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Exclusive: Asos asks suppliers for discount

Asos is asking suppliers for a 3% discount on all invoices for stock received from 1 September onwards, to continue to “fuel joint growth” at the business.

In a letter to suppliers, seen by Drapers, the etailer highlighted recent “transformational investments” made by Asos including the launch and expansion of two new warehouses in the US and Germany and greater investment in sustainability, customer acquisition and customer retention.

Asos has asked suppliers for a 3% discount to ”fuel joint growth” for the etailer and the brands it stocks. 

The letter said: “We have recently reviewed the current status of our supplier arrangements, also taking into account the significant investments we have made over the last few years and will continue to make, to lay the foundations for future growth.

”We have set our sights on becoming one of the few companies with truly global scale in the market, and we are confident that we will achieve this. Our future growth aspirations not only benefit us but also benefit you, our valued partner. We hope you will understand this necessary change and on behalf of Asos we would like to thank you for your continued support.”

Drapers understands it is the first time Asos has asked suppliers for a blanket discount. 

In July Asos warned full-year profit before tax will be lower than expected after sales in Europe and the US were hit by teething troubles from the retailer’s  overhaul of its warehouses.

Profit before tax is now expected to fall between £30m and £35m, down from expectations of £35m, as a result of £47m in transition costs. It expects retail gross margin to fall by 250 basis points. Capex (capital expenditure) guidance for the full year is unchanged at £200m.

Total sales at Asos were up by 12% on a reported basis and 11% on a constant currency basis in the four months to 30 June. Sales in the UK grew by 16% and the rest of the world by 14%.

Asos declined to comment. 

Readers' comments (4)

  • We think this the a dangerous route to go down for a business which relies so heavily on their suppliers to be commercially viable. ASOS is not the only business in the market under pressure as the DR headlines show. We hope they recognise partnership is about trust and strategy which means not changing the goal posts.

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  • 'Fuel joint growth' is just corporate speak. If ASOS did value their partners, they would not be asking for and additional 3% which is wholly unnecessary. If they want to have the brands, they should be pay the price - as we all do.

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  • Very very poor, a default borrowed from failing business's. As mentioned nothing to do with fuelling growth just a cheap way to reap back lost forecast profit. Really thought that Asos were better than this with their own clear strategy, clearly not which is worrying for brands/suppliers alike, not to mention that this may tip some over the edge into insolvency given the many knocks that they have suffered in the last 12 months. The common misconception that brands/suppliers can afford is a deeply flawed concept and it is a sad indictment of the industry that one of the stalwarts of E-tail thinks that this is acceptable. In effect they are saying we need some of your money to fuel our growth, don't worry you will benefit, sounds very very familiar, i can hear an echo coming from Debenhams and Arcadia etc etc and we all know what's happening there, not growth but an actual fight survival and brands/suppliers not knowing if they will even get paid, truly demoralising for all concerned and i include buyers in this.

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  • As someone who has worked inside ASOS, in a position quite high up, this is not good news, the 'greater investment in sustainability' is tiny, their internal structures are too ridged and mid level management heavy.

    Sadly it's only a matter of time before their investment needs and spending would push them to this and more extreme measures are only a little way off

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