Asos CEO on the Next E-Commerce Frontier

This article appeared first in The State of Fashion 2019, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company. To learn more and download a copy of the report, click here.

BoF: Few sectors of the fashion industry are developing as fast as yours. What do you see as your biggest challenges and opportunities in 2019?

Nick Beighton: The market has got too big a supply and capacity of stores [so] 2019 is going to be the year when that changes. Demand for clothing has largely been flat around Western Europe, but where people are choosing to spend their money, their time [and] their effort, is going to move increasingly into a different channel.

That means digitalisation at an ever-increasing pace. There will be all kinds of different [digital] interfaces with brands — which will be AI-driven — through voice, through visual, through direct messaging. My tech people call them ‘conversational interfaces.’ I use the language of customers and go, ‘Imagine interacting with your brand 24/7 in any way you want, with a picture, with voice, with direct message, through WhatsApp, through an email if you want to, and the digital brand responds to you.’

Other big [factors to watch] will be the impact, certainly European and UK, on disposable incomes, post-Brexit. Depending where we end up [with Brexit], there’s going to be an impact on supply chains and there [could be] friction and costs associated with all of that.

BoF: In the past, you’ve said that mobile is the future and that you’re going to go wherever mobile goes. Were you referring to the kind of ‘conversational interfaces’ that you just mentioned?

NB: Yes, that’s exactly what was in my mind. Seven years ago, we started our mobile journey. Today we’ve got the best part of 80 percent of our traffic in the UK coming from a mobile device, and the other major territories are catching up quickly. Using your mobile device to shop and interact with your favourite brands in a different way is going to be the next new challenge, which is the ‘conversational interface.’ The friction of swiping around with your thumb on a mobile device is just as much friction as tapping around a keyboard. Twenty-somethings are looking at their mobiles between 150 and 200 times a day. It’s a high frequency, high velocity channel and… an easier and more intuitive way for customers to interact with e-commerce [but] there is still friction.

BoF: You’ve been investing big in beauty. How do you manage to differentiate yourselves from other players in the beauty space?

NB: Well, let me tell you the words of a significant chief exec of a large beauty business who turned around to his board and said, ‘Asos can redesign the role of beauty for 20-somethings in the same way they’ve redesigned the role of fashion for 20-somethings.’ That’s exactly what we’re aiming to do. When you think about beauty and grooming with Asos — we call it Face and Body now — this won’t be somewhere you get your functional requirements for cosmetics. This will be where you get excitement and engagement that is content-rich, brand-rich and also Asos product-rich through great delivery experiences and great digital experiences. This is something that hasn’t yet been done.

Seven years ago, we started our mobile journey. Today we've got 80 percent of our traffic in the UK coming from a mobile device.

BoF: When you first took on your leadership role, you said that Asos won’t be growing up with your customers, and that you want the brand to remain ‘forever young.’ How do you do this but avoid alienating your older customers?

NB: Focus is important to us, and our experience is delivered by a mostly twenty-something audience. Our 18.4 million active customers are mostly twenty-somethings. Thirty percent of our customers have been over 30 [since the beginning,] but our tone of voice, product, price, experience, content, it’s all driven for twenty-something engagement. That doesn’t mean we’re not interested in over-30s anymore, it just means we recognise that some of our products and experiences may lose relevance as you progress through your life. If this wasn’t e-commerce, we would be looking at a different proposition for a different demographic.

But because this is e-commerce… we will stay twenty-something; we will stay ‘forever young.’

BoF: A number of your online peers have been venturing into physical retail for a number of years. What is your take on that and will it feed into Asos’s future in the years to come?

NB: It’s not our mission, currently. We have 85,000 major SKUs on our ecosystem, that’s 500,000 SKUs at a minor level. Our proposition is about content, about technology, it’s about product. A digital manifestation of that is very clear, but physical manifestations of that are less clear, so, I don’t envisage a physical store any time in the short-term. Never say never, experimentation is always key, but it’s not something we are currently looking at to achieve our mission.

BoF: A lot of the discussion around artificial intelligence in e-commerce players, and fashion more broadly, seems to be around getting the balance right between AI and the human touch. What is the right balance mean in Asos’ world?

NB: I used to say, ‘Be careful when you put a machine in front of a human, because you’ll lose something.’ But I’ve migrated my view on this a little bit. Now, I actually think putting a machine in front of the human — with the right context — is a great thing. It’s something that we’ll only figure out through experimentation. Where I see AI working for us is in two ways; one, to enhance and turbo-charge customer experience, in terms of recommendations, different ways of doing search, different ways of engaging with our ecosystem, and two, improving the cost of handling all our customer queries and all our products through our entire end-to-end business.

BoF: What do you think are the most important technological advances in the year to come?

NB: Without a shadow of a doubt, something that improves size [and] fit, for customers and brands would be an absolute game-changer. It’s about; ‘Here’s my body shape, how can I match my body shape to the products on sale in a way that I don’t have to worry about returns?’ That will be a game-changing piece of technology, but I don’t know what the real deal is, in terms of a solution. I’ve looked at lots of different manifestations that are getting close. I’ve looked at avatar solutions, I’ve looked at uploading pictures of yourself, I’ve looked at other solutions using data analytics to recommend… We’ve got one of those live right now. [But it’s got to be] something that’s engaging, intuitive and helps customers resolve that simple problem.

BoF: What about the pain-points for customers between discovery and purchase? Is your visual search function part of the solution to overcome that friction?

NB: There is friction [and] visual search is one of those things that will help it. You go to dinner with your boyfriend or girlfriends, take a few snaps of your outfit, upload, and go, ‘Has Asos got something similar?’ ‘Yes, it has, available on next-day delivery.’ ‘Brilliant.’ Visual search is one of the ways to take away that friction, but, by far and away, the biggest friction is the sizing debate. Most customers will tell you that they get frustrated by a size ten being something different in each and every brand, and the annoyance of having to send something back because it doesn’t quite fit, so, something that assists customers with that problem will be pretty big for us.

This interview has been edited and condensed.