ASOS Cracks Down on the Realities of Online Shopping
ASOS, the online UK retail giant, is making some sizeable changes; marking up its digital marketing spend and clamping down on abusers of its return policy.
This shouldn’t come as a surprise, as we can all agree that ASOS hasn’t had the most spectacular year. Recently, it’s been the less-than-stellar feedback from customers on specific clothing as well as some photo fails, but more notably, their return on investment on the marketing front. ASOS's pre-tax profits fell 87% to £4M for the six months leading up to February 28th as compared against the same period in 2018. However, they did manage to stabilize sales, rising 14% to £1.3B for the period.
The online fashion retailer attributes its profit plunge to heavy discounting, as well as website traffic issues due to marketing changes that directly impacted a fall in visits to its websites paired with a drop in its search engine rankings. ASOS’s Chief Executive, Nick Beighton, identified several things they "can do better", and that heavy investment in its platforms gave the retailer "increased confidence" that its performance would improve in the second half of the year. Mr. Beighton further stated, "We now have the tech platform, the infrastructure, a constant conversation with our growing customer base who love our own great product, and the constantly evolving edit of brands we present to them."
This profit warning notably came as a shock to many, as ASOS has usually been seen as an online disrupter within the high street fashion market, and they continue to disrupt the market with some of their recent changes.
In early April of this year, ASOS announced a significant change to its return policy, which includes a crackdown on so-called ‘serial returners’.
Firstly, the policy now lengthens the time allowed for returns of a customer’s unwanted items from 28 days to 45 days. A customer can still traditionally return any item within 28 days to receive a full refund, however, from 28 days and up to 45 days after purchase; customers will now receive an ASOS gift card for the amount they have spent. These changes aren’t too drastic, as ASOS has been known to have a notoriously lax return policy by being a company that has made returning items so much more convenient than other online retailers. Every shipment a customer receives includes a free return label, bags that are easy to repackage, and refunds that are promptly paid in full.
However, the noteworthiest change is ASOS’s effort to take tough action against ‘serial returners’. This is just one example of a shift among retail and eCommerce businesses to encourage their consumers to give more consideration to the stuff they buy today by making it more challenging to return tomorrow.
ASOS announced that it would be monitoring customers who continually buy and then habitually return the clothing. They warned customers they could—and would—start suspending accounts if they suspect customers were actually wearing the goods before returning them, as well as those who order a large number of items and then return a large number of items.
This more stringent return policy—in all honesty—is a good thing when you consider the fact that returns are a growing environmental and labor issue, especially for goods ordered online. Cyber sales require more transportation—raising the carbon footprint—and the returned goods typically don’t get restocked and end up in our landfills. According to Mashable, people are buying and returning items online more than ever. In fact, over the 2018 holiday season, US$98 billion in goods were returned, jumping up a whopping US$29 billion from the 2015 holiday season ($69 billion).
According to ASOS, these changes are to ensure its returns policy is "sustainable" for not only the environment but also its business. Further supported by a statement from the company: “We also need to make sure our returns remain sustainable for us and for the environment, so if we notice an unusual pattern, we might investigate and take action.”
ASOS isn’t the only retailer that is feeling the impact of returns, nor are they the first to make changes. In May of 2018, Amazon began closing the accounts of customers who they deemed ‘serial returners’. A Brightpearl survey of 200 retail executives found that two-thirds of respondents were willing to follow Amazon’s example and do the same.
From what we can tell, these initiatives seemed to be designed to improve their overall business; from changes in its policies, to its inventory, and even its marketing strategies.
In a bid to remain competitive, ASOS experienced a misstep when it launched 200 versions of its eCommerce website based on consumers’ regions, which consequently had a negative effect their search engine rankings. They also engineered and implemented changes to the way customers navigated the website and viewed products, focusing primarily on only new stock. A good online experience is key to help you convert customers, but it is also critical to ensure customers be fully aware and thoroughly confident they are happy with what they’re buying, thus reducing returns.
Michael Schirrmacher, UK Managing Director at BloomReach, said: “Ecommerce is a sophisticated industry, yet the persistent issue of returns shows there remains work to be done to ensure all aspects of operations are sustainable.”
“Without a changing room to try on a range of sizes, fittings or colours many customers end up ordering items that are not ‘right’ for them. Perfecting the online shopping experience is a top priority for every brand and retailer, and it’s worth considering whether content or improved search would help customers more easily make the right choices before they place an order. Improving the experience to help customers better understand what they’re buying – whether it’s the material, sizing, or something else – could reduce the likelihood of the item being returned later.”
“On a similar note, maybe customers are ordering multiple items knowing most will be returned simply because they can’t find exactly what they’re looking for. Delivering intelligent, bespoke search results could really make a difference here. It’s all about helping a customer know they’re getting what they want at the point of purchase, instead of thinking they don’t want what they’ve received at the point of delivery.”
But what do these changes in return policies mean for eCommerce? Although it will help businesses reduce costs, it could lead to an increase in unhappy customers.
ASOS is no babe in the woods when it comes to digital marketing.
In a 2008 report, ASOS stated that nearly 10% of its sales were directly attributed to its email marketing.
In November 2009, ASOS held ratios of one Twitter follower for every eight Facebook fans for every 100 active e-mail subscribers.
In 2017, ASOS launched a social media campaign taking full advantage of 'Instagram Stories'.
ASOS uses and promotes the #AsSeenOnMe hashtag, and any use of this hashtag adds the photos to an ASOS online database.
In March 2018, ASOS’s mobile app allowed users to upload images of clothing they like to which the app would then suggest matching or similar items from the company’s stock.
ASOS still maintains a great brand and impressive engagement stats, despite their challenging year. With that being said, ASOS is planning to increase its investment in digital marketing and influencer marketing recognizing that their organic customer acquisition and traffic have been significantly impacted.
According to Chief Executive, Nick Beighton, ASOS intends to address this with “upweight” to its digital marketing while keeping its overall marketing spend relatively flat. They are also seeking to increase the “velocity of conversations with customers”, a change in step, he says, that has been especially notable on Instagram over the last few weeks. Furthermore, ASOS is looking to double its investment in its influence-marketing activities. This summer will see a cooperative venture with the Life is Beautiful Music and Art Festival, with an effort to showcase top influencers while promoting ASOS-branded Life is Beautiful fashions who will be enjoying festival and tagging photos with Life is Beautiful.
These changes are not surprising or new. They simply mean that ASOS intends to be around for a long time and are addressing the issues—that all online retailers are facing—head-on. I wouldn’t be surprised that other vendors will follow suit in due course, and you may soon see an email arrive that outlines policy changes from your favorite online retailers. With that being the case, let us all remember to think before we buy.