ASOS

Introduction
ASOS Plc (As Seen On Screen – Public Limited Company) is an online global fashion and
cosmetic retailer. It was founded in 2000, in London, UK. In a couple of decades, the
company became the largest clothing retailer in the UK, and sought to become the world’s
number one fashion destination for 20-somethings. It was recognized as one of the world’s
largest online fashion specialists in 2018 (with revenues of £2.4 billion), with a website that
offered over 85,000 items, and shipping available to 230 countries worldwide. The path
that led ASOS to achieve these remarkable results was not always easy, since, on several
occasions, the company had to cope with accidents. In 2005, a fuel depot explosion dam-
aged the Hemel Hempstead (UK) warehouse; in 2014, at the Barnsley warehouse (UK),
20% of the stocks were ruined by fire, and in 2017, at the Eurohub distribution center (in
Germany), another fire broke out.
The company relies on few key cardinal principles that contribute to strengthening its core
objective of increasing and enhancing customers’ experience. First, product differentiation.
A broad offering of products from different lines, gives the company a comparative ad-
vantage over other firms. Second, service level. ASOS seeks to offer an effortless online and
mobile shopping experience to customers, from purchasing to return processes. Third, in-
novation. Investments in technology allow the differentiation of products and the creation
of a strong brand identity. Fourth, online presence enhancement. ASOS is exploiting new
ways to take market shares, and so, communicating with customers on information plat-
forms (up to 10 different social media platforms at once) is their main strategy. Fifth, sus-
tainability. The company supports the circular fashion economy, through the adoption of
four sustainable sourcing pillars: (i) traceability of raw materials, (ii) lowering environmen-
tal impact, (iii) engaging customers on sustainability and (iv) local craftmanship. Sixth,
transparency, loyalty and credibility. Marketing efforts are all aimed at creating brand loy-
alty in the large customer base, and increasing credibility. Moreover, the effort to improve
visibility and transparency through the supply chain gives a clear vision of all the company’s
activities. Seventh, addressing new generations. ASOS addresses young customers in differ-
ent campaigns, immediately following trends set for and by Millennials.

In terms of products and channels, ASOS falls into the category of fast-fashion companies,
because their products are innovative, are produced with a short and reliable lead-time and
are aimed at satisfying the most recent customer trends. The website asos.com provides
fashion clothing for men, women and children, as well as footwear, accessories, jewelry and
beauty products. It primarily targets people aged between 16 and 34, and the retailers sup-
ply parts manufactured by of external companies, despite having several lines that make up
their own brand assortment. As the company continues to grow, diversify its product ranges
and increase awareness, it will appeal to a much wider online fashion market.
In ASOS, products have a life cycle made up of different phases: development, introduc-
tion, rapid growth, maturity and saturation. The variety of mixes is a strength for the com-
pany and ensures a high turnover of the product released on the website each week. At the
same time, the Customer Relations Management department allows the company to target
its promotional activity by using user information and key performance indicators. To this
end, ASOS has a twofold approach regarding discounts and sales. The outlet section offers
a selection of limited products at a reduced price, while promotional sales are concentrated
on specific dates during the year, typically in June, December and in some holiday periods.
Discounting is promoted by means of discount codes, which are sent via email or advertised
on social media and websites.
Today, ASOS is truly multi-channeled, it allows customers to shop via the web, mobile
phones, its app and on social media. The retailer has no brick-and-mortar stores, as it has
adopted e-commerce for all the business activities.

Supply chain model

The ASOS supply chain has evolved over the years, following the company’s international
expansion (see Figure 1). At the beginning there was a small network of suppliers (up to
three tiers), from different geographical areas, with preferred sources in Europe and the
Americas. The tiers included raw material suppliers, and the production and supply of fin-
ished products. At the beginning, ASOS provided only storage and distribution of order
services. For this reason, finished products were subsequently sent to the company’s first
warehouse and distribution center, in Barnsley (UK). Products were sold on the company
website, initially only in the UK, then, over many years, also in other countries.

Figure 1 – ASOS supply chain structure in 2019

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From 2001 to 2014, the company managed to distribute products in 190 countries. ASOS
also owns four marketing offices and two return processing offices around the world that
manage customer relations, which represent only one tier outbound. The supply chain set
up was crucial when the company had to face unexpected events that threatened its opera-
tions. The ability of ASOS to recover from the damage demonstrates the agility of its supply
chain.
In 2014, ASOS started to invest in the development of new warehouses, not only in the
UK, but also in Europe (Germany, near Berlin) and in the US (with two hubs, in Georgia
and Ohio, respectively). The changes in strategy for the main activities concerned an in-
crease in the number of products sold, including an own production line, and an extension
of shipments on a worldwide scale. Investments in warehouse management systems allowed
the warehouse processes to run quickly and smoothly. The storage capacity of all ware-
houses was maximized, by means of an automated handling system that supports mechan-
ical activities.
In 2019, the company had plans to expand operations in Australia, while also extending
core processes globally. The processes in the supply chain have only recently stabilized and
have led to greater investments in automation and technological developments. The com-
pany also increased its visibility in the supply chain, by establishing reliable relationships
with suppliers, which have contributed to remarkably increase supply chain responsiveness.

Developing resilience
ASOS is an interesting company that thrives and deals with different issues, while being
able to avoid possible major threats.
ASOS main competitors are Amazon and Zalando in the e-commerce sector, and Zara in
fashion retailing. All the three companies put pressure on ASOS’s innovative market posi-
tion, in different ways. Amazon produces not only fashion products but other products as
well, and its position in the industry is very strong, mainly in terms of price and delivery.
On the other hand, Zalando is a fashion retailer, with a focused European market and a
wider range of fashion products. In contrast, Zara owns brick-and-mortar stores, it has a
good reputation with its global presence, although its online channels are still weak. Thus,
there is room for ASOS to keep up with the latest customer trends and, at the same time,
to survive in the fashion e-commerce sector.
Since the beginning, ASOS has had the outstanding ability to invest and develop in all the
processes of the supply chains, although it has suffered from repeated profit risks and other
financial performance uncertainties. In the inbound part of the supply chain, the company
overcame the problems created by the unreliability of suppliers and sustainability issues.
For example, in May 2013, a supplier provided ASOS with a batch of studded belts that
were contaminated with cobalt. The products, which had previously been held in a radio-
active facility, were withdrawn from the market after ASOS had put them online. The com-
pany was not able to establish, with certainty, the supplier’s liability. Consequently, ASOS
started enhancing transparency in the supply chain, by releasing the list and data on all the
company’s suppliers. The company’s sustainability was subject to debate, also in the
Buzzfeed report on working conditions at the Barnsley warehouse. The company dealt with
the allegation by issuing a modern slavery statement in 2015 and 2016, in which ASOS
proposed new ethical sourcing commitments for the following years.

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However, the most relevant issue ASOS has had to face over the years, has been the three
accidents at their warehouses. The frequency, effects and solutions of the problems can be
studied to establish the company’s ability to be resilient and the measures adopted to re-
store and continue their activity. Indeed, ASOS suffered the three accidents in a period of
about 12 years (see Figure 2).

Hemel Hempstead,
Site Barnsley, UK Berlin, Germany
UK
Damage to the only
Type of warehouse, after the A fire in the major UK Fire hit part of the Euro
accident explosion of a fuel de- warehouse - hub warehouse.
posit nearby.
Time to Business operations Orders on the website
No stop required
recover halted for 4 weeks shut down for 2 days
Stock value loss £ 5.5 million £ 22.0 million £ 6.25 million
They cancelled orders
They launched a sales They redirected orders
and generated re-
Solutions campaign, with discounts to their warehouse in
funds. A new ware-
of up to 50%. Barnsley.
house was built
Full payout, covering ASOS received a £6.3 mil-
Damage to stock was
the loss of profits and lion insurance payout to
Insurance covered fully by the in-
the loss of assets at the cover lost stock and inter-
surance.
warehouse. ruption of business.
Number of
1 2 4
warehouses

Figure 2 – Comparison of accidents. Notice that the impact has decreased over time be-
cause of the policy of decentralizing their stock.

The first disruptive event occurred on December 11, 2005 (at 6.01 p.m.), when the com-
pany’s warehouse in Hemel Hempstead (UK) was damaged by an explosion at the Bunce-
field fuel deposit located nearby. The explosion destroyed ASOS’s warehouse and its entire
stock with a value of £ 5.5 million. Consequently, the company stopped its business oper-
ations until mid-January 2006, taking about 4 weeks to restart. The forced stop led to a
refund of 19,000 orders and the cancellation of orders through the corporate website. Fur-
thermore, the then CEO suspended all trading activity of ASOS shares on AIM (Alternative
Investment Market), and the sales (and profits) anticipated from busy Christmas trading
were lost. In the following months, ASOS started planning a new warehouse, to cover the
disaster promptly. The company’s insurance (which had been stipulated with Fusion Insur-
ance Services) helped minimize the negative effects of the accident, as Fusion agreed to
make a full pay out, covering the loss of profits and the loss of assets at the warehouse.
The second disruptive event involved the company’s warehouse in Barnsley (UK), which
was hit by fire on June 20, 2014 (at 9.30 p.m.), when around 500 workers were promptly
evacuated from the premises. At that time, this warehouse held about 70% of the com-
pany’s stock (the total amount on May 31, 2014 was £159 million) and it was the company’s

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main distribution center. The company estimated the effects of the fire and that the sprin-
kling system at the site had damaged about 20% of the stock held there, which resulted in
£30 million in lost sales, including 10 million boxes of lost packaging. ASOS had to shut
down the flow of orders over two days after the fire and the ASOS website published this
message: “We have pressed pause on the ASOS website due to a fire in our Barnsley distri-
bution center in the early hours of Saturday morning”. Orders re-started at 2 a.m. on Mon-
day morning, with a massive sale campaign, that included discounts of up to 50%. The
insurance company helped minimize the negative effects of the accident, as ASOS received
a £6.3 million payout to cover the lost stock and interruption of business.
The third accident struck on May 16, 2017, when, in the early morning, ASOS’s warehouse
Eurohub, just outside Berlin (Germany), was hit by fire. The warehouse had 7 million items
in stock when the fire broke out, and 2 million items were present in the chamber damaged
by the fire, representing a value of about £6.25 million. The three other rooms at the Berlin
facility, which were not affected by the fire quickly went back to operating later the same
day, and some of the orders were redirected to the warehouse in Barnsley (UK). Then, the
damaged stock was later fully covered by the insurance. “We are fully insured for loss of
stock and any subsequent business interruption,” said a company spokesperson.

Guidelines for discussion

The unique events that ASOS had to face during its growth are directly linked to its rela-
tionship with risk and resilience. Considering the crucial theme of supply chain risk man-
agement and resilience, develop an analysis that focuses on the following topics:
Explain how and when ASOS was repeatedly harmed by accidents.
Clarify what the aftermath was and how ASOS was able to recover.
Highlight what measures ASOS considered in order to recover from the accidents and
how they affected the company’s supply chain.
Assess whether the company is resilient enough.