ASOS Price Cuts Only To Expand The International Market

April 4th, Britain fashion Online retailers ASOS The company's semi annual report for fiscal year 2017 ended February 2017. According to its display, ASOS has made brilliant gains in the past half year and achieved a sales of 88 million 920 thousand, up 31% from the same period in the previous year.

But what is more striking is the 2017 financial year performance forecast released in the year - sales growth in ASOS 2017 fiscal year, and is expected to increase to 30%-35%. Prior to that, the company's projected sales growth for the fiscal year was 25%-30%.

According to the world clothing and shoe net, ASOS has increased its sales expectations this time, mainly because of its strong growth in overseas markets and bright sales. ASOS chief executive Nick Brighton confirmed this statement. He gave official commentary that it was the price cut strategy launched in the UK's external market that made the international market grow, making the group confident that the annual sales forecast would be raised.

In fact, from the half year of November 2016 to February 2017, ASOS's international market sales reached 54 million 840 thousand, which has increased by 54% over the same period in the 2016 fiscal year.

"After the withdrawal of the euro, the continued decline of the pound provides us with the opportunity to expand (Overseas) business." Brighton explained to reporters the opportunity to reduce prices after a group visit.

However, in addition to the positive impact of the low pound, Asos can find growth opportunities in the US and Europe, and also need to thank the market for competition. Because whether it is the United States or Europe, when it comes to fashion business, the first reaction of customers is Net-a-Porter, Farfetch and so on. The competition of these businesses is mostly around. Luxury brand And the sales of independent designer brands, such as ASOS, with 20 years of age as the target of young people, and a high street brand e-commerce platform which sells for hundreds of yuan, is not much on the market, so that ASOS can find the space for survival and development in these overseas markets.

In contrast, ASOS announced the closure of its Chinese website in April 2016 and the main reason for its withdrawal from the Chinese market is that in China, there are already strong rivals such as Taobao and Tmall for the same target audience. If ASOS wants to win in the Chinese market, it has to consume more manpower and material resources in product development, marketing and so on, resulting in "cost-effective" is not high. Moreover, at that time, ASOS's losses in the Chinese market had reached 8 million 600 thousand euros, even close to the estimated 9 million pounds (10 million 490 thousand euros) previously invested in the market.

"In the overall strategy, China occupies only a small part of the total turnover of the company, but it requires a lot of energy, time and investment, which is not conducive to the overall situation." This is what ASOS chairman Brian Mcbride said at the end of 2014 when he accepted the "Marketing" interview.

At present, apart from the UK's local market, ASOS has established localized websites in the United States, France, Germany, Spain, Italy, Australia and Russia. Globally, as of the end of fiscal year 2017, the e-commerce website attracted 14 million 100 thousand active customers. This figure was 10 million 900 thousand in the same period last fiscal year.

But that does not mean that ASOS has no rivals in the European and American markets. To some extent, as fashion brands compete to get through online and offline channels, more competition from ASOS will come from H&M, Toshop and other single brands. Therefore, compared with these brands, the speed of the distribution, the ease of return and so on will be the inevitable competition of ASOS.

This has also enabled Asos to invest in logistics and spanportation systems across the country in the new financial year. This directly increased the operating cost, thereby resulting in the loss of the profit margin - the profit margin of ASOS fell by 0.4% to 47% during the earnings period.

But in fact, even the biggest impact on profit margins is the price reduction. That is why ASOS has not raised its earnings forecast in the case of expected sales growth. Brighton said that in the second half of the fiscal year, ASOS will still insist on reducing prices to drive the growth of sales under the premise of exchange rate permission. At the same time, he said that the problem of rising production costs caused by the decline in sterling exchange rate will continue to affect ASOS's profitability.

According to previous projections, ASOS will achieve a profit of 80 million 600 thousand at the end of fiscal year 2017. At the end of the first half of fiscal year 2017, its pre tax profit will be 27 million 300 thousand, up 14% from the previous fiscal year.

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