Why is ASOS so cheap? (10 reasons)
ASOS is popular with shoppers for its affordable quality clothing, shoes and accessories.
Because of these low prices, ASOS continues to attract shoppers looking for trendy fashion items. But how exactly does ASOS manage to keep costs so low? This is what I found from research.
Why is ASOS so cheap?
1. Online operation
Since its inception in 2000, ASOS has been selling its merchandise exclusively through the website; as such, it does not have any physical stores.
As recently as 2021, ASOS announced that they would be launching their collection in brick-and-mortar Nordstrom stores for the first time, with an official release in 2022.
By keeping all of its operations online for years, the retailer has saved a lot of overhead costs, such as rent.
Also, even if they have brick-and-mortar stores now, ASOS is limited to a handful of locations, so most customers still need to order online.
2. ASOS obtains items in batches
ASOS is considered a fast fashion company because it produces inexpensive clothing products that are quickly produced for the mass market to keep up with the latest trends in the market.
Getting merchandise in bulk saves retailers money; therefore, they don’t pass on significant costs to customers.
3. ASOS projects come from developing countries
ASOS publishes brand designs on a weekly or daily basis to keep up with local trends. To meet this demand, they need to have an ultra-fast turnaround time.
As a result, most of their clothes are made in large factories in developing countries in Africa, Asia and the Middle East.
This enables companies to cut production and labor costs as they pay workers a living wage.
In addition, these countries have lower operating costs, which reduces overall costs and makes their goods cheaper.
4. ASOS clothes are of poor quality
Most ASOS brands are designed to be manufactured at low cost and of poor quality. As a result, ASOS does not have to spend too much money to source high-quality materials.
This reduces manufacturing costs and makes their products cheaper.
5. They work with well-known brands
When shopping at ASOS, you can buy items from ASOS brands as well as well-known brands such as Nike, Adidas and Tommy Hilfiger.
ASOS believes that all of their products are genuine and source directly from these companies.
As a top retailer, ASOS can buy these items from top fashion brands at affordable prices and pass them on to customers.
6. ASOS Market Stocks Used Items
ASOS Marketplace stocks vintage and fashion items from independent brands. Some of these vintage items are used and reworked clothing.
Because it is second-hand, the seller will drop the price slightly. In some cases, certain items on the market tend to be cheaper than new items on the ASOS website.
7. Minimize the scale of operations
Despite shipping fashion items globally, ASOS keeps its business small by having several locations to fulfill customer orders.
ASOS’ warehouse network includes 4 fulfillment centers and 5 return centers. These fulfillment centres are located in Barnsley, UK and Lichfield, Berlin.
In addition, ASOS has return centres in Doncaster, Selby, Poznan and Krupka. On the other hand, the Atlanta US location is both a fulfillment center and a return center.
Through these centers, ASOS has reduced the number of employees they need and their salaries. Because of their lower fees, customers can get lower product prices.
8. They have a year-round business model
ASOS has an advantage because the company sells fashion accessories for all seasons. Their target audience is young people who shop all year round.
In addition, ASOS stocks everything from footwear and sportswear to casual wear. By selling merchandise throughout the year, they have a regular source of income.
This constant cash flow allows retailers to keep costs low because the company makes enough money to sustain itself.
9. Global coverage
Although ASOS has fulfillment centers in the US, UK and Europe, they ship products to over 150 countries through a seamless delivery network.
For example, ASOS customers in Canada can order and ship items from a fulfillment center in Atlanta, USA. Other order fulfillment is done from the centre in the UK.
10. Regular offers and discounts
ASOS builds customer loyalty by offering regular offers, sales and discounts. A section of the company’s website called the ASOS Outlet is dedicated to discounted apparel.
In addition, ASOS offers students a 10% discount to retain customers.
Also, there is a sale section on the site, and items are usually cheaper because ASOS has dropped prices. Some specials are up to 80% off.
Through such offers, ASOS builds loyalty and ensures customers buy more. This increases the retailer’s cash flow and they can keep overall costs low.
To learn more, you can also read our post on ASOS Outlet, Does ASOS Offer Free Returns, and ASOS Orders Never Arrived.
in conclusion
ASOS has managed to keep its costs low in 2022 compared to its competitors. This is thanks to a combination of strategies to reduce administrative costs.
Due to its low cost, ASOS can offer its customers regular discounts and offers, contributing to a loyal customer base over the years. ASOS keeps prices low because much of its business is online, allowing the company to downsize.
