ASOS is popular with shoppers because of its quality clothes, shoes, and accessories that are priced quite affordably.
Because of these low prices, ASOS has continuously attracted shoppers looking for trendy fashion items. But how exactly does ASOS manage to keep the costs so low? Here’s what I discovered from my research.
Why Is ASOS So Cheap?
1. Online Operations
Since its establishment in 2000, ASOS has been exclusively selling its items via the website; therefore, it didn’t have any brick-and-mortar stores.
It was just in 2021 when ASOS announced that they were debuting their collections in a brick-and-mortar Nordstrom store for the first time ever, which became official in 2022.
By keeping all the operations online for years, the retailer has saved a lot of overhead costs, such as rental fees.
In addition, even though they have physical stores now, ASOS is only restricted to a few locations, so most customers still have to order online.
2. ASOS Gets Items in Bulk
ASOS is considered a fast-fashion company because it produces inexpensive clothing items that are produced fast for the mass market to keep up with the latest trends in the market.
Getting items in bulk saves money for the retailer; therefore, they don’t pass a lot of the costs to the customer.
3. ASOS Items Are Sourced From Developing Countries
ASOS releases brand designs each week or daily to keep up with the local trends. To meet this demand, they need to have a super quick turnaround.
Therefore, most of their clothes are manufactured in large factories in developing countries in Africa, Asia, and the Middle East.
This allows the company to cut production and labor costs because they pay the workers a living wage.
In addition, operations are cheaper in these countries, lowering their overall costs, making their items much cheaper.
4. ASOS Clothes Are of Poor Quality
Most of the ASOS brand designs are cheaply made and of poor quality. Therefore, ASOS does not have to spend much money to source high-quality materials.
This reduces manufacturing costs, making their items cheaper.
5. They Collaborate With Reputable Brands
When shopping on ASOS, you can get items from the ASOS brand and others from reputable brands such as Nike, Adidas, and Tommy Hilfiger.
ASOS believes all their products are genuine and sourced directly from the companies.
As a top retailer, ASOS can get these items from the top fashion brands at an affordable price and pass on the same to customers.
6. ASOS Marketplace Stocks Secondhand Items
ASOS Marketplace stocks vintage items and fashion items from independent brands. Some of these vintage items are pre-owned and reworked clothing.
Because they are second-hand, the sellers reduce the prices slightly. On some occasions, some of the pieces on the Marketplace tend to be cheaper than new items on the ASOS website.
7. Minimizing the Scale of Operations
Despite shipping fashion items all over the globe, ASOS has kept its operations on a smaller scale by having a few locations to fulfill customer orders.
ASOS’ warehouse network includes 4 fulfillment centers and 5 return centers. These fulfillment centers are located in Barnsley, UK and Lichfield, Berlin.
Additionally, ASOS has return centers in Doncaster, Selby, Poznan, and Krupka. On the other hand, the Atlanta location in the United States serves as both a fulfillment and return center.
With these few centers, ASOS has cut down on the number of employees they need and on employee salaries. Since they have fewer expenses, customers get lower prices on products.
8. They Have a Year-Round Business Model
ASOS have an advantage because the company deals in fashion accessories for all seasons. Their target audience is young adults who tend to shop all year round.
In addition, ASOS stocks a wide range of items from footwear and activewear to casual wear. By selling items all year round, they have a regular source of income.
This constant cash flow enables the retailer to keep the costs low because the company is making enough money to sustain itself.
9. They Have Global Coverage
Although ASOS has fulfillment centers in the US, the UK, and Europe, they ship products to more than 150 countries through their seamless delivery network.
For instance, ASOS customers in Canada can order and ship items from the fulfillment center in Atlanta, US. Other order fulfillment is done from the centers in the UK.
10. Regular Offer and Discounts
ASOS has built customer loyalty by having regular offers, sales, and discounts. A section on the company website known as ASOS Outlet is dedicated to discounted clothing.
As well, ASOS offers a 10% discount for students to keep the customers coming.
Additionally, there is a Sale section on the website where items are usually cheaper because ASOS has reduced prices. Some of the items on sale have discounts of up to 80%.
With such offers, ASOS has built loyalty, ensuring customers buy more items. This boosts the retailer’s cash flow, and they can keep the overall costs low.
ASOS manages to keep its costs low compared to its competitors in 2023. This is possible due to a combination of strategies that reduce overhead costs.
Because of low costs, ASOS can provide regular discounts and offers to its customers, contributing to a loyal customer base over the years. ASOS keeps the prices low because most of its operations are online, allowing the company to scale operations down.