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A month ago, I wrote a post questioniong whether Primark was mad to ignore ecommerce, after it had said it had no plans to sell online.
Strangely, for a post and discussion on an internet marketing blog, the general consensus was that Primark's offline only strategy was a good idea for such a low margin retailer.
Yesterday however, Primark started selling a limited range of clothes via ASOS. So is this a good idea?
Earlier this year, George Weston, chief executive of Primark's parent company, Associated British Foods, seemed to rule out any prospect of Primark selling online.
This came together with some very impressive results. All the more so in such difficult times for retail. Sales were up 24% and profits up 56%.
So should Primark sell online?
- Ecommerce is only going to keep growing. For the immediate future at least. It would be better for Primark to enter the ecommerce market from a position of strength now rather than out of necessity further down the line.
- There is a market for Primark online. There are people who can't easily reach Primark stores, plus the younger demographic which is more likely to buy online.
- Ecommerce can complement the high street stores. Primark could offer in-store collection for online orders, thus bringing more people into stores. It could also make more use of mobile.
- The costs of delivery / logistics. The costs of picking orders for individual customers and paying couriers may east into the retailer's margins. Also, delivery costs could be a barrier for customers.
- Returns. Primark produces cheap, 'throw-away' fashion. Would it be an issue for online buyers if the t-shirt they bought shrunk on first wash?
- Low basket values. Low order values mean its harder to make a profit online, without the impulse purchases offered in store.
Primark on ASOS
The link up with ASOS is a great way for Primark to test the waters. First of all, Primark has chosen an excellent partner. ASOS has been succesful online, and has plenty for the (until now) offline only retailer to learn from.
There is a limited range, but I imagine this is something that may change as Primark sees the initial perfomance.
One thing at the moment is that there's no obvious sign that ASOS is selling Primark's clothes, you'd have to stumble upon it in the brands list as you navigate.
Likewise, Primark's own site gives no hint that people can buy its clothes on ASOS. Since it will be getting a fair amount of brand search traffic from potential online customers, it makes sense to send them somewhere.
In summary, this seems to be a good move from Primark in order to test the waters, and it would be hard to replicate the user experience and ecommerce knowledge of ASOS if it wanted to launch its own site quickly.
However, one drawback of using ASOS is that Primark has to directly compete with other brands on the same site. As Venda's Eric Abensur points out:
Diverting resources away from its own online proposition may have some initial merits, however Primark should quickly be thinking about how it can be disruptive in this space and this will rely on it creating its own individual online presence.
Once (and if) the case has been made for a move into ecommerce, Primark will need to go it alone.