A British Fashion Invasion
Entrepreneurs in Action
It's Not Easy, but It's Worth It
Small Town, Big World
Nick Robertson is not a fashionista.
He favors button-downs and jeans, not too much product in his hair, and light accessories. But with sales of $300 million, the 42-year-old British entrepreneur runs ASOS, London’s largest independent online fashion and beauty retailer—and he’s gearing up for a U.S. invasion.
“International sales are 30 percent of our business, and the U.S. is the fastest-growing market—without any advertising on our end. So we figured it’s time to give the American consumers what they want, a U.S. presence,” says Robertson. He plans to launch a stateside version of the site by the end of the month.
When he started the company 10 years ago with three employees, it was a product-placement service that featured apparel and goods seen on television and sold them to consumers. As its popularity grew, Robertson decided to widen the focus and his offerings. "I started looking at the site as the Amazon of fashion," he says.
To get there, though, he realized he needed the help of industry insiders since his experience is in media and advertising, having worked for Young and Rubicam and founding a marketing firm before going on to create ASOS. But he didn't know the ins and outs of fashion. His first buyer formerly worked for trendy Brit brand Topshop.
And he seems undaunted by the competition, which includes sites like Gilt, HauteLook, and RueLaLa, among others. What sets ASOS apart is its selection and pricing model. Carrying 800 brands, 42,000 product lines, and a proprietary label that accounts for 50 percent of annual sales, Robertson’s company follows a different business model than those discounting designer wares for 48 hours at a time. His inventory is available at full price until it sells out rather than taking a markdown for a limited time and shipping excess inventory back to the vendor, or being stuck with the remainders.
He’s also heavily focusing on the 16-to-34-year-old demographic.
“Young people want what’s hot now, not what was big last season,” says Robertson. “We can charge full price because we offer fashion that’s current, often seen worn by celebrities, and we give our young customers access to designers that other sites don’t.”
To be fair, both New York-based Gilt and HauteLook of Los Angeles deny carrying older items. "HauteLook sells season-appropriate items that are still, for the most part, available in stores," says the site's CEO Adam Bernhard, who founded HauteLook in 2007. "We offer an in-season sale of 50 to 75 percent for two days to help designers reach faster sell-through."
In order to become a player in the U.S. online fashion market, Robertson had to overcome some big obstacles. “One of the biggest barriers to international sales was the fact that the U.S. charges duties on purchases over $200. To make shopping more enticing, we’re now paying those tariffs,” he says.
The fees usually cost about $50 to the retailer, who's only charged if the goods each cost more than $200. For most sellers, it's just part of the cost of doing business and one that they either choose to absorb or build into the shipping fee.
Figuring out the shipping-cost structure was an issue, especially since the youth mentality is all about “get it now.”
To that end, the company uses express mail that ships items within four business days at a flat fee of $6 to a customer. The company uses several different carriers to make that happen. Compared to the $8 to $10 that Gilt charges for standard shipping, which can take up to 10 business days, and $10 for HauteLook to deliver within 10 to 14 business days, and $9.95 for three to seven business day delivery from RueLaLa, ASOS is a clear competitor. And the company has no plans to ship from the United States once it makes the hop over the pond.
Robertson's tactic isn't a sustainable one without a huge pot of money, says Lisa Pool, co-founder of online jewelry, body, and home goods site Hazel & Harlow. "It can cost up to $100 to express ship to Canada from the U.S., and while (he can use) the low-cost shipping fee as a marketing tool initially, it won't work long-term unless the company essentially has endless financial backing," she says. "To guarantee that level of shipping is going to cost him millions of dollars."
Robertson doesn't see it that way.
“There’s no financial incentive to open a warehouse in America when we’ve already worked out a way to send items at a competitive rate from the U.K.,” he says. “Some people say I’m crazy not to have a physical presence here, but I just look at how much money we’re saving.”
That’s not to say that the company won’t help the U.S. job market.
One of the last barriers to operating in North America was dealing with returns. Since returns often account for 33 percent of retail operations, ASOS needed to find a way to handle them efficiently. Robertson plans to hire a staff to deal with those directly in the U.S. But when it comes to customer care, that’s all done electronically. “The average 20-year-old doesn’t want to talk to anyone,” he says. “They send us an email with the issue, we guarantee a response within an hour, and take it from there.”
If customers aren’t happy, Robertson hears it. He and his staff actively monitor both the site’s Twitter feed and Facebook page. And unedited customer reviews appear on the site for anyone to see. Smartphone apps are in the works and should launch with the company’s U.S. debut.
But what customers won’t see is a major marketing push.
“We believe in our brand, but that doesn’t mean that it’s going to be easy to break into the market here,” Robertson says. “We plan to make a quiet entrance and slowly turn up the dial. What’s nice is that celebrities like Katy Perry, Scarlet Johannson, and others are already wearing our brand. So we have an American resonance.”
Pool welcomes his efforts. "As a small-business owner, we benefit from a larger player coming in and fighting the big guys for market share," she says. That's because the competitors tend to spend money on advertising if they feel their place is threatened. And that leads to more awareness of the smaller brands, like H&H as well. "We can tag on to what they're doing and use their momentum to increase our brand reach."
Robertson understands that in order to compete with the loved U.S. retailers, he has to offer something that the others don't. In ASOS's case it's a monthly magazine published since 2007 that it sends to top buyers. Realizing early on that the brand needed to be more than just about selling clothes, Robertson enlisted the help of his fashionista staff (all the buyers and marketers came from established labels) to put the glossy together. The recession didn’t hit the publication since it doesn’t rely on ad sales or a circulation figure. Instead, the brands ASOS sells pay to be included in the spreads, making the entire operation essentially risk-free for Robertson.
Looking to the future, Robertson is introspective.
“I’m amazed by how much the Internet has shrunk the world and how fashion is globalizing very quickly. We’re all inspired by the same clothes and the same celebrities,” he says. His advice for other entrepreneurs out there is to think globally from the beginning. “Don’t think country-specific because that can pigeonhole your business.”
Romy Ribitzky is an associate editor at Portfolio.com.
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