of online retail.
The researcher placed three orders on the Company’s website and its mobile app and the comments are as follows. The quality of the clothes (black cotton t-shirts) were a direct representation of what was depicted on the images and worn by the models. The product description matched the items received and in terms of the products, in the viewpoint of a customer, the entire retail experience was satisfactory. The only disadvantage faced was in terms of delivery to Sri Lanka as the parcels are delivered to the General Post Office and there is a high probability of the products being delivered with extreme delays and parcels being lost. This however, is not a negative factor which can be attributed to the Company, but a negative factor of the local demography which the Company caters to. One key recommendation for the Company is to resort to SkyNet Delivery (courier service procured by the Company which is available in Sri Lanka) as their preferred method of couriering the products to primarily South Asian and South East Asian markets due to the unreliable nature of its Post Offices.
The researcher used the Mobile Application of the Company’s website and it was apparent that the app was designed in a very user-friendly manner, guaranteeing that items added to the cart on the app would be visible and accessible identically on the website. The motion, graphics and overall content on the app was extremely fluid and sharing content available on the app on other social media networks was deemed extremely easy. The researcher recommended the use of the mobile app to two males and three females in Sri Lanka (belonging to a demography of South Asian Males above the age of 50 years) to sample the app and revert with feedback. The feedback received is as follows: As per the data gathered above, it is evident that any person outside USA or UK would be required to make their own conversions and deem if such items were within their spending capacity or not, due to the lack of currencies other than GBP and USD. If the app had enabled up to 10 currencies including the Singaporean and Australian Dollars, Indian Rupees, and several other currencies, the Asian market would be a key market segment to tap in to as the Company currently has total sales amounting to only 9% from the rest of the world excluding UK, USA and the EU (ASOS, 2016). 3.3. Threats identified by ASOS
When perusing through the annual reports of the Company, it becomes apparent that it struggles with certain key risks as set out below.
The Company has a risk management system to provide reasonable assurance against material misstatement or loss (ASOS, 2016) which is as follows. One of the most key threats which could hinder the growth of a customer base by means of new markets would be a breach in security of personal data of the customers, due to the online retail presence of the Company. The Company has strengthened their IT security team in terms of expertise, experience and numbers to increase the Company’s ability to mitigate internal and external IT threats (ASOS, 2016). The Company has also invested in enhanced alert systems in terms of attempted unauthorised access.
With the increased degree of caveat-emptor of customer’s in a contemporary context, companies ought to ensure that their trading standards are both ethical and production methods are safe and humane. The Company is said to have expanded their sourcing and ethical trading teams, enhanced work with suppliers to increase sustainable sourcing and etc. (ASOS, 2016). Contemporary consumers, especially of online retail markets are more sensitive to ill trading practices and a lack of CSR conducted by a company. The Company has invested in a significant amount of CSR to combat negative influence of customers and boost the goodwill and reputation of the Company as well as ensuring that the customers have a smooth trouble-free retail experience.
Another risk which was not highlighted in the annual reports of the Company is the risk posed by exchange rate fluctuations. Although the Company remains one of the most successful e-commerce company in the UK, it suffered tremendous losses in 2014 and a price increase in international markets up to 25% more expensive than 2013 (Robinson, Felsted and Aglionby, 2014). When UK announced that it had voted in favour of Brexit in 2016, the Company’s website and mobile applications were not functioning. Speculations of the market were that the Company was downsizing its cross-border supplies, although the Company remained the contention that it was a system error that caused the site-wide halt in trade. That said, the Company reaped major benefits during the 10% fall of the GBP since the 23 June referendum (Farrell, 2016).
Therefore, it is apparent that with the entrance in to new markets segments and opening up of the company to a larger and broader global internet retail market space, it is subject to sizeable opportunities and risks. The Company could also potentially reach out to other social media influencers from the rest of the world and not limit itself to primarily British or American influencers to market the products of the Company. Certain customers across the South and South East Asian region are unaware of the fact that Company provides free delivery on a consolidated bill exceeding £20 (Asos Website).
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