The ASOS Empire: Why Retailers Create Their Own Brands

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The ASOS Empire: Why Retailers Create Their Own Brands
The ASOS Empire: Why Retailers Create Their Own Brands

Video: The ASOS Empire: Why Retailers Create Their Own Brands

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Video: How ASOS became one of the world’s largest retailers | CNBC Explains 2023, January
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Online hypermarket Amazon is called almost the main threat for all retailers in the world. The company, which earned about $ 72.4 billion in the fourth quarter of 2018 alone, will soon be able to provide consumers with everything in general, including clothing and accessories. In the United States, it is the second largest seller of fashion products after Walmart: more than a third of wardrobe items ordered online in America are bought from Amazon.

At the same time, the Internet giant owns more than 80 labels, dozens of which produce fashion products. But Amazon isn't the only one using this strategy - niche multi-brand stores like Kith and Opening Ceremony will also have their own labels, which sometimes supplant the range of third-party ones. We figure out why this is happening and why stores open their own brands at all.

Text: Anna Eliseeva

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Who launches their own brands

Another online hypermarket focused exclusively on fashion and beauty, ASOS, launched its first clothing line back in 2004. Today, the site features six own brands - the exact number in companies of this scale is not accepted to be disclosed, so estimates differ (in the same Amazon, for example, experts count 19 "secret" brands). So, in ASOS Design there are things that meet the latest trends and for people with different parameters; there are also lines of casual, festive, sportswear, separately - collaborations. In annual reports, the company boasts fast performance: in 2018 alone, about 5,000 new products appeared in the online store every week - while the ASOS Design line accounted for 40% of sales. Taking into account third-party brands, in general, the British company sells up to 60% of its products exclusively. WWD, citing marketing company SEMrush, reported that ASOS showed the best traffic among fashion retailers in 2017.

Another popular Internet retailer, Los Angeles-based Revolve, presents about 700 brands, nineteen of which are their own. In addition to the namesake Revolve and Revolve Beauty, the retailer oversees all of the once owned by Alliance Apparel, such as the H: ours and Lovers + Friends brands. “Consumers perceive them as independent brands. So, during the year, eight of the top ten labels were ours,”says the Revolve report.

Designer and entrepreneur Ronnie Fieg founded concept store Kith in 2010. He started by selling limited collections of famous brands like Nike and ASICS, which he sold out in a matter of hours, but quickly came to the conclusion that it was worth launching his own line of products. Two years later, he created a capsule of sports pants, which turned out to be no less popular than sneakers, and two years later, a full-fledged brand appeared - Kith Classics. It is easy for consumers to give what they want, but it is more important to maintain uniqueness in a crowded market, according to the founder of Kith, who is now actively cutting back on partnerships with other brands. The business of the company, whose scale is incomparably smaller than ASOS or Revolve, is only going uphill: in 2016, Fig reported that more than half of his income comes from the goods of his own label; today Kith has eight offline points of sale.

In 2014, online fashion retailer Matchesfashion - arguably the main competitor in online luxury brands for Net-A-Porter and Farfetch - decided to relaunch its own brand, called Raey. Prior to that, the label was called Freda and was conceived as an equally high-quality, but still more laconic and budgetary alternative to the luxurious outfits of other brands presented on the site. However, when the brand was relaunched, Matchesfashion management notedthat "she needs a new personality." So designer Rachel Proud, who previously worked at Topshop and Christopher Kane, took on the renewal of the brand, adding to it the characteristic features of the tomboi style and creating a men's line as well. Today Raey is described as an "androgynous and minimalist" brand. In total, the site features about 450 high-price brands, which brought in revenue of £ 293 million in 2018

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Same goals

Despite the obvious difference in scale, these companies have a lot in common.At least that their own brands bring in substantial income (or promise to bring in the future), comparable to the results from the sale of third-party brands. Online stores have an important advantage: they can collect data about shoppers and their preferences and produce the most desirable products in a matter of weeks. In addition, it is easier for them to understand which fashion niche is not yet occupied or poorly mastered. So, The Business of Fashion immediately read the Raey brand success, simply because the brand offers a competitive price-quality ratio and brings in much higher margins than wholesales.

It is logical that experience of working not so much in the fashion industry as in the field of data analysis may be decisive. This is exactly what happened with Revolve: before founding the company, platform owners Michael Mente and Mike Karanikolas were involved in software and data collection that helped them take an analytical approach to online store management. Thanks to the information collected on the site about customers, they know exactly what customers are looking for - and it is the brands that take this data into account that are able to sell more. Another famous American retailer Macy's relies not tonly for analytics, but also for the development of a mobile application, which in the future will provide a more "personalized experience". So, the user, being in the store, will be able to scan the goods that he wants to buy with his phone, apply discounts to them and pay by picking up purchases at a special mobile checkout. The company's reports show that their bet on active gadget users was correct - sales through the mobile app increased. by 50% in the first half of 2018.

There are similar examples in Russia too. For example, the Sakharok store sells its own line of jewelry. Its founder, Svetlana Efremova, confirms that understanding customer desires plays a key role in market success. “When we were creating our jewelry brand, I relied on the knowledge of the market, gained over almost five years of the existence of“Sugar”. I understand what they will buy and what not, - says the entrepreneur. - In the first month without any announcement in the media, the sales volume of our brand was higher than that of the other thirty-five brands represented. The demand is very high and I think it will only grow. This is the only product we make money on. The rest of the jewelry has such a small margin that it is eaten up by all the expenses of the store. " Efremova adds that it is more profitable to create products ourselves, even despite the fact that partner factories often miss deadlines and supply finished products with defects that have to be returned.

The difference between their own lines of multi-brand stores is their more attractive price. For other brands, multi-brands pay a wholesale distributor's commission - and brands themselves set the minimum purchase volume. As part of their own brand, retailers pay only for the cost of products. “We have two lines of our own - design and Basic. And if in the first one we invite designers who create something unusual to cooperate, then I make the second one myself - these are simple and inexpensive jewelry, the most basic - and the most popular, - continues Efremova. - We are planning to develop: find a designer on the staff to fine-tune the production and create more jewelry. Now there are about 150-200 items in the assortment of “Sugar”, and I would like at least 70% of them to be products of our own brand”.

At the same time, the proximity of their own brand with third-party brands is especially beneficial for the former. Fashion United, citing analyst firm Edited, concludes that ASOS does not aim to be the cheapest online retailer. Instead, the British company introduces brands in different price categories that add status and make their own products look like a better value proposition.The authors of the Quartzy website believe that buyers in such vast online stores are used to comparing only the prices of goods, rather than the labels themselves.

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Betting on millennials

Another significant difference between multi-brand online stores is that they collect products for a particularly demanding audience. - of course, millennials. Today people are between eighteen and thirty-eight years old commit 54% of their purchases are online. If the store manages to adjust its policy to the rapidly changing interests of a young, but already paying audience, it will ensure itself at least attention.

ASOS, for example, focuses on "individualism and beauty diversity," encouraging shoppers to "express themselves through fashion, be freer and not afraid to experiment." The retailer introduced its own plus-size clothing line Curve, periodically adds in the assortment of things for people with disabilities, supports The LGBTQ community and advocates for the empowerment of women in the workplace (the company talks more about this here). But do not forget about the trends to which the online store responds the fastest: in 2018, for example, sales of items with animal print increased by 233%, and dresses of its own line for pregnant women, in one of which Meghan Markle appeared, by 100 %.

In 2017, Revolve planned to achieve $ 1 billion in sales through active work with influencers. Then the company provided its clothes to 416 public figures, and the WWD reported that 70% of the online store's sales were stimulated by the media influence, which they relied on. For example, the Coachella festival, which, according to Michael Mente, has become a kind of fashion week for millennials, made a significant contribution. The audience specifically selects interesting outfits for the event, and in this the company sees more opportunities to showcase brands than at traditional shows. As part of Coachella, a private Revolve Festival party is held, to which influential bloggers, musicians, models and other celebrities are invited, adjusted for the era of social networks (in 2018, Emily Ratajkowski and Amy Song were seen among the guests, in this - Kendall Jenner, Cardi B, Vinnie Harlow and others), and the online store has a special section of clothing and accessories for going to festivals.

Kith initially occupied the niche of the popular streetwear today, creating versatile sportswear: casual hoodies, plain T-shirts, loose sweatshirts, windbreakers and more. Today, the company is gaining weight not only due to stylization, but also notable collaborations with luxury brands, expanding its audience. So, for a joint collection with Versace, Kith has combined the kitschy elements of the Italian label with sporty cuts. The face of the advertising campaign was Bella Hadid. And in November 2018 came out already the fifth Kith collaboration with the prestigious department store Bergdorf Goodman.

Most multi-brand stores in Russia do not launch their own brands yet, but create joint capsules with young and avant-garde brands, as well as charitable organizations. For example, Moscow KM20 prepared collaborations with Demna Gvasalia, Heron Preston, Ashish Gupta, Nina Donis and others for the opening of a new point in Stoleshnikov Lane. At the same time, Virgil Abloh created the first Off-White capsule specially for Russia, which received in September 2018 continuation. Multibrand store Aizel is also limited to collaborations and its own merchandise, but its representatives admit that everything can change. “In the near future, we do not plan to create full-fledged seasonal collections, because the company has other priorities now. Making your own clothes will prove to be as costly as for any market participant - it is a separate business with its own plan, employees and other aspects. The only thing that can help is the already established connections with international showrooms, media and influencers.Aizel periodically releases merchandise in support of certain initiatives (the last one, for example, # I woman # yamogu T-shirts), but we do not get any commercial benefit from this, "Aizel's PR service notes.

Where it leads

The era of fast fashion is definitely undergoing changes - some even predict its sunset. Experts point out that in 2019, fashion companies should make their policies more transparent, because today buyers are increasingly concerned about sustainable and ethical production and will only trust open brands. However, don't underestimate the impact of technology. Analysts also believe that the winners are those that offer the most convenient shopping platform - including on mobile - and the fastest shipping. Now you can buy almost any goods through Instagram, seeing them in the accounts of famous people or brands. Online giants such as Amazon, ASOS and Revolve are becoming a kind of Mecca in the world of fashion retail: in order to achieve large sales and audience coverage, you will have to turn to them for cooperation, as channels with the largest base of influencers and buyers. By the way, with the help of it, they can create their own trends - like the same mass festival style - and be the first in the race for audience funds.

PHOTOS: ASOS, Kith, Matchesfashion

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