E-commerce Sector Industry Trends Analysis and Strategic Planning

 

Introduction & Identifying Issues

The e-commerce sector has seen significant growth in the past two decades. The growth drivers rapidly transition from physical to online stores, an increase in online purchases, and the great role of internet in promoting online customer’s decisions anytime, anywhere, buy and pay online as well. In this period one of the major companies that were rising is ASOS. It is showing huge growth day by day. ASOS is one of the UK's largest e-commerce fashion and beauty retailers. The company offers more than 60000 product lines with a huge range of products on its website which is ASOS.com, which includes private as well as branded label products. They have been launching almost more than 1300 new product lines each week. The major product lines are men’s apparel, women’s apparel, jewellery, accessories, and beauty products. Despite the economic bad period’s company is showing huge growth in profitability.

 

VRIO Analysis of ASOS PLC

Figure 1: VRIO Framework Process

 

VIRO analysis helps the organization in analysing the resources and capabilities and creating a competitive advantage through the use of internal resources by looking at the four components value, rarity, imitability, and organization.

Valuable: human resources, marketing expertise, financial resources, and operations management. These are all the valuable resources of the ASOS.

Rare: if resources are not valuable they do not provide a competitive advantage and market performance is compromised. Hence resources should be valuable enough to get a competitive advantage.

Inimitable: because of so much advancement in technology, the data of the companies have become vulnerable to the threat. It was claimed by the ASOS that the core differentiation is it is difficult to imitate.

Organizational Competence & Capabilities: organizational capabilities of the ASOS are highly dependent on the resources it has and how it uses those resources. Further, it depends on the organization how it used the resource and creates a competitive advantage over the internal resource.

 

Resources	Value	Rare	Imitation	Organization	Competitive Advantage
Talent to Manage Legal Obligations	Yes	No	It is imitable	Yes	Not critical factor
They are present both globally and locally	Yes, revenue streams are diversified and isolated in the company's balance sheet from an economic point of view	Yes	Can be imitable	Yes, it is a diversified company	Competitive Advantage
Brand awareness	Yes	Yes, ASOS has the leading brands in the industry	No	ASOS Beighton created positions in the various segments	Sustainable Competitive Advantage
Access to Cheap Capital	Yes	No	Can be imitated by competitors	Not been exploited	Not significant in creating a competitive advantage
It has created a good Position among Retailers and Wholesalers – company name retail strategy	Yes, good relationship with intermediaries	Yes, sound relation with channel partners	inimitable though not impossible	Yes, the company has remained successful	Sustainable
Customer Loyalty	Yes, 23% of the consumers are contributing to more than 84% of the sales	Yes, the company has a strong customer loyalty	Tried many competitors but no one could imitate	The firm leveraging the customer loyalty positively	Provide average-level competitive advantage
ASOS strategies are aligned with corporate strategy	Yes	No	Each company follows its strategy	Yes, the firm produces maximum output by using skills	Still, there is a gap between desired performance and outcome
There is synergy between product portfolios if the various product lines	Yes, it is valuable according to customers’ preferences.	Many competitors are trying to enter the potential segments	It is imitative by the competitors	The firm has used it for a good cause	Provide short term competitive advantage but innovation is needed for sustainability
Suppliers are flexible	Yes	Yes	Near competitors also have flexible supply chains and share some of the suppliers	Fully utilized	Keeps the business running
Opportunities and new resources are required to enter the new industry	Can be valuable because of generating new revenues	No	It is imitable	There is still a gap in capabilities to be utilized	Has potential

External and internal environment analysis

In conclusion to the internal and external analysis, the porters five forces model reflected that the ASOS was performing well because it faces less rivalry, low bargaining power of suppliers, low bargaining power of the customer, low threat of entry, and low substitute threat and all of this has become possible because of the efficient use of the internal resources and capabilities which created the competitive advantage for the ASOS.

Strategic planning

Benefits of planning while formulating strategy

·         It makes the organizations proactive rather than reactive.

·         It provides the direction for further actions.

·         It enhances operational efficiency.

·         It helps in formulating the strategies that further help in increasing the market share and profitability.

·         It helps in making the businesses more stable.

 

PDCA cycle of ASOS

Figure 2: PDCA Cycle

 

PDCA cycle helps continuously to plan, do, check, and act. It provides an easy and effective approach for managing change and solving problems. This model is helpful for testing at a small scale. ASOS has signed agreements with Microsoft for its business operations for 5 years. ASOS engineering teams follow the PDCA cycle by planning for the projects and implementing them and finally checking the performance of the projects and various related activities. Hence the ASOS team is working with Microsoft to create the platforms for the customers that enable agility and resilience. It is a very critical thing to do in satisfying the customer needs for the fashion and beauty products.

Strategies for ASOS

ASOS uses digital marketing and other digital communication tools to connect and reach potential customers.

ASOS claimed that for the very eight Facebook fans it has one Twitter follower and 100 email subscribers. This is because of their belief that email marketing can directly contribute to 10% of the sales.

In 2017, ASOS launched a campaign in which it encouraged customers to upload videos of past purchases. The result was astonishing because in the UK 3 million people uploaded their videos and communicated about the products in the videos which were helpful in the ASOS marketing strategies.

5.3.1. ASOS product strategy

ASOS sells its products and clothes directly to the customers who can be purchased by using the internet and other apps suggested for buying (see appendix B). Not all the products ASOS sells are made by him but sometimes they are made by the other brands. They have many brands in their stores such as Nike, Calvin Kein, Adidas, etc.

Furthermore, they have the verities of the product portfolio because they want to satisfy the variety of the customers they also customize their products to meet the preferred needs of the customers according to the different geographical locations.

 

Conclusion

ASOS is one of the major e-commerce companies which have been leading in fashion and beauty clothing and other accessories. While analysing the external environment we looked that ASOS has the internal capabilities that help him to better perform in satisfying the needs of the consumers. Finally, this report also analysed the strategies and planning of the ASOS which helps him in achieving and sustaining the long-term growth and profitability.