The product life cycle and online fashion
ASOS.com is the UK’s market leader in online fashion retailing. It offers own-label, branded fashion and designer goods. Its headquarters are in Camden Town in North London. ASOS.com originally stood for As Seen on Screen. The company was set up in June 2000 with just two people to bring the latest fashion trends to shoppers as quickly as possible. It has rapidly grown to become the UK’s largest independent online fashion retailer. It stocks over 22,000 product styles on its website and introduces up to 1,000 new products to its ranges each week. The ASOS.com website attracts over five million visitors a month and the company currently has around 1.2 million active customers (that is, people who have bought in the last six months). It was named Online Retailer of the Year in 2008 by Retail Week Awards. ASOS.com provides high fashion clothing for women, men and children, as well as footwear, accessories, jewellery and beauty products. It aims these primarily at a target audience of 16-34 year olds. However, as the company continues to grow and diversify its product ranges and increase awareness, it appeals to a much wider online fashion market. Over 20% of its current customer database is aged over 35. Each week ASOS.com delivers 70,000 packages to the homes of its online customers. CURRICULUM TOPICS • Product life cycle • Extension strategies • Boston Matrix • Promotion
GLOSSARY Retailing: providing activities related to selling goods or providing services for the final consumer. Target audience: group/s that promotional communication messages are aimed at reaching. Product portfolio: the range of products developed by an organisation.
Womenswear 61% Women’s non-clothing 20% Beauty 2% Menswear 17%
ASOS.com has been able to exploit the increasing popularity of online shopping to help the business grow. According to research from IMRG UK, an organisation which tracks online sales: • around 50% of 16–24 year olds buy clothes online more than once a month • 30% of women have bought clothes online • the total UK online spend in 2007 was £42.0 million • there were 26 million UK online shoppers in 2007. Online shopping provides customers with the convenience of making purchases whenever and wherever they like. ASOS.com’s use of technology helps to increase sales by providing easy navigation around the website and helpful tools like the ‘catwalk’ option so items can be seen on moving models. The business also benefits from its visionary approach to traditional retailing by not having high street stores. This keeps its staffing and property costs down. This case study shows how ASOS.com uses the product life cycle to ensure its product portfolio continues to meet the needs of its customers and provide up-to-date fashions in the fast-moving online retail industry.
The product life cycle
The product life cycle shows the stages a product goes through over time in relation to its sales. Whilst individual products have their own life cycles it is important also to understand wider market trends. The retail market also follows a life cycle. In the UK the total retail market is in a mature state with growth slowing down. Retailers have to compete hard, shown by declining sales in high street stores.
In contrast, the online retail industry is a young market still showing huge growth since its introduction period between 1998 and 2002. Between 2004 and 2007, total retail growth was just 4.6%, whereas online retail grew by over 130% in the same period. One of the big changes that occurred was a move by businesses from selling from a catalogue to direct selling online. This is clearly illustrated by the growing market share of ASOS.com. 6.0% 5.0% 5.53% Monthly market share
GLOSSARY Maturity: the stage in the product life cycle when there is little room for expansion because most or all of the target market is...