Suppliers have slammed Asos asking for a 3% discount on all orders for stock received after 1 September, branding it “unbelievable”.
In a letter to suppliers, seen by Drapers, the etailer asked for a 3% discount on all invoices for stock received from 1 September onwards, to continue to “fuel joint growth” at the business.
“Asos was the last business I expected to do this,” said one supplier. “To do it during the summer while people are on holidays, and two weeks before delivery, is unbelievable. It’s the first time I’ve been asked for a discount by an online pureplay. It’s usually the high street guys who blame the cost of rents and rates, and updating stores.
“Some of the bigger brands will push back and say they won’t do it, but most don’t have a choice. What else are they going to do with the stock? Asos can get away with it as they will flex their muscles, but it sends a message out to the market that it’s not the business it used to be. It is really worrying.”
One young fashion supplier branded the move “incredible”, while one womenswear supplier added: “[Profit growth has slowed at Asos] so a 3% discount would help stop that. Margins are already wafer thin [for suppliers] with Asos, so it’s a very tricky situation for most.”
In the letter Asos highlighted recent “transformational investments” it has made, including the launch and expansion of two new warehouses in the US and Germany, and greater investment in sustainability, customer acquisition and customer retention.
The letter said: “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 is now expected to fall between £30m and £35m, down from expectations of £35m, as a result of £47m in warehouse 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% in the four months to 30 June.
Asos declined to comment.