An E-fashion Retailer Analysis - Essay Example

? An E-fashion retailer analysis inserts his/her s Department’s Contents Contents 2 1.Overview 3 2.Target Consumer Behavior 3 3.Online Marketing Mix 4 a.Product 4 b.Price 5 c.Promotion 7 d.Place 8 4.Conclusion and Recommendations 11 1. Overview The fashion industry has become highly competitive with industry giants such as Topshop, H&M, ZARA and ASOS competing on the internet for sales. E-commerce has been described as the process whereby the retailer and consumer communicate via the internet and the customer is able to order the goods directly through an online interactive system. Thereafter, fashion retailers put up images and graphics of their products online along with the prices and delivery options so that consumers can purchase their merchandise without having to visit the store physically. While the economic recession has resulted in slow growth of sales for fashion retailers, online fashion retailers are still witnessing high growth and profits. On the other hand, companies such as Jane Norman and La Senza are sprouting in the fashion industry whereas consumers have become more price conscious than ever before. Therefore, value creation has become quintessential for fashion retailers who are eyeing the internet as a profitable medium. More and more fashion retailers are increasing their online presence such as Saks Fifth Avenue and Lucky Brand Dungarees (Frings, 2008). 2. Target Consumer Behavior There has been a growth in internet accessibility and usage on the whole. Online sales of clothing rank fourth highest with travel services, software and media sector occupying the first three positions. More consumers across the globe are purchasing computers and gaining access to the internet and are, therefore, attracted to a myriad of online websites operated by fashion retailers. Typically, consumers in the past were wary of buying apparel online. Females, in particular, would want to touch and see the apparel physically for obvious reasons such as buying the size that best fits them or feeling the quality of fabric (Mintel, 2012). However, in recent years, this trend has been changing and more consumer, including females, are comfortable with purchasing apparel online. The theory of buyer behavior demonstrates the buyer black box of which the buyer decision process is a subset (Sandhusen, 2008). Consequently, the model of consumer buying process explains how consumers engage in information search after they have realized the need to purchase a product (Schiffman & Kanuk, 2010). This has been catered to by online fashion retailers who have now adopted the model of a “virtual store” whereby consumers can have a 360 degree view of products they intend to buy by seeing the product from front, back as well as the sides (Dunne & Lusch, 2008). Furthermore, the “zoom in” function allows consumers to have a close-up of products (Hines & Bruce, 2001). This can help consumers see the fabric/texture as well as design that they could otherwise have viewed had they been present physically at the store. Although the initial target market was U.K customers, ASOS has expanded to include American customers through its online store. 3. Online Marketing Mix a. Product ASOS primarily sells clothing that is worn by celebrities in the media. The company offers various brands under one umbrella and includes affordable clothing as well as expensive lines. The company sells over 50,000 product lines from approximately 800 global brands including Ralph Lauren as well as designer brands such as Sonia Rykiel (Perrey & Spillecke, 2013). As per the company’s marketing strategy, over thousands of new products are added on a weekly basis, thereby sustaining the interest of customers. With its strong and multi-brand product portfolio and customer service, the company ranks as the 5th most popular online shopping destination in U.K, beating H&M in terms of having twice the number of unique customers visiting the website (Perrey & Spillecke, 2013). ASOS primarily sells clothing and accessories online and has managed to make profits out of its business model. This is contrary to the model provided by Kare-Silver which suggests that products in the “social” consumer category have low online shopping potential compared to convenience goods which have high shopping potential (Dennis et al., 2004). Furthermore, ASOS offers a 360 degree view of products other than apparel such as shoes and accessories. However, the online consumer is not provided with the privilege of controlling the “zoom-in” feature. Rather, a large image of the product is available for viewing which can be moved up and down (Internet Retailing, 2010). This does not allow consumers to thoroughly investigate the product they wish to purchase. For instance, one cannot zoom in to see the texture of a ladies’ shirt and/or the precise design. b. Price As far as price is concerned, it is important to note that online customers are better able to compare prices instantly between various stores and brands and, therefore, the need to offer low prices remains high (Lambin, 2008). Also, ASOS primarily acts as a third-party and sells various fashion brands under one umbrella. In this case, clearly it does not have the luxury of controlling the prices of its products nor does it have products that are unique and cannot be purchased anywhere else. For instance, H&M, Topshop and ZARA mostly sell products through their own outlets and online stores rather than third parties thereby giving little option to customers for price comparison. However, in the case of ASOS, consumers can easily compare prices of their brands with those offered by other websites such as Nordstrom or Net-a-Porter, thereby facing more price conscious customers. Furthermore, theory suggests that companies that use the internet as a channel for making sales tend to encounter the lowest level of value addition per sale along with lowest transaction costs (Kotler & Keller, 2011). ASOS, therefore, cannot charge a premium price for its products in this respect. Nevertheless, research has demonstrated a rising trend in online sales in clothing and footwear in the U.K market from 2006-2016. This is shown in the figure below: Source: Mintel, (2012) This could work in favor of ASOS as U.K is its home market; therefore, allowing it to charge higher prices keeping in view greater acceptability of online shopping. c. Promotion As far as promotion is concerned, the feature of “complete the look” offered by ASOS promotes consumers to buy other complimentary products to complete a given fashion look or style (Internet Retailing, 2010). For instance, a consumer may buy matching shoes, sunglasses, bag or watch as featured in the image for a given “look” at ASOS. This increases sales of other products and encourages consumers to buy a baggage of products from the same website. However, the effectiveness of this can be debated especially since consumers can flock to other websites such as Nordstrom to buy those other products rather than buying from ASOS. At the end of the day, online consumers are in a much better position to compare prices and, therefore, the chances of sticking to ASOS may at best be moderate. Furthermore, the company also offers a “what others bought” section which, again, promotes products which were purchased by others. The product display itself is available in various sizes, colors and price range which is reflected in the product description. The size guide allows users to select the appropriate size as well as save it for future purchases (Internet Retailing, 2010). Furthermore, in order to generate greater customer traffic on its website, ASOS has engaged in promotions such as offering vouchers on discount voucher websites. Furthermore, the company has been using social media to heavily promote itself as well and boasts of having several thousands of fans on Twitter and Facebook. Also, it uses Facebook as a medium for sales (Mortimer et al., 2009) (Mena, 2012). This is made possible by Search Engine Optimization feature which has been cleverly used by ASOS to generate customer volume on its shopping website. Furthermore, most firms are taking advantage of the growth in smart phone users to engage in mobile marketing. M-commerce, as it is called, refers to connecting to the internet via mobile phones which allows users to order online (Kotler & Keller, 2011). ASOS too has taken advantage of this feature and has developed a shopping website exclusively for mobile customers that runs smoothly on mobile devices. However, this may not generate actual sales as most consumers are wary of sharing their credit card details on mobile devices . d. Place As suggested earlier, ASOS can be classified as an “eTailer”. This is referred to online retailing and is a form on Business-to-Consumer (B2C) e-commerce (Turban & Lang, 2011). Furthermore, theorists have identified six options for deciding which marketing services to offer on the web. In this context, ASOS seems to be somewhere between Level 4 and Level 5. Level 4 pertains to transaction-based online interaction with the buyer with a customer help desk at most; whereas, Level 5 is a full-fledge relationship marketing effort made by the seller on the web (Chaffey, 2009). ASOS offers various options of distribution via the same channel; that is, the internet. Customers can conveniently add the required products in their shopping cart and then select the suitable options for delivery. The online credit card purchasing cycle is followed which is described as the process by which consumers place an order through SSL encryption (for secure transactions) based on mutual trust between buyer and seller (Laudon & Traver, 2012). Thereafter, the merchant contacts the financial institution which then contacts issuing bank to verify the information. Once verified, the issuing bank adds the amount to the merchant’s account and, consequently, deducts the same from consumer’s account (Laudon & Traver, 2012). The company offers delivery to various countries (international delivery) which means that customers across the globe can purchase virtually anything from this fashion retailer at a single click. This facilitates purchase of products without ASOS having to open up a physical retail store anywhere. Since all interaction between the consumer and retailer (ASOS) is directly held online, the costs and risks associated with intermediaries have been reduced. Furthermore, ASOS offers the convenience of viewing up to 200 products on a single page- a feature which is virtually impossible in traditional retailing whereby the amount of shelve space restricts viewing of various products simultaneously (Internet Retailing, 2010). This allows consumers to view a wide variety of products in the product range at once. Another feature offered by ASOS is that of filtering the results which means that consumers can view only those products that are most relevant to them. This can reduce the possibility of spontaneous or impulse purchases which is a feature facilitated by physical retail outlets whereby consumers walk through several unrelated products before finally stopping by the one most relevant. On the other hand, this would help consumers make more informed purchases, thereby reducing the possibility of post-purchase dissonance. Post-purchase dissonance is defined as consumers doubting the purchase they have made owing to dissatisfaction or lack of usability of the product (Hawkins et al., 2009). On the other hand, the channel of distribution (internet) has posed threat to the security and privacy of consumers (Frings, 2008). The following diagram shows that, almost a half of online shoppers (42%) do not want to shop online owing to fraud and security reasons. Source: Verdict, (2010, p.13) Retailers doing business online, therefore, must impose stringent regulatory procedures for the purpose of securing credit card purchases online. Research suggests the trend of consumers shopping from websites of stores that are already known or have had retail outlets before. This is because, in the event of making returns, it is easier to do so with “e-tailers” that have physical stores whereby return is fast and easier (Kotler & Keller, 2011). Furthermore, consumers also often demand ordering a product online and picking it up from a physical store (Kotler & Keller, 2011). This is a potential disadvantage to ASOS as the company does not possess any physical retail outlet and, therefore, can elicit less trust from customers. On the other hand, companies such as ZARA and H&M that have geographically dispersed retail outlets and an already established goodwill find it easier to attract consumers on their online shopping websites. Such companies have been termed as “brick and click” operations (Frings, 2008) reflecting a mix of physical and virtual(electronic) stores. Others have referred to them as “click and mortar” reflecting on their primary source of revenue being derived from physical stores. However, ASOS falls under the category of “virtual organizations”. The same has been termed as “pure-click” organizations by some authors (Kotler & Keller, 2011). This is because such companies conduct their business solely online (Turban & Lang, 2011). As part of its online distribution network, the company has adopted increased visibility and exposure on search engines such as Google which allows users to come across the websites more often than other websites when searching for key terms such as clothing, apparel, accessories and other related categories. Furthermore, ASOS possesses a distribution centre at its central location-U.K from where it ships outbound orders across the globe. For instance, products shipped to U.S are sent via air through a shipping carrier which then delivers the package to the postal service in U.S. Henceforth, the package is forwarded to the address of the final customer (Baines et al., 2013). The company operates an efficient shipping and distribution system which has allowed it to achieve a growth of 140% over one year period in the U.S (Baines et al., 2013). 4. Conclusion and Recommendations To conclude, by adopting a “pure-click” model of retailing and ensuring efficient management of distribution, ASOS is gradually picking up pace and growing. This is accompanied by its vast mix of products along with high internet visibility through social media and SEO features. Even though the lack of retail outlets could reduce sales as customers prefer returning products at the store, its wide range of products and international shipment may lure customers to benefit from the convenience of buying through a single click. Although the company offers features such as “complete the look” and “what others bought” there should be a section dealing with “customers who bought this also bought” to denote the additional items that others purchased. This is referred to as “collaborative filtering” or linking an individual’s profile to profiles of similar customers and then making product suggestions based on past purchases by those customers (Gay et al., 2007). This will again increase the sales of ASOS specially for consumers who like to follow the “herd” and purchase products that others too have bought. This reflects on the concept of herd mentality whereby consumers reinforce their self-expression and sense of belonging by following the fashion trends of their peers to reflect similar lifestyle (Temporal, 2008). Furthermore, it is highly recommended that the company develops its own fashion magazine in order to catch up with competitors such as “Net-a-Porter” whose “NOTES” magazine has gained popularity. Additionally, it can offer recommendations to customers regarding what to wear on various occasions and under different climatic conditions in different countries. All this shall ensure greater personalized experience for consumers. Expansion into other markets may require marketing in ways that are culturally appropriate. Since clothing is deeply embedded in the culture of any nation, doing so will guarantee ASOS an edge over its rivals. References Baines, P., Fill, C. & Page, K., 2013. Essentials of Marketing. Oxford: Oxford University Press. Chaffey, D., 2009. E-Business and E-Commerce Management strategy, implementation and practice. 4th ed. London: Prentice Hall. Verdict, 2010. Proportion of Consumers stating concern for fraud as a reason for not shopping online in 2009. [image] . In: Verdict, 2010. Global Strategies in Online Fashion Retailing. Dennis, C., Fenech, T. & Merrilees, B., 2004. E-retailing. New York: Routledge. Dunne, P.M. & Lusch, R.F., 2008. Retailing. 6th ed. 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