Leading British fashion e-store ASOS (As Seen on Screen) announced they will quit China by the end of May. The reason seems plenty simple, but often repeated. So what can we learn from ASOS’s brand fail in China.
Despite enjoying strong sales globally, with 18% sales growth in 2015, ASOS is removing its China pain point. Even with this energy at the global level, ASOS have never really gained buyer momentum in China since launching in 2013.
This is somewhat surprising considering the insatiable appetite of local Chinese shoppers for online fast fashion. But due to ignoring key fundamentals of brand launch in China, ASOS will pack its China bags with a loss projected GBP 8.6 million – now that is something you do not want “as seen on screen”.
So thats enough English dry humour to send off the latest foreign brand failure in China. Let’s diagnose the brand failure, so lessons can be learnt, and brands can avoid the same pitfalls needlessly.
What did ASOS do to deserve this?
As ASOS closes their site in China, and their Tmall faces an uncertain future – possibly full of tumbleweeds. Lets identify the key reasons for failure.
Not doing anything to connect with core consumers
As in every market, ASOS’s key consumers are 18-25 years old. In China, you really have to create substantial buzz to be part of their conversation. For some unknown reason, ASOS developed a particularly conservative digital approach on Weibo and WeChat, where they simply re-broadcast global material for local consumers – being nothing more than un-engaging translation service – without a local voice.
Not offering the full brand to local consumers
ASOS never offered their full, or close to full, range in China. For example, 6,000 different items were offered online in China, whereas 80,000 items are available in other markets. For local netizens, who seamlessly research brands on a global level, the disparity of the brand offer was easily apparent – so much so that local shoppers posted their angst about this policy.
Short changing local consumers (the last straw)
Despite offering less, ASOS had the nerve to initially charge more in China, than elsewhere. In a super competitive fast fashion market, both internationals (like H&M, Zara) and savvy locals distributers on Taobao. All prices are accessible and comparable (in Economics, “perfect”), so however cool, ASOS came across as ‘taking advantage’ of local consumers – which was not seen as very cool.
However ASOS, is not the only, but simply the latest brand in e-fast-fashion, with Net-a- Porter’s Outnet.com and American brand Neiman Marcus both failing before them.
Look out for Resonance China’s upcoming “The Ten Commandments of China Market Entry”, and the SMART ways we help brands avoid the same pitfalls in China.