CASE STUDY How ASOS is using its German distribution centres to launch new services on the continent

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CASE STUDY How ASOS is using its German distribution centres to launch new services on the continent

07 August 2018 by Alex Sword

 

As ASOS’s continental distribution centre ups its activity, the UK-based retailer has been able to deliver a wide range of new services to its growing European customer base.

 

The company, which made around 29 percent of its sales to EU shoppers in 2017, launched its first European distribution centre in Grossbeeren, Germany, in 2014. By the end of 2015 the centre held 2 million units of stock and despatched 38 percent of total EU orders.

 

This was followed in 2017 by the addition of the Berlin Eurohub 2, offering 44,000 sq ft of space. The project has the ambitious goal of offering total capacity of 20 million units.

 

According to ASOS’s annual report in April, progress on the second facility is progressing “at pace and to plan”. The six months to February 2018 saw operations being handed over to the new site and over the Black Friday period, the hub dispatched 1.9 million units over the peak seven days.

 

ASOS is taking what it calls a “modular” approach to building out the facility, adding incremental improvements. It has begun installing an automated storage system, which it says will be completed before peak trading later this year.

 

The company is also set to install a new warehouse management system at the start of the 2019 financial year.

 

It also took a green approach, working with renewable consultancy firm Carbon Smart to use solar and wind energy. It invested in these technologies as part of the build phase, meaning it could cut over 2000 tonnes of CO2 emissions annually and generate half of their electricity demand from on-site low-carbon sources.

 

The investment means that more than 85 percent of European orders (excluding the UK) are now fulfilled from the hub. The increased fulfilment has also allowed ASOS to launch a number of new services for European customers. In Germany, it has launched Saturday delivery for both its next day and standard options and extended the cut-off times for Saturday orders across the EU.

 

Germany, as well as Austria, has seen the launch of click and collect services, adding almost 20,000 locations. In March, the retailer launched the service in Russia.

 

It is not all upsides, of course – the project requires extensive CapEx and OpEx. The company said it would spend £60 million on the warehouses between 2014 and 2018, with the project also contributing to increased spending on its warehouse as it invested in automation last year.

 

Overall, ASOS said warehousing costs increased by 160bps to 9.8 percent of revenue due to a higher proportion of fulfilment from the more manually intensive Eurohub.

 

With automation, however, the costs are set to fall substantially. The retailer is really just at the beginning of realising the benefits of the project.

 

Click here to read about how ASOS and other retailers are adapting their strategies to take on Europe in our latest IREU report.

 

Image credit: ASOS

Original source: InternetRetailing

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