SWOT Analysis of ASOS: Top Fashion & Cosmetic Retailer

Products of ASOS 

• Clothes
• Shoes
• Accessories
• Beauty

Competitions of ASOS

The top 5 competitors of ASOS are:

• The Hut Group
• Alibaba
• AllSaints
• House of Fraser
• Farfetch

Now, we know the brief of the company, what it is, what it does and the relevance of its existence. Let us dive into the SWOT Analysis of ASOS.

SWOT Analysis of ASOS 

A SWOT analysis examines the strengths, weaknesses, opportunities, and threats that a firm faces. SWOT Analysis is a tried-and-true tool that enables a company like ASOS to compare its business and performance to that of its competitors.

It will give us a strategic analysis of its internal and external environment, which is crucial for understanding the SWOT Analysis of ASOS.

To better understand the SWOT analysis of ASOS, refer to the infographics below:

Below is an explicit guide to the SWOT analysis of ASOS.

Strengths of ASOS

ASOS, being one of the leading companies in its industry, has several benefits that help it flourish in the marketplace. These strengths not only help it retain market share in existing areas but also help it break into new ones.

• Branded Retailer: Asos is one of the largest independent online, fashion, beauty, and retailer stores based in the UK. The retailer sells fashion and cosmetic items through an online e-commerce website.
• Business Model: ASOS sells over 800 brands as well as its own private label of clothes and other merchandise. The ASOS brand offers more than 30 sizes of the same item you select and that at the same price which no other online retailer is doing in the market.
• Attractive & Appealing Website: The company uses innovative ways to display merchandise to customers and an interactive online experience to shop, including customer-created looks, company-edited fashion trends, and the ASOS marketplace.
• Digital Marketing: It connects and actively engages with its customers through social media platforms including Twitter, Facebook, Instagram, and youtube. ASOS has over 27 million active customers that use its platform and this is all possible relationship management with customers. 

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• Global Expansion: ASOS focuses on international expansion and growth with sales growth outside of the UK. ASOS opened its first office outside the South East, in Birmingham and that gave the brand recognition through a physical presence.
• Supply Chain Increased Visibility: The international supply chain has increased the visibility and business of ASOS globally. ASOS has a global supplier spread across 14 countries and it has a unique approach to understanding and strategically implementing the supply chain operations.
• Corporate Responsibility: ASOS follows its corporate responsibility to drive sustainability by combining people and the planet to deliver fashion with integrity. They are transforming themselves into a net-zero emissions company to manage waste and resources wisely by 2030. Such steps show the positive side of a brand. 
• Diversified Workforce: ASOS has always believed in having a diverse and very inclusive workforce that enables the employees to create innovative products and understand consumers and their constantly changing needs. Their models are part of the ASOS family and they support them by following a Model Welfare Policy.

Weaknesses of ASOS

ASOS’s weakness is an area where he can improve. Strategy is about making important decisions, and weaknesses are areas where a company could improve with the help of a SWOT analysis.

• Reducing Market Share: ASOS is getting Intense competition from the global retail players and the e-commerce platforms like Alibaba, AllSaints etc. and that means a limited market share of ASOS.
• Limited Presence: The brand is largely dependent on a few countries for its major revenue like the UK, the USA and Europe. It still does not have a significant presence in Asian regions like India and Russia.
• Reliant on Third Party: Since the products consist of a digital dashboard and different functions, ASOS depends on third parties for services such as other fashion brands, logistics and brand suppliers. They lack control over third parties compromising on their operations, quality, efficiency. 
• Quite Expensive: ASOS comes under the premium segment and thus its products and the brand’s products that it lists on its website prices are quite on a higher side as compared to other brands in the market offering the same products at a little cheaper price. Due to this, people who want to buy a product from ASOS are taking their feet back just because they are not willing to pay.
• Customer Experience Becoming Expensive: ASOS is always trying to emphasise creating customer experience at the best possible and that’s good but sometimes over-focus on creating customer experience causes customers to take advantage of such experiences.
• Free Shipping: Although ASOS is providing free shipping to its customers which is superb when it comes to sharing value, ASOS value drops when free shipping starts hitting its gross margin. There was a time when it had discontinued this offering and right now it has resumed it back again. 
• More Investment in New Technologies: As the company embarks on its next phase of expansion, it needs to invest in new technologies that can help it achieve its goals. Currently, investment in technology does not meet the ideas that a company has.
• Investment in R&D: Investment in research and development is below the rapidly growing players in the industry. Even though ASOS is consuming above the industry average on research and development, it has not been able to compete with the leading players in the industry regarding innovation. 

Opportunities for ASOS

Opportunities are possible areas for a company to consider to improve results, sales, and, ultimately, profit. ASOS includes the following opportunities:

• Follow Trend: Consumers are willing to spend more money on unique products and on fashion products that are in trend. It has the opportunity to improve and innovate the range of equipment, apparel, accessories and training in the marketplace. 
• Mobile Penetration: Increasing mobile penetration helps people to make more purchases from mobile platforms. 
• Growing Demand: The market for fashion and cosmetic products is expanding, and it has significant demographic and geographic potential. The market potential is always increasing as more people use fashion products daily and there is so much competition in the fashion industry, people are well aware of its importance.
• ASOS with Microsoft: ASOS is building a new cloud agreement with Microsoft that will bring 900 brands for fashion lovers globally. Microsoft Azure’s AI capabilities and digital platforms will help ASOS to touch growth opportunities. 
• Globalisation: Globalisation is expanding the reach of retailers, as they are able to connect with consumers across the globe and grow their businesses, ASOS can take advantage of this to expand.
• Using First Mover Advantage: Instead of fighting with competitors, they can position themselves as a pioneer and quality brand. Launching new products before the market is an addition.

Threats to ASOS

Many factors can affect your business outside its immediate environment. Some of these include factors such as a shortage of skilled workers or a supply chain issue. The threats ASOS is facing are as follows

• Competitors: Larger retailers existing in both digital and physical domains like Bohol and Nbrown may have more brand recognition than ASOS, as they gain consumers through foot traffic as well as their online platform.
• Unseen Events: ASOS had been closed for six weeks due to the fuel depot explosion at Buncefield in 2005 that caused ASOS to lose £5m of stock. The brand had also discontinued offering kidswear in 2010 which has diluted its core young adult fashion market. 
• Dependent on Products: Most of its revenue comes from the product, since they have a limited product segment which is fashion and cosmetics, declining sales of its product could lead to a decline in revenue.
• Market Difficulty: Almost all players come under the fashion and beauty category and differentiation is very difficult. Customers are very anxious about the fashion category so attracting them needs more brand quality and services. 
• Deadstock: Since ASOS deals in the fashion and clothing segment, the problem of dead stock has always been a drawback for businesses like ASOS. Increasing deadstock will ultimately lead to inventory expenses and clearing the stock at higher discounts lower than what the actual product cost will always be there.

This ends our elaborative SWOT analysis of ASOS. Let us conclude our learning below.