Fashion is ubiquitous, and so is ASOS, one of the UK’s top-selling fashion brands.
ASOS has created cult followers in the marketplace like H&M, Zara, and M&S. The unique fashion discovery must reach the end user. A perfectly executed fulfilment strategy is the essence of notch-ups.
ASOS provides a stunning virtual shopping experience in the eCommerce industry. Increased online orders are the outcome.
They spread their vibrance to diverse segments of men and women. The end customers have shown great interest in taking a shot at new costumes.
The truth is, “ASOS is the UK’s trendsetter in the fashion industry.”
This blog post is penned with the recent happenings of ASOS, its performance in the marketplace, and the intake of working with 3PLs.
ASOS Warehouses
The warehouse operation is ultimately the essence of reaching more customers. ASOS has articulated it strategically to seal their dominance.
ASOS has picked Barnsley, Eurohub, Atlanta, and Lichfield as their finest locations for supply chain management.
These warehouses are upgraded with end-to-end autonomous features, providing them with higher competence.
Hence, they earned a super coin by shipping the right product, directly getting it folded into the customer’s wardrobe.
The Operation of the Distribution Network
Eurohub
The recent innovation at Eurohub has attracted ASOS to set up their warehouse.
It is dedicated to shipping their fashion products to European nations.
In return, ASOS has achieved the highest shipping accuracy and uninterrupted supply chain operations.
Barnsley and Lichfield
The fulfillment centres in Barnsley and Lichfield are designed to deliver their products to their UK and rest of the world customers.
Most customers of ASOS are within their country. Geographically, they hold a higher share of the customer base.
The presence of local fulfilment centres helped them deliver products within a few days.
These centres fulfill online orders received overseas, complying with the required shipping regulations.
Atlanta
ASOS expanded its global presence in North America.
For order fulfillment in the USA and Canada, the Atlanta warehouse is utilised.
The strategic location in Georgia leverages them to reach every corner of the United States.
Next to the UK market, ASOS has positioned itself as a dominant fashion brand in North America. The Atlanta location empowered the retailer to keep shipping time “short and efficient.”
The Technological Integration in ASOS Warehouses
“Technology” is the backbone of eCommerce operations.
Starting from customer experience to order fulfillment, ASOS has deployed cutting-edge technology to outweigh the market competition.
Keeping long-term goals in mind, they have partnered with technology and solution providers.
CEVA Logistics and ASOS signed a deal for an 80,000-square-metre fulfilment centre in Grossbeeren, Germany. The deal is made to fulfil orders in more than 60 countries.
BS Handling System is in a partnership with ASOS to provide a warehousing automation solution.
ASOS deployed the supply chain technology offered by GXO. This initiation has helped them create an uninterrupted warehousing operation.
The eCommerce application is powered by machine learning. The deployment has improved the customer experience by providing the right product suggestion for the query.
The use of AI and ML has assisted ASOS in increasing sales through the best recommendation based on consumer behaviour when buying.
The changes in pricing strategy powered by ML saved the retailer from incurring losses, generating higher returns based on market demand.
ASOS Lost Some of its Profitability
The fashion retail giant experienced a decline in profitability of 5% to 15%.
The changes in customers’ preferences and tastes in fashion have caused ASOS to experience a dip in the bottom line.
50% of the stocks went unsold for the first half of this year. And the hit in sales is expected to prevail for the next few months.
A few common factors influencing ASOS Profitability
The key reasons have not been found yet. Many other factors should be considered, as there is a shift in preferences.
The rising inflation rate and cost of living have caused customers to limit their online shopping expenditures.
In addition, the strict norms of producing fashion products with sustainable solutions have added extra cents to the cost and selling price.
Overheads: Over the Heads of ASOS
Deploying advanced technology and modern practices in warehouse operations went in vain.
ASOS failed to achieve its intended sales target. The steep fall in online orders in the UK marketplace has tumbled the balance sheet.
Hence, the returns to be generated from the allocated resources are not so great to express.
Instead, it has added an extra expense and liability to ASOS. The downward trend line has to be revived by further advancement.
Cost-cutting is the only way to make the losses get short.
In-house Order Fulfilment is an Expense
When the stocked inventories get stagnant, there is no need for resources at the moment.
The cumulative cost involved in improving the low functioning of the warehouse is higher.
It is not equal to the revenue and profit generated from it. The investment spent on the basic requirements will be accounted for as overhead.
Achieving a break-even point on warehousing operations is impossible in the short run.
It typically takes a few years to stabilize the balance sheet.
The Pain Point of ASOS in Order Fulfillment
We would say that ASOS made the wrong move by sticking with its in-house fulfillment practices.
On assumption,
ASOS has the warehousing potential to process 3000 order fulfilments per day, collectively.
But the retailer has around 400 to 500 fulfillment orders.
The allocated resources across the warehouse remain the same, altogether.
The resources are insufficiently capitalized, resulting in losses.
In some other cases, ASOS would have experienced a fluctuation in fulfilling orders. Rise and fall on the dice on each different day.
Anyway, the warehousing operation is underutilized.
For processing order fulfillment, 3000 orders and 500 orders share the same investment.
To solve supply chain issues, Amazon has various warehouses in the UK. Here is the complete list of Amazon UK warehouses, with all the recent addresses updated.
Should ASOS Consider Partnering with 3PL Warehouses?
Yes. The opinion is unbiased.u003cbru003eSince the fashion retailer is marching towards declining profitability, partnering with a 3PL warehouse would save them both cost and time.u003cbru003eThey can add an extra tonne of pounds in marketing and promotional activities to regain the lost sales volume.u003cbru003eThird-party logistics has the competence to be on par with the expected fulfilment services set by them.
Things to Consider if ASOS Prefers to Partner with 3PL Warehouses
Expertise and experience
The 3PL must hold excellence in processing apparel fulfillment, complying with the guidelines of ASOS.
Starting from preparation to shipping, the logistic service provider should be capable of tailoring the approach to meet multinational norms.
Storage capacity
The 3PL warehouses with the largest floor area allow ASOS to handle the fluctuating orders.
Once the retailer pulls back their average order quantity, the warehousing capacity makes it suitable for scalability.
Thus eliminating the need for in-house dependency and upgrading for future requirements in the very first instance.
Also, the additional investment can be restricted for warehousing expansion.
Cost-efficiency
Usually, 3PL charges for orders that are prepared and fulfilled.
It is highly cost-effective compared to the operational costs required for in-house warehousing. Also, the resource allocation is done with agility, which helps ASOS save extra pounds.
The rate is charged regarding the changes in order fulfillment.
Location
The 3PL warehousing service provider should have its centres in the targeted locations.
As the UK is the primary focused geography of ASOS, 3PL expanding their logistic operation would benefit from fulfilling orders.
In addition, the fashion retailer has the competence to maintain their turnaround time.
Partnering with third-party logistics can improve the customer experience.
Cross-border warehousing
ASOS has a customer base in more than 200 countries.
The 3PL warehouses operating on different continents are an advantage.
Therefore, the retailer can fulfill their orders overseas with the minimum shipping time.
Final thoughts
Considering the present business ecosphere of ASOS, choosing a 3PL warehouse is a better choice.
The comparison of the investment required for in-house and third-party warehousing shares a clear picture.
Signing up with the 3PL for a short-term contract works even better.
This would be the best deal that ASOS can make to focus on improving the bottom line.
We’re leaving the space to the ASOS to make their final say.
Daniel Rozario is the Lead Content Specialist at AMZ Prep, collaborating with the marketing team to produce blogs and articles on e-commerce fulfillment and logistics. He specializes in creating resources that help brands navigate inventory management, operational efficiency, and fulfillment strategy.
Good to read and well written piece! Great Job!
Good mention of ASOS. ASOS is growing in a faster way and could be leading in the industry.
This website always brings in something new and very different from others. Your deep research and unique vision of the ecommerce industry is what keeps ne bringing back to this site.
Great findings, loved your simple approach.
Ecom is expanding at a much faster rate than expected. These mentions helps inn understanding the future players of the industry.
Fashion industry has a major role, and its acceleration has high impact on the business industry. Rightly connected and aligned the growth perspective.
Nicely written!
Thanks for writing! Enjoyed reading with some new information.
I really liked reading this post. Your writing is simple and very informative. Thanks for sharing!
ASOS has a major contribution in the fashion industry, you rightly explored it.
Thanks for sharing!