ASOS and its third-party brand suppliers – Covid-19 update
ASOS and its third-party brand suppliers – Covid-19 update
Last month, ASOS published a detailed statement confirming that we are reinstating and paying in full for all previously cancelled, made own-brand orders. In the interests of transparency, we now want to publish details of our approach to third-party brand orders during this time.
Our business model
Third-party brands account for c.60% of ASOS’ sales each year on average, although this number varies from year-to-year, with the remainder of sales coming from our own-brand products.
Typically, we have more than 800 brands available on ASOS at any one time, although this number varies as new brands are onboarded and old brands exited as part of the normal course of business. The majority of our third-party brand sales come from large global brands and household names, and the rest from mid-size, smaller or independent brands that might work with a number of retailers or have their own retail operation. We also operate a unique business model focussed on wide product choice and limited volume.
Branded engagement programme
In contrast to our own-brand product, where we directly engage with suppliers, our third-party brand relationships see ASOS one step removed from the sourcing process, with the partner brand handling the relationship between itself, its suppliers, and its suppliers’ manufacturers. However, we have a shared responsibility with that brand to ensure its workers are treated fairly, protected, and properly paid. To that end, we have a separate and dedicated third-party brand programme within our responsible sourcing operation, through which we engage with our brand partners to ensure they are meeting (or working towards) our five minimum standards and are treating their suppliers fairly. More information on our third-party brand programme and our five minimum requirements is available on our plc site, here, and also in our annual detailed modern slavery statement published earlier this year, here.
Response to Covid-19
Together with our third-party brands, and alongside our own-brand sourcing programme, we have been taking action to adjust our order intake in response to Covid-19. In particular, we have been responding to shifts in category demand, increasing our intake of popular products like loungewear and face + body, and moving away from less-in-demand areas like tailoring and going-out wear. We also took steps to reduce our stock intake, including cancelling and delaying third-party brand orders. These actions are part of the usual course of trading with our partner brands in response to customer demand and behaviour, but were carried out at an increased scale in response to Covid- 19.
As has been our approach throughout this pandemic, ASOS contacted each of our third-party brands individually to discuss possible cancellations and delays by either ASOS or our partner brand. Where brands have raised concerns or issues with us relating to their suppliers, we have endeavoured to find a positive resolution to ensure that workers are protected and fairly paid. We are committed to continuing to do so on a case-by-case basis if and when issues are raised with us and ASOS can reasonably take action, for example through accelerating payments. Our suppliers and brand partners are incredibly important to our business and we want to continue to support them to our mutual benefit.
We were not alone in our response to this pandemic. Almost all of our brand partners took steps to reduce their production levels to protect their businesses independently of ASOS and following the drop in demand they were seeing either directly in their sales or from their retail partners. This
meant that in many cases, in particular for bricks and mortar retailers that were no longer able to operate, orders we had placed were cancelled by them, not by ASOS. We are in regular contact with these partners to explore ways we can support their businesses.
Critically, and in contrast to those bricks and mortar retailers, ASOS has continued trading during this pandemic, with all appropriate social distancing and hygiene measures in place. As a result, we have been able to continue serving our customers, accepting products, and placing new orders with our brand partners, and expect to be able to do so into the future. For many of those brand partners, particularly those who have been unable to trade, ASOS has proved a valuable channel through which to continue to sell their goods, in turn providing vital cashflow throughout the entire value chain.
It is also important to note that ASOS has continued to pay in full for all the stock we have brought into the business, and we are working to reinstate orders where appropriate each day as we respond to the trading environment. This work will continue in the coming days and weeks.
We are aware that we have a role to play and a responsibility to act appropriately to protect workers in our supply chain. The global garment industry is complex, with entrenched challenges and issues across multiple continents that have been worsened by Covid-19. We believe that the best route to improve the industry and protect workers is through wide-scale, multi-stakeholder collaboration at a global and a local level. This has informed our market-leading Ethical Trade programme, in which we continue our work with NGOs such as IndustriALL Global Union and Anti-Slavery International, industry groups such as Action, Collaboration, Transformation, and Governments across the world. It is also why we are pleased to be playing a constructive role in the UN International Labour
Organisation’s Covid-19 working group. We are hopeful that this programme will lead to systemic change as the retail industry begins to recover, for the betterment of all.