Good afternoon, everybody, and hopefully you enjoyed the the day in the life of a dress. You're gonna see more of that dress later on today. Don't know if that's that. It's really nice to be able to welcome so many of you here today in person. It feels like a long time since we've seen some of you in the room, and it's a really good opportunity for us to be able to share our plans today. This is obviously the first detailed capital markets day we've held since 2016, and as you'll all be aware, a lot has happened over the last few weeks. I wanted to start by telling you why we thought it was important to go ahead with this event and hopefully what you'll get out of the session.
Firstly, since I joined the business two and a half years ago, what's come up in our regular conversations with you is your desire to understand more about the fundamentals of our business, particularly its profitability and the profile of our customers. We're keen to take this opportunity to provide some additional disclosure, which will help you better understand the strength of our customer base and the profitability of our different markets. Secondly, we'll share more detail on the drivers of our medium-term plan, which reflects detailed work by the full management team with the full engagement of the board. At our recent results, we announced what we expect from that plan, so the objective today is to share why we're so confident in the delivery. Finally, we'll provide more clarity on our expectations of the long-term profitability of the business and our growth journey.
We've made a lot of progress over the last few years improving our operational discipline and capabilities across the business, and we've invested in the foundations to sustain growth. We know there's more to do. The key objectives of today is to explain how we plan to activate that investment and accelerate our delivery. At its heart, this plan is about increasing the pace, intensity, and discipline of our commercial execution, which we all acknowledge has been a key factor holding us back over the past number of years. We know that we will still need to prove ourselves, but we do hope by the end of today, you'll have clarity as to what we are doing and how we're gonna do it.
Before we begin, let me just take you through the presenters today, most of whom you'll have met before in our various different capital market events leading up to today. After me, you'll hear from Cliff Cohen, our Chief Technology Officer. Cliff joined the business in 2015 and is following senior roles at both M&S and Accenture. You'll then see Robert Birge, our Chief Growth Officer, who will outline our approach to marketing investment. Robert joined the business in 2019, having held executive roles across marketing and growth companies in the U.S., in particular kayak.com and IMG. After that, you'll hear from José Antonio Ramos. José's our Chief Commercial Officer, and he joined the business in January.
José's most recent role before that was the CEO of Salsa Jeans in Europe, but he's also held senior executive positions across fashion brands, including Esprit and Inditex, including stints in both Germany and Spain. Supporting José will be Vanessa Spence, who's our Design Director, and she's been at the heart of developing ASOS brands over the last 10 years. Once they've talked through the brands, José and Robert will then take you through a topic which I know will be of a lot of interest, which is about how we plan to grow our international business.
Then I'll come back at the end of the session to talk to you about the margin potential in the business, spotlighting both the U.K. performance as an example of what we can do in a mature market, but also to illuminate the trajectory that we believe is achievable in the rest of our international businesses. I'm also gonna take you through our medium and long-term ambitions. We are also joined today by Ian Dyson, the new Chairman of the ASOS board, and there are a number of the ASOS team in the room as well, who you may get a chance to meet in the breaks. In terms of practicalities, we'll be hosting a short Q&A after the capabilities section and the international section, where the intention is we can cover any detail that we've gone through in the preceding sections.
There will be a longer Q&A at the end of the day, where we can wrap up any more strategic or long-term questions that anybody has. I'm sure it goes without saying, but today's about the medium and long term, and I'd ask you to reflect that in your questions. We updated you only three weeks ago in terms of performance, and therefore, we won't be giving any updates on guidance or current trading, as I'm sure you'd expect. Let me now turn to why we are so confident we are going after the right opportunity and that we have the right strategy. Firstly, some context on the journey so far. ASOS has been on a consistent growth journey, and as we go forward, we are set to embark on the next phase, a next phase which is underpinned by the foundations we've already built.
We've successfully built a portfolio of our own brands where others in our space have failed. ASOS DESIGN is now the fourth largest U.K. fashion brand in the world, and we've seen strong growth in many of our other brands, particularly COLLUSION. As you'll know, earlier this year, we acquired four new brands, including Topshop, to further strengthen our portfolio and credibility. Upon this foundation of strong fashion credibility, we now have over 850 of the best and most relevant brand partners, which we've added to the platform, which allows our customers to have all their fashion needs met in one place. This is, we believe, a unique combination, and it remains at the heart of our strategy.
More recently, we've taken precise and specific steps into new categories, starting with face and body and sportswear, and we've already seen significant growth in these categories, and they clearly resonate with our consumer. Over the last few years, we've also laid the foundations for future growth, particularly internationally. In terms of technology, we've now landed TGR. We've also re-platformed our infrastructure and improved our customer experience. We've also added a highly automated DC in Europe, as well as built a new facility in Atlanta and very recently in Lichfield in the U.K., both of which will be automated by the end of next year. Having built these foundations, the next phase of the journey will be underpinned by continued progress in growing our brands and accelerating our international performance and the addition of new capabilities, particularly in the form of partner fulfillment and ASOS Services.
This has all been in service of our vision, a vision I hope you know well, which is to be the go-to global destination for fashion-loving twenty-somethings. Twenty-somethings for us is and has always been a mindset. What does it mean to be the go-to destination? It's the place our target consumers turn to for fashion. It's a place that's focused solely on delighting its customers, and it's more than a website or an app. It's a place that's inspiring, engaging, and entertaining, and it's the fashion best friend of our consumer. It's a place that understands fashion because it makes fashion. It's a place that cares about what its customers care about, and it's a place that has sustainability at its core.
Our focus means we are well positioned to win our target customer, and this comes with 21 years of understanding that customer and how their needs have changed. We've built a model combining own brand product, our platform for third-party brands, and our tailored customer propositions, which is laser-focused on delivering for that consumer. This winning offer translates into superior economics. Our offer is more profitable at an order level than our key competitors. The more our customers engage with our offer, the more valuable they become. We've spent considerable time building a scalable platform that we can now leverage. This includes the strong brands we've built and the 850 brands I just referred to. They are some of the most relevant brands in the world for our consumers. As a result, we've now got a portfolio we can truly leverage globally.
To support this, we laid down physical infrastructure in key international territories, and we've put in place the right technological backbone. We've also built, in recent years, the management team with a focus on international growth experience. We are now in a position to activate these assets, and the opportunity ahead of us is enormous, a total addressable market of GBP 430 billion in our core markets. We have a clear plan to grow with multiple levers. We still have significant growth potential in our core business, particularly once we add Partner Fulfils. There's a huge opportunity outside of the U.K. While we've made good progress, there's clearly more to go for, and we have the potential to increase the pace and intensity of our execution here.
We've also seen the incremental impact of adding fashion-related categories, and we not only have room to grow these categories, but also to launch new ones. We also have the opportunity to drive a stronger EBIT margin, which I will take you through later. Lastly, we are entering this next phase of growth with focus and with the intention of improving the discipline and execution of our commercial delivery. This doesn't mean doing all things at once. It's a disciplined plan, focusing on key value drivers, key territories, and with disciplined investment. We will constantly test and learn to see what works for our customer before backing the winners with further investment. Let me now take you through these in more detail. There we go. We believe what differentiates us is that we do young fashion, twenty-something fashion, with a focus like no one else.
That doesn't mean sacrificing our Fashion with Integrity principles to be the cheapest in the market, nor does it mean creating the widest possible range. Instead, our whole strategy is focused on Gen Zs and millennials and having the most relevant product for them at relevant price points with relevant propositions, such as the on-site experience and delivery methods tailored to their needs. To stay relevant for this customer, whose needs change as much as the world around them, we need to constantly tune and sharpen our focus. Critically, to really do young fashion well, you need focus, a focus no one else really has. Because what's relevant for a 25-year-old isn't likely to be what's relevant for a 50-year-old. In fact, it's the opposite. A 25-year-old actively doesn't wanna look like their mom or dad.
That's not just in terms of fashion, but how they search for inspiration, how they build an outfit, or the range of ways they want to pay or receive a product. Let's be clear, though, twenty-something isn't some arbitrary cutoff. It's a mindset, it's how people define themselves, and it's how we actually monetize consumption. However, the twenty-something mindset that we target is reflected in our customer base, where over 80% of our customers are Gen Z or millennial. We've been able to sustain this with the average age of ASOS customers staying relatively consistent over the past 10 years. Why this target? As the chart shows, on an absolute basis, the amount a twenty-something customer spends on adult fashion is greater than an older customer.
In fact, on a relative basis, this difference is even greater, with our target customers spending 50% more of their disposable income on adult fashion than older consumers. Their average annual spend on fashion is about 30% greater. The customers we target, the customers who engage most with us, are the customers who are most engaged with fashion, and they spend more of their wallet on fashion than other groups. Our clear focus on our customer has meant that we have a better understanding of them than anyone else. If you look at the left-hand side of this chart, our understanding of our target consumer reveals some interesting points.
Our customers are 1.5 x more likely to describe themselves as fashion-conscious and 1.6 x more likely to want trendy and cool brands, and 1.5 x more likely to see exclusivity as a driver of purchase. Our customers also have incredibly diverse needs. To give you a few examples, 50% like to experiment with new styles, while 50% like to stick with the same styles. Therefore, we need a platform that provides newness and inspiration, but also a platform that can offer consistent product lines they can trust. In terms of price, 54% of our consumers look for the best product, no matter what the cost, which of course means 46% even are price conscious. We need a platform that offers a range of price points and brands to meet price, quality, and style conscious needs.
A platform that allows people to shop outfits and looks without having to sift through limitless product. The week I joined ASOS, I heard two bits of consumer feedback that still sum it up for me. One of them was from a U.K. consumer who said, "I love ASOS. It has everything I want except Primark." One from a U.S. consumer who said, "I love ASOS because they have the sneakers I want and not the basketball boots my dad wears." I think those consumers pretty much have it right, and that's the approach we take. It's also clear that our consumers want the product they buy to be made right, ethically, sustainably, and transparently. We recently hosted a full sustainability capital markets event where we outlined why we are so passionate about our ESG agenda and our Fashion with Integrity program.
At the heart of it, is that we share the same values and beliefs as our customers. With one in four Gen Z and millennials demanding sustainable products from brands, and a further 20% of our customers saying that knowing that a brand is eco-friendly would increase their chance of buying it, and we know that those calls will only get louder. Running through every part of our business is that commitment to sustainability. Our Fashion with Integrity program guides our approach, and since 2010, it's been our way of moving our business forward in a more responsible and sustainable way, and we're proud of the progress we've made since then.
When you've been doing something for 10 years, pretty much half of the life of the organization, it's a real part of who you are as a culture, and it's consistently why people choose ASOS as a place to work. As we discussed in detail in September, we have four goals which will shape the next steps in our sustainability mission. Be net zero, be more circular, be transparent, and be diverse. I won't recap all of the detail, but essentially what this means is that we will be net zero by 2030, and we'll ensure all of our products are made from more sustainable or recycled materials. We'll also be a more diverse organization and have achieved full transparency in our supply chain. These principles underpin all the other commitments and targets that are set across the organization, including the ones that you're gonna see today.
21 years of improving our understanding of our changing customer needs has led us to create a unique and winning offer. There are three parts to this offer. First, our own brands, which provide desirable, exclusive, and fashionable product tailored to our customer needs. Consumers can trust that this product has been produced in line with our Fashion with Integrity principles, and they can trust that what they choose to buy represents the latest trend. Our own brands have a strong gross margin, reaffirm our fashion credibility, and are a strong customer acquisition tool, particularly in territories outside the U.K. Second, our platform, which combines our brands with a curated edit of the best partner brands and products, meaning customers do not have to go elsewhere to pick up the brands that they love.
Equally, they can trust that the assortment we provide is relevant and chosen by experts, and isn't just a sea of product, fashionable or not. This platform allows us to extend to adjacent fashion related categories such as beauty and sportswear. Applying our fashion lens to this gives us a unique and differentiated perspective, a benefit for our customers and, critically, for our brand partners. It also means our customers do not have to go elsewhere to buy these as they look to build their look. This for us translates to a higher share of wallet, further fashion credibility, and improved customer KPIs. Third, our customer experience. Our proposition elements, such as a great on-site experience or best-in-class delivery methods, are again tailored to the needs of our target customer. They aim to make using ASOS friction-free, engaging, and inspiring.
This drives loyalty and conversion, but it will need to evolve to stay relevant, because as anyone who's had to wait a week for something will tell you, it really matters. The combination of these factors drives a best-in-class customer experience for young fashionable consumers, and it's this experience which turns our flywheel, creating increased traffic conversion and ABV, which in turn drives increased volume and scale. It's this volume and scale that allows us to create efficiencies to reinvest back into the product, the platform, and the customer experience. The core offer I've just described clearly resonates with our target customer. As the chart above shows, the customers we retain from each cohort spend more with us each year than they did in the previous year.
As an example, you can see the customers we acquired in FY 2016 spend an average of 38% in their first order, and they spend an additional GBP 34 per customer during that financial year. After which we see the average net spend per customer increase each year, culminating in GBP 104 of spend in FY 2021. Importantly, we see this, as you can see on the chart, from each cohort as the customers we retain continue to spend more with us each year, leading the value of the total cohort to increase over time. While we see the average value per retained customer increase over time, as our less engaged customers drop out, we also see the total value of each cohort increase in absolute terms over time due to the incremental spend from our retained engaged customers. Why does this happen?
Let me take a minute to talk you through the chart on the screen. Many customers discover ASOS through our own brands, with 60% of new customers having an own brand product in their basket. These customers have strong consumer dynamics, as you can see on the chart, with a GBP 40 ACV. However, for many customers, this is just the start of their journey. Many customers' next step is to add third-party brands to their baskets. The shoppers who do this have even stronger economics, with increases in all key metrics as you can see on the chart. With our average annual spend increasing nearly four-fold to GBP 152, as they are more frequent and have larger baskets. Many consumers who love this experience take the next step and sign up for Premier.
These customers exponentially increase in value, spending 2.5 x more, and 80% of these are retained, a stat of which we are incredibly proud. For these Premier customers, there is one more step, shopping face and body and in time other categories. For them, ASOS is their go-to destination, and they return to ASOS at least once a fortnight to make a purchase, and with 96% retention. That means that nearly 100% of those customers will go on and place an order in the following financial year. What this customer journey shows is that the more customers engage with us, and the more of the model that they consume, the better it works for them and the better it is for us.
We will spend much of today exploring how we intend to move customers through this journey, both in the U.K. and critically in other markets around the world. As I mentioned, this model delivers superior economics. Our model has a higher gross profit and a higher EBITDA per order than our key competitors. Just for context, competitor one represents a purely own brand competitor, while competitor two is a purely platform business. This isn't just an economic benefit, it's driven by a genuine customer benefit from our model. They can get more of what they want, the way they want it than other models. We clearly believe that we have a customer model that works. The U.K. shows what's possible when we get it right. For us to capture the opportunity ahead of us, we needed to replicate this customer experience globally.
We have invested to create a strong, scalable platform which should underpin the next phase of our growth. There is still more to do, as the team will go on to explain, but we've built some strong assets which we can now leverage to activate the next phase of that growth. The first thing to say is that we spent time building a leadership team with the capability to drive growth, particularly outside the U.K. Many bring with them capabilities that added something to ASOS, and several of our new executive roles we have hired have had experience in leadership roles in our key territories. However, at the same time as strengthening our leadership team, we've retained some of the key talent in key roles below the executive team that have driven ASOS over the past 10 years.
We've brought together the right people to tackle the next stage of our journey. It's also worth noting that we're not just starting this journey. We've built a position we can now leverage in many key markets around the world. As you can see on the chart, our EU business is now a GBP 1.2 billion business, and U.S. business has reached almost half a billion GBP. Our five-year CAGRs are also strong in most of our key international markets, with most of them experiencing five-year growth rates in excess of 20% per annum. To continue this growth, we knew we need the right infrastructure, and we have now finished a program of updating our tech capability, which is a further essential prerequisite for scaling internationally.
It took a long time, but TGR was rolled out to the business without any disruption and will enable planning and trading at a truly global and local level. The first signs look promising, and as we continue to embed the system among our employees, we expect it to drive further value in their day-to-day processes. We've also re-platformed our tech onto a microservices class-based, cloud-based architecture, key for scalable expansion, and have improved our front-end customer experience. We know we still need to do more, especially on the customer experience, and we will be investing more in this area. We've also improved our supply chain technology, allowing us to scale more easily in the next phase of growth. We've made several other enhancements that will help us to accelerate into the next phase.
At the same time as building technical infrastructure, we have developed our supply chain and logistics infrastructure. Since 2019, we have automated Eurohub as well as launched our Atlanta DC. Very recently, we launched our fourth FC in Lichfield without any disruption to operations. As a result, 85% of our customers globally are now eligible for next day delivery. On top of our DCs, we now have four returns processing centers, and for our customer, we have over 200,000 click and collect and returns locations. These provide for a quick delivery and returns experience, which reassures the consumer that shopping online is easy and friction-free, a key reason so many of them have chosen us over the high street. These investments, particularly automation, have also helped reduce our overall cost base, providing further fuel to reinvest into the customer experience.
Lastly, and perhaps most critically, we have built a growing portfolio of brands that resonate to an ever greater degree with our target customers. As I mentioned, ASOS DESIGN is now a top four British fashion brand in global markets, and it's got strong economics with own brand gross margin at over 55%. Our new brands are also doing incredibly well. COLLUSION was the second most searched for brand, including own and third-party brands on site in FY 2021, and was sold in 186 countries. We believe it's on course to become a GBP 1 billion brand in the long run. Having looked at the assets we've built, let's now look at the opportunity ahead of us.
Our target customer base represents a very significant opportunity, with a total addressable market of GBP 430 billion by 2030 in the U.K., U.S., EU and some of the core rest-of-world territories. I really do believe the opportunity ahead of us is huge. It's one of the reasons I joined ASOS, and I believe in it more today than I have ever done. Our total addressable market includes our target customers in the core markets I just referred to, and as you can see here, clearly with a share of just over 1% of this addressable market, there is plenty of room to grow. Some growth in share will come as a result of an accelerated shift online, especially among Gen Z and millennial consumers.
The rest of the opportunity to increase our share is driven by increasing our customer base, particularly outside of the U.K., and how we build our relationship with those consumers, which increases share of wallet over time. Most of this share growth is likely to come from markets outside of the U.K. As the chart on the left shows, 35% of potential target consumers in the U.K. are currently ASOS active customers. That's just over 1/3 of under 40 shopped in the last 12 months on ASOS in the U.K. As the right-hand side of the chart shows, this is clearly much lower in other territories, demonstrating huge room for growth. You can see our model works. In France and Germany, which represent perhaps our most mature positions outside of the U.K., more than 10% of under 35 consumers are active ASOS customers.
It's much lower in the U.S., of course, but with half a billion of sales and 3.5 million customers, we have still shown that our model resonates. Building on the momentum we have in these territories, getting consumers to engage more with the proposition and building awareness are key to unlocking growth outside of the U.K. Undoubtedly we've built a strong foundation, and to drive the next phase of growth, we are completely focused on what we believe we can do better than anybody else, 20-something fashion. To do this, we have three focus areas which bring together our plans. We will leverage our platform and capabilities, driving greater product choice and evolving our capabilities to ensure greater executional ability. We will double down on our winning offer, continuing to innovate, evolve, and improve and not stand still in the market.
We will truly localize our offer and invest in marketing to win in our most important markets, critical to the next phase of our growth. Robert, Cliff, and I will begin by taking you through how we plan to leverage our platform and capabilities. We will touch on the rollout of Partner Fulfils and ASOS Services, the tech enablement of our core customer experience and proposition, our operational excellence program, and the evolution of our marketing capability and planned expansion of Premier. José and Robert will then take you through our plans to double down on our winning offer, touching on our strong own brand position, our brand partners, and how we will double down on face and body and sportswear as strategic priorities. Excuse me a second.
We will then spend time talking you through how we plan to truly localize our offer and back it with marketing investment to leverage the infrastructure that we have in place in our key markets. I'll then come back again and take you through the financial outcomes of our plan. While I'm sure many of the themes that we will cover will be familiar to you, I wanted to briefly touch on how we plan to execute, as this is certainly different from the past. Over the last few months, much of our time has been dedicated towards not just what we intend to do, but how we will execute this plan effectively. This has included many debates and much work to ensure that we have the right level of focus on the key value drivers, backed with clear plans with the right level of people and resources.
I do not intend to take you through that detail today, but we are clear what our key areas of change are and in what sequence they will be delivered. As you can see from the chart, the program is a comprehensive one, and we will deliver through the operational discipline we have built, knocking these initiatives off one by one. You'll see many of these initiatives touched on today, particularly with regards to brands and international. These initiatives underpin the medium targets we laid out a few weeks ago, and I really hope by the end of the day, you will understand how we plan to get to deliver these outcomes and share our confidence that we are doing the right things for our customers, our business, and our shareholders.
Our plans are not just designed to hit a set of medium-term targets. These are the next step on our journey. As we think longer term, the growth levers we have outlined in this presentation, as well as some of the structural shifts in our sector, give us confidence that we can continue our growth trajectory over the long term. Today is not the right time for us to be setting formal long-term targets. We know that. I did want to say that we believe what we are doing is not just right for the next few years, but should set us up to continue our journey, because if we do it right, our plan should provide a platform for growth over many years, given the size of opportunity and our unique approach.
Alongside this belief in sustaining our revenue growth, we are confident that the margin potential in this business in the long term is significant. Again, I'm not trying to set a target, but the most common question I get from investors is, "What can your long-term margin be?" Later today, I'm finally gonna try and answer that question and explain why I believe that we should be able to deliver an EBIT margin in excess of 8%. Before we move on to the next part of the agenda, I just wanted to reiterate why we have confidence in the opportunity ahead of us. We are well positioned to win our target customer globally. We have a winning offer that critically has superior economics, and we have in front of us multiple levers to accelerate future growth and margin.
That opportunity is a huge one, with a TAM of GBP 430 billion. We've built a strong scalable platform which we can leverage, and we have created a disciplined plan to execute and capture this opportunity. I'd now like to hand you over to Cliff, who will take you through the first part of our next section relating to our platform and the capabilities that will enable our success. Over to you, Cliff.
Thanks, Mat, and good afternoon, everyone. I'll start this next section talking you through our technology capability, focusing firstly on our platform development and then on how our technology enables our customer experience. Over the last few years, we have rebuilt most of the ASOS technology to ensure we have the foundations in place to support a truly global business. Earlier this year, we completed what was the last major foundational change to transform our buying and merchandise processes and systems to enable our global commercial plans through our TGR program. With this completion of this last change, the technology deficit we spoke about in the past is now behind us. Our technology platforms and internal systems are set up to scale globally and provide the flexibility to offer localized experiences.
These investments to date have included the following: Our core customer experience platform, which is built using a microservice architecture that enables our technical agility, global scale, and resilience. This architecture gives us the flexibility to deliver multiple features simultaneously and plug in innovative software. For example, since rebuilding this, we have added nine new payment methods, four new language sites, international gift cards, and many customer features such as boards, customer reviews, and recommendations, just to name a few. Our customers interact with our platform through native iOS and Android apps and a responsive web-based desktop and mobile web, which provide for the smoothest experience.
Our technology is all deployed in Microsoft's Azure cloud, giving us access to unlimited infrastructure scale, global reach, and resilience, all of which is critical as we continue to handle demands for our peak days, during which we typically see burst volumes of between five and 10 times our normal hourly volume. Our cloud-first strategy also ensures that we have the global technology infrastructure in place as we continue to grow to a much larger business. We've also now transformed almost all our internal systems to support our end-to-end business processes with a particular design focus on our global operations. Examples of these all have included new HR, finance, studio, and commercial systems.
We've right-made really important investments in our data infrastructure, including a full redesign of our core metrics and reporting, our data lake which supports analytics and insights, and we've built a machine learning platform that underpins our data science capability. These platform and system investments, as well as the continued development of our team, have set us up well now to accelerate our technology plans, all of which are critical to support our global growth, and specifically the development of our extended platform functionality, including a direct customer to offer and key ASOS services, which I'm going to speak about in this next section. As we all know, flexibility is absolutely critical in our industry, and specifically the flexibility in how we fulfill our fashion edit to our customers globally.
I'm gonna cover what is now one of the most fundamental changes we are making to our platform, which we are calling flexible fulfillment. The flexible fulfillment program is made up of two macro capabilities. First, how we offer and fill more of our global stock to more customers, and we're calling that ASOS Fulfills. Second, how we expand our access to more brands and products by creating a direct-to-customer or marketplace offer with our brand partners, and we are calling that Partner Fulfills. In addition to these two capabilities, and as part of our wider platform strategy, we also plan to offer key services and enable new partnerships, and we're calling that ASOS Services. I'm gonna take you through each of these in a little bit more detail, covering where we are with each and the strategy to deliver these. On to ASOS Fulfills.
ASOS Fulfills is building the flexibility to allow more of our customers to access more of our stock regardless of their location, by essentially creating virtual global stock pools over our physical stock locations and offering access to that stock to more customers through our platform. In doing this, we believe we'll deliver the following key benefits. First, we'll maximize the local product ranges we offer in territory for products which we don't currently offer in all our fulfillment centers. Second, we'll improve local size availability by being able to backfill out of stock items in one fulfillment center from stock that we're holding elsewhere. Third, we should reduce our overall markdown by targeting an earlier sell-through due to a lower stock fragmentation. In summary, ASOS Fulfills will support our growth through greater local product width and availability without increasing our overall stock investment or working capital.
To share a little bit more about how we're doing this, in November last year, we started with a small pilot in which we exposed some of our Barnsley stock to our U.S. customers in order to expand the overall brand offering and size availability in the U.S., using rules to ensure we manage the cost of the potential additional shipments. The scope of the pilot was as follows: We offered 15 brands fulfilled to the U.S. customers in addition to the stock available in Atlanta, and we delivered through split delivery of multiple parcels. The brands we chose to offer included younger brands with a lower average selling price, which we did not stock in Atlanta at that point, range extension of larger strategic brand, brands, and we back filled out-of-stock ASOS DESIGN products. As part of the pilot, we are aiming to test three things.
First, to understand the potential demand for certain brands in the broader product ranges in the U.S., to assess the level of incremental sales we could achieve by offering a greater range and availability, and to gauge if customers had any issues with split deliveries. In April this year, we measured the outcome of the pilot and confirmed that the improved offer did increase demand, and we saw a higher average basket size in these orders. We measured and attributed 37% of the sales that went through this route to be incremental compared to if we never offered the products in the U.S., and we didn't experience any significant customer care issues with the split deliveries. Following the pilot, and based on these results, we built out the full solution which we completed in June this year.
This build catered for the expansion of the number of brands we could offer, designed for how we could deploy this globally, provide additional customer care support, and most importantly, created an improved customer experience to ensure that we were clear on the offer and the delivery proposition changes. As of today, we have deployed this in the U.S. and Russia, backfilled by our Barnsley stock, in the U.K. and Australia, backfilled by our Berlin stock. In readiness for this peak, we've developed additional flexibility between warehouses within the same territory to support our Barnsley and Lichfield sites. You can see the volume of key brands we are offering to these territories in addition to their primary stock pools on the slide.
To give you a feel for the customer experience, our aim was to make sure that it was as simple and as clear as we could make it for our customers. On the left, you can see that during the pilot, we offered a limited experience just to test the concept before we built the full solution. We would offer the additional stock to customers, and if they bought an item that was in the scope of the pilot, they would get a simple message in checkout stating that some of the items would be delivered in a separate parcel from the U.K. As part of the release in June, we developed the full experience, which introduced our customers to the enhanced fulfillment proposition, which you can see called out in green. We offered additional stock to customers through normal category and search pages.
We call out on the product page if the item or stock will be shipped from a different fulfillment center. In the bag in checkout, we offer a full multi-drop or split ship experience by grouping the products in each parcel and clearly showing the delivery source and expected date for each. We are not finished there. Our ongoing development strategy for ASOS Fulfill includes the development of a further enhanced feature set. First, we'll add an ability to set more granular prioritization rules between different stock pools, and this will enable us to better balance and manage our stock and capacity across the network. We will add improved delivery options for the second parcels, which will improve the overall customer experience.
We're also looking to add a third stock pool to each of the territories where appropriate in order to maximize the amount of stock we can offer our customers. Just after peak, we plan to roll out to France and Italy next, backfilled with our Barnsley stock, and then we'll continue to roll out to other European and Middle East countries. On to Partner Fulfill. Partner Fulfill is where we expand our product assortment and backfill our availability by connecting the stock of our brand partners through our customer experience while retaining our unique curated ASOS edit. Partner Fulfill will support our international growth through increasing our global range, our local relevance, and ensuring our customers have access to must-have product. In doing this, we believe we'll deliver the following key benefits over and above what we have done with ASOS Fulfils.
First, we'll increase our overall brand and product assortment for offering a greater stock availability and range, and we'll introduce smaller, locally relevant brands in different territories. Later on, Mat will provide more details on the potential for Partner Fulfils in the medium term. I'm really pleased to tell you that we've already started to put this in place. Last week, we successfully launched our pilot for Partner Fulfils. The scope of this pilot is shown on the slides. We started with Adidas and Reebok. We're offering these brands and products to our U.K. customers, and we started with a depth model in which Adidas and Reebok will backfill our out of, out, will backfill our stock when we sell out, and we will receive a commission on the sales. The simplest way of thinking about this development is that we have built marketplace capability across our core technology.
In other words, until now, our platforms and our systems were tailored towards our wholesale model and didn't cater for third-party sales. Now they will. While we do recognize that we've been later than some others to develop this capability due to other priorities we had, such as TGR, once we have started this, we've been able to deliver the first phase in nine months, which is down to our technology architecture, which I covered earlier. First, we developed an integration layer for brands. Typically, brands will integrate into e-tailers through various marketplace aggregation systems to provide their product, stock, and price data and to receive customer orders and notify us of any returns. We have started with one, and over time, we anticipate we'll integrate with others, as well as directly with some brands based on each individual brand capabilities.
Most importantly, we've enhanced our customer experience across all our desktop, mobile web, and apps to cater for the different brand proposition, pricing, returns, and tracking in a simple and seamless way, and we are ensuring that all our payment methods within each territory are available on Partner Fulfils orders. We've also updated all our internal business systems and processes to cater for marketplace sales, including our commercial systems, our TGR, our payment flows to manage safeguarded funds on behalf of the brands, and our finance systems to deal with commission revenue and marketplace VAT reporting. Finally, we've enhanced our customer care systems to provide the support needed if we need to pass a customer on to a brand partner's customer care or resolve the query ourselves.
Just to bring this to life, the following short video will give you a feel for the Partner Fulfils customer experience. Hopefully, you can see that we've worked hard to make it as integrated into our experience in a seamless, simple, and as clear a way as we can for our customers, and I think is as good as many of the leading marketplace platforms in our space. This is really just the start of the journey for us. Once we've completed the pilot, we plan to continue the development of Partner Fulfils capability as follows. In this financial year, we'll build out the width model, in which we'll offer products that we do not stock in our fulfillment centers, and we plan to extend Partner Fulfils to our European customers as well.
In parallel with these developments, we have set up a team to focus on brand onboarding and are exploring additional integrations, which will unlock more brands. As our capability grows, so will the number of brands we'll be able to onboard. Within the next six months, we'll look to start the onboarding process with some of our largest brands, and we will begin to scale up new, smaller local brands through FY 2022 and 2023. In FY 2023, we plan to extend Partner Fulfils to our U.S. customers. Now turning to ASOS Services. In addition to the flexible fulfillment program, we are in the process of developing new capabilities, which present future opportunities for us and our brand partners. These services include a Fulfilled by ASOS offer, ASOS Media Group, and partner platforms. Fulfilled by ASOS.
This is where we will store products and ship orders on behalf of our partner brands, as well as handle their returns. This provides an additional revenue opportunity for us and allows us to onboard smaller brands that don't have the fulfillment capabilities to meet our customers' expectations and essentially lowers the bar for local small brands to enter the program. It should also offer our reach to maximize the opportunity for smaller brands, which otherwise would not be able to offer their products globally. Essentially, Fulfilled by ASOS will allow us to offer an even greater range of products through these brands without the stock risk or working capital investment. We launched ASOS Media Group with a limited number of partners in September 2020, and we steadily expanded the offering.
This enables our partner brands to engage further with our audience through our customer experience, and our audience has a number of really attractive characteristics for brands. We have over 26 million active customers on the platform in the last 12 months, with high engagement as our customers spend a great deal of time discovering fashion in our apps. It's a unique and definable audience. We are explicitly focused on a clear demographic with a strong affinity for fashion. Brands can target specific audience and objectives, including increasing brand exposure and accelerating their sales on our platform. To do this, we're using Google's Ad Manager technology and a suite of advertising tools to enable more sophisticated campaigns, automation, and increased reach. In our first year, we had 150 campaigns across 40 brands, and we're currently working to improve the platform further for our partners.
Our first objective is to ensure the program enhances our customer experience and provides a valuable service for our partners. We are also now exploring our ability to serve more customers through different platforms or partnerships and where we receive and fulfill orders which have been taken on a non-ASOS platform. This is essentially a reverse of our Partner Fulfils or D2C model, where we take the role of the brand and we drop ship our stock to the end customer. Partner platforms will enable us to test new partnerships in geographies where we don't offer the best customer experience and a partner can offer something more locally relevant, for example, in Japan or MENA. It also provides the potential for an alternative wholesale model in the future, where we ship at the point of customer sale.
In other words, partner platforms will allow us to test the demand for our products in new and complex territories before we invest and access new customers through alternative experiences and/or new partnerships. This capability also provides the same technical foundation we would need for selling through social media platforms should we choose to do so in the future. In summary, through the flexible fulfillment program, we'll go from a customer currently accessing one of our major stock pools through our experience to customers having access to far greater stock from our multiple stock pools, plus access to branded partner stock, providing greater product ranges and better availability through our seamless customer experience. ASOS Services will further amplify this by enabling new capabilities for our brand partners on our platform, access to more products from smaller brands, and access to new partnership opportunities.
That, in summary, is flexible fulfillment and ASOS Services. Turning now to how our technology enables our customer experience. In this next section, I'd like to cover how we're investing in our data science and AI capabilities, creating a personalized experience for every customer, and how we continue to test and iterate to enhance our customer experience. To date, we have been deploying AI in both the customer experience and the back-office operations to improve efficiencies, but we are really just at the start of this journey. We have developed our personalization and recommendation models, which use deep learning algorithms that predict what a customer will buy based on past purchase and browsing behavior, and we tailor the sort order of products which we show to customers.
Additionally, we partnered with visual search and fit technologies, which provide our customers with AI-enabled features that help them find the products they want and select the best size to fit them based on predictive algorithms. We've just started a trial of a virtual assistant to automate live customer care queries. We hope this will solve customer issues quicker and provide for efficiencies within our customer care operation. Within the back office, we have developed markdown optimization algorithms, which recommend the right discount depth for each product. These algorithms learn price elasticities from individual products and take into account the dynamic of each territory. We've trained these algorithms so that we can either optimize for sell-through, sales, or profit, depending on the trading strategy for each event.
Our fraud team have trained a machine learning system which provides new detection capabilities, reduced our overall operating costs and the overall levels of fraud on our platform, and we've deployed machine learning at scale in our cybersecurity team. After a few small pilots in commercial and customer care, we believe we can unlock a number of efficiencies within our teams by automating simple business processes through robotic process automation. To bring this to life a little, this slide summarizes how we are creating an experience that's tailored to every customer. Previously, we had deployed a recommendation algorithm that would suggest products to customers based on. This was successful, but it was limited to a small number of touchpoints within the experience.
In 2020, we focused on expanding and scaling these product recommendations so more customers would see them, and we deployed these models to personalize our category pages so that each customer would see a different product sort order based on what the model believes they would most like. We blend these personalized sort orders with the top 20 products merchandised by our commercial teams to ensure we retain some of the curated focus for each of the categories. This year, based on the results of many experiments, we continue to expand these algorithms across our promotion, clearance, and outlet pages, and we have also solved for product cold start problem and can now personalize new end products that have no historical interaction data.
Through this work, we have developed a highly scalable and reusable architecture for deployment of our machine learning models that allows us to provide real-time responses to our customers, and through this architecture, we currently serve over a billion product recommendations a day. Our architecture enables us to serve multiple models or variations at the same time, which allows us to experiment and always test the impact for our customers. Every one of these AI deployments goes through multiple A/B tests, which compares the results of the personalized page to a non-personalized page or a page based on a previous iteration of our algorithm. Successful tests this year have shown improvements of anywhere between 0.8%-2.7% increase in conversion.
For example, when we rolled this out to our U.S. and Australia customers, we observed a 2.2% increase in conversion for those customers in the experiments. Our focus going forwards is therefore to continue to expand on the number of touch points that we can personalize and continue to iterate and improve our algorithms. Two key areas we're currently working on include the following personal search results, which we are currently testing in our apps, in which we serve tailored results for our customer searches. We're also building for the same capability on our desktop and mobile web experiences. To date, we focus most of our personalization algorithms in our apps, where it's easier to identify customers and also provides for a faster experience. We're now solving for these within the web experience and have started testing this quarter.
As we continue to expand the number of customers that see and interact with our algorithms, we gather more signals and the models keep learning and thereby keep improving their relevancy over time. We also believe that driving fast incremental improvements through an always-on program of experiments will enable us to optimize the experience for our global customers. In Q2 last year, we moved to a new experimentation platform, enabling a greater number of experiments and reducing our test duration. Following this change, we doubled our year-on-year test velocity and expect to double that again this year. We are investing in our product management capabilities, bringing more customer focus, scientific rigor, and we have seen early improvements in our test outcomes through better data-driven test observation. Just to share a few really simple examples of recent tests.
In one experiment, we made our free delivery proposition information much clearer on the product page, and we observed an increase in buying visitors by 0.6%. In the U.S., this was even more successful, and our buying-driven visitors went up by 1.3%. In a second experiment, we expanded the number of products shown on our product page for customers when coming from paid marketing channels to help customers identify new products quicker. In this test, we saw a decrease in the bounce rate of this traffic of 4.3 percentage points. Finally, we're always looking to make the most out of every customer signal we have to build feedback loops throughout ASOS. We want to build everything with a view of how we can learn from our customers to improve their end-to-end experience.
One example of this is how we use our ratings and reviews data to inform our commercial teams on quality, fit, and style, which are then fed back into the product development and buying processes. A second example includes extracting product sentiment from our returns data sets to further help us improve size and fit. To summarize, this is not about any specific tests or features, but more about creating a culture of customer focus, always on experimentation, and continuous learning to improve our experience for every customer. We are focused on driving up the volume and velocity of our experiments and measuring everything we do. I'd like to end on one last point. As I said earlier, we believe that we are really just at the start of this journey, and there's so much more opportunity to improve the customer experience and our core operations.
In order to prepare for this, we are ramping up our investments in these capabilities this year. Highlights of this include a 60% increase in the size of our data science team with the hiring of more data scientists, data engineers, and machine learning engineers. Our product management and front-end engineering teams will grow by 30% this year, and the overall technology team will increase by approximately one-third over the next 18 months, including our new tech hub in Northern Ireland, which we announced in September. We'll keep investing in our core experimentation platform with a continued focus on velocity and success rates of experiments, adding new metrics to measure and extending to more parts of the customer experience.
We plan for further technical investments in our machine learning and data platforms to enable access to a greater array of data science models, the automation of model training, and to improve the overall impact of our data science teams. Finally, we'll continue to work with AI startups looking for innovative opportunities. We are increasing our customer research capabilities and adoption of open source models from the likes of Google and Facebook, and we plan to strengthen our academic research partnerships with various universities. Thank you very much. I'd now like to hand you back over to Mat.
Thanks, Cliff, and hello again, everyone. Let me now briefly cover how we're building our capabilities to ensure we can deliver our future plans. A key part of my role as CEO, both now and into the future, is enabling the organization to be more effective and to execute better on its strategy. As a part of this, we will stay relentless in our pursuit of efficiency, as this underpins our investment plans as well as longer-term profitability. Operational excellence is a set of tools and capabilities by which we deliver this for the organization in a disciplined way. As you know, we've made much progress over the last two years in establishing a more efficient and disciplined organization. As a part of this, we have trialed a specific methodology for improving our organization and processes, which we call operational excellence.
This trial has proved to be very successful, and we've now taken the learnings from this to drive an enterprise-wide program of improvements, which will improve execution and increase operational cost leverage. Success will come from utilizing our capabilities to drive efficiency. This involves bringing together process improvement, data, and technology to drive both continuous improvement and transformational change. We are set to do this within a disciplined and rigorous manner. As a part of this, we are leveraging and developing our capabilities in lean thinking, automation, and data and AI, as you've just heard from Cliff, as well as insights and analytics. We will critically focus these efforts on driving more value for our consumer whilst being relentless on wasteful activities, reducing, removing, or changing these.
This is a continuation of what we have been doing and will create speed, quality, flexibility, and efficiency in what we do. These initiatives will be key to how we accelerate our execution and drive future efficiency and effectiveness. Let me briefly give you an example of how it has worked so far. In January 2021, we launched the ASOS lean framework across our supply chain, and this has now been deployed across our three largest fulfillment centers, two of our return sites, and our delivery solutions network. After initially identifying over 230 opportunities to rethink, redesign, and reimagine the way we work, a combination of local and global ASOS and third-party improvement teams have worked together to deliver a variety of improvements across many areas, which include, for example, returns processing, core warehouse processes, and warehouse design.
We've built a central capability within ASOS that has created this freedom within a framework approach, and that has created both discipline and creativity in how improvements are identified and delivered. We've also created our own lean training program, externally accredited by the Lean Competency System, to ensure we are continually giving our people the skills and capabilities they need to implement and lead change. Through this program, we have delivered clear benefits in operational efficiency and quality metrics, as well as supporting our growth plan. It is this approach which we will use to embed a culture of operational excellence across our organization, an approach that will unlock efficiencies in our end-to-end operations, enabling us to invest in our growth while also generating free cash flow.
Looking ahead, we have the opportunity across all our end-to-end processes to drive both transformational change and continuous improvement, and I'll take you through some of the financial impact of these initiatives in the section later on. Some key examples of areas of opportunity are our end-to-end returns process, where we are identifying and addressing the customer drivers of returns and optimizing the experience, removing some of the operational drivers of returns and optimizing our global returns network. Looking at our global intake network and inbound logistics, where we will deliver efficiencies and a better customer experience by improving the flow of product and taking inefficiencies out of the value chain. As a part of this, we will work with key strategic suppliers, working collaboratively to deliver both efficiency and effectiveness across our entire end-to-end value chain.
There's also a significant opportunity, as Cliff spoke to you about, to digitize and automate much of what we do, in particular, routine processing activities, a key area where we can derive many benefits with many of our internal processes requiring significant manual intervention currently. By unlocking these and other efficiencies in our end-to-end operations, we will continue to embed a culture of operational excellence that drives both improved execution, better efficiency, and a lower cost profile. This will, however, require us to shift our culture towards a more collaborative, cross-functional environment, which across the business we will call One ASOS. This will be supported by rigorous approaches to performance management, incentives, and talent management. Critical to this is how we evolve our culture and talent. This is a big topic and critical to success, but one I will only briefly touch on here.
There is much to do in this area, including building our organization, attracting and retaining top talent, and driving the engagement of our ASOSers. As we grow globally, we will need to foster the right leadership behaviors backed by development and training for our ASOSers to not only embrace, but to lead the change. As we do this, we will continue to celebrate the culture that has brought us this far, a culture driven by our purpose and values. We will augment our organization through increased diversity and an increasingly inclusive environment, which will make us more effective, as well as allowing us to bring in new skills and capabilities, which will enhance the strength of what we already have. I'm now gonna hand over to Robert, who will talk you through our Premier offer and our marketing capabilities.
Hopefully, I can keep you all with me. We get a break after this, hang in there. Thank you, Mat. Continuing on the topic of enabling capabilities, we're making several enhancements to our Premier offering, and I'm also going to discuss investments we've made in our marketing capabilities to support the increased investment and expansion of our marketing model. Our Premier service is an important part of our customer experience, as well as an integral part of our growth plans. For more than 10 years, we've offered customers unlimited next-day delivery in the U.K. for only GBP 9.95. Our Premier subscriber base underpins our U.K. position. Let me provide a few highlights of the impact of Premier in the U.K. 1.8 million Premier customers accounted for 59% of our FY 2021 net sales.
Premier customers in the U.K. shop with us more than five times as frequently as non-Premier customers, which is well more than one time each month. They shop across a wider variety of categories. Quite simply, Premier customers are more engaged with ASOS. Without considering the reduction in ongoing marketing costs, retention benefits, and the impact on market share, which are all important benefits of the program, the average Premier customer generates almost two times the order level profit of a non-Premier customer over a 12-month period. That said, our Premier program is about growing a foundational, loyal customer base as part of our overall playbook. It's first and foremost about market share. A fashion-forward customer can rely on ASOS to find the latest styles as well as inspiration to amplify their own unique style.
Shopping for fashion is emotive and rewarding, and next-day delivery overcomes a built-in compromise of the experience of buying online. There isn't an equivalent destination for fashion-loving twenty-somethings, which is why so many U.K. customers take advantage of this service. We recently initiated a long-term program to improve our ability to grow the Premier base outside of the U.K. and to enhance the offering beyond the delivery benefit. We've offered Premier outside of the U.K. for many years, but we've not developed the same level of participation. After a thorough review, we've optimized the pricing for Premier in 10 markets to better tailor the offer locally.
Specifically, we've optimized both in terms of the relative customer proposition as well as local order economics and customer behavior to ensure that in each territory, we build a subscriber base as a sustaining flywheel in the same way as we've done in the U.K. We're particularly excited about the refined offering in the U.S. Since September 1, Premier members in the U.S. can now enjoy unlimited next-day delivery for the first time. As I mentioned, we also plan to include benefits such as exclusive promotions, early product access, and expedited customer service. Last month, we ran our first ever Premier party, giving Premier customers an exclusive site-wide discount. That was one of our most successful promotions in the last two years. We've also begun replacing the subscriber platform, which will enable more marketing support and a better subscriber experience.
Premier is an important part of our overall growth strategy. We plan to double the subscriber base over the next three years. Now, hopefully, this gives you more of an understanding of the opportunity and how Premier fits into the plans. As I mentioned, I'm gonna provide some background on the efforts we've made to enhance our marketing capabilities. The ability to effectively and efficiently increase market share through marketing investment is a critical enabler for our future growth. We've been able to steadily reinvest operating leverage behind marketing. Spending as a percentage of sales is up by about 1.5 points, which is particularly meaningful in absolute terms. As we continue to scale, we're approaching our plans with an equal dose of rigor and creativity, because increasing spend alone will not accomplish our goals.
We've made significant changes in capability investments, including a complete reorganization of the function with the appointment of four new directors, improved measurement and data science capabilities behind our digital media spend, and thorough research of our brand in today's fashion-loving twenty-somethings in our key markets, including a global demand study, a global review of our brand equity, as well as a large-scale ethnographic study across our key markets where we spoke to more than 4,000 individual fashion-loving twenty-somethings. We virtually went into their homes, we toured their closets, spent hundreds of hours listening to their hopes and dreams, frustrations, inspirations about fashion and beyond. We now have not only the operating leverage to expand the mix and scale of our marketing, we also have greater insight and capabilities to manage that spend.
A primary focus of our enhancements has been to improve our ability to invest in digital media. We've added a dedicated data science team who've built a best-in-class capability to measure the incremental impact of our different marketing investments through a continuous program of controlled A/B tests. This is the cornerstone of our media investment. We ran 160 media tests in the last 12 months, and the learning from these tests helped guide the allocation of marketing capital across channels and markets based on the measured returns. This has enabled us to nearly double our spend in performance marketing between fiscal year 2019 and fiscal year 2021 with a small improvement in ROAS, and this is very difficult to achieve as return tends to decline when you increase investment that much.
We recently asked Google to give us an assessment of our digital marketing capability based on their digital maturity assessment that they've developed with the Boston Consulting Group. On that benchmark, they rated us a 3.1 on a 4-point scale. That puts us in the top-tier group, which is much better than the sector average of 1.7. As important, it's a significant improvement on our rating from two years ago, which was only a 1.2. We're continuing to invest in data and marketing tech to build those capabilities, but we've made significant progress, and this underpins our ability to continue increasing investment. Again, we're not just increasing spend; we're expanding the model. In particular, we're increasing investment in reaching people beyond lower funnel media when we know they're actively shopping, but also reaching them continuously to maintain salience with our audience.
The biggest change in our marketing mix will be a significant increase in broad reach advertising. As I mentioned, we do plan to continue building our capabilities to help profitably capture lower funnel demand. We've also long had success publishing brand content through organic social media and influencer marketing and cultural marketing. We plan to increase resources in these areas as well. We're reaching our audience in less traditional places where they have passion and interest and spend a great deal of time. We just signed a partnership in the gaming world with eSports team Fnatic to leverage the massive growth in gaming among our audience. For the first time, we will also make ASOS available in a physical store in the U.S. with our strategic partnership with Nordstrom. We're approaching expansion with a measurable approach so we can optimize the model before we scale investment.
We now have the capabilities to support deploying a full funnel model. That's it for me for now. Mat's gonna chair a Q&A, joined by Cliff and I, and then we'll follow that with a short break, and then we'll start again with José and Vanessa talking through our fashion offering. Okay?
Thanks, Robert, and thanks, Cliff. We've as I'm sure you're all feeling, we've covered quite a lot of content in the last hour and a bit. We just wanted to provide a kind of opportunity for a check-in Q&A if there's points you'd like to clarify in any of the content or you've got any specific questions for me or Robert or Cliff. As I said earlier, at the end of the session, there'll be an opportunity for a longer Q&A with any more strategic questions. If I can ask people in the room, if you wanna put your hand up, there's a roving mic, and if I can ask you to state your name and institution just for the transcript.
Before we do that, just for those online, there should be a box where you can ask your question. Again, if I can ask you to put your name and institution so I can read it out, that would be helpful. We'll start in the room. Heidi, there's a question from Mike.
Hi, Mike Benedict here from Berenberg. Just one from me, please, and it's on the brand portfolio.
Yep.
I think the brands or number of brands you work with has been ticking around the 800-850 mark for a while now.
Yep.
I wondered if there's any plans to expand that materially. To that end, is the Partner Fulfils model enabling conversations with mega brands that may not have worked with you previously?
In terms of that, there is an intention to expand our brand portfolio, but I might ask that we're gonna have a whole section on brands and brand portfolio. Which I hope it will be covered then. If not, let's come back to it after that, but we intend to cover that later on. Lots of questions. Sorry, just point at someone. It's probably easier.
Hi. Thanks for taking my question. It's Sherri Malek from RBC. First question is on the customer cohort behavior that you showed for the U.K. Just curious to see how that picture compares to international markets today, in terms of that net spend increase, by customer. Then second, on the flexible fulfillment model, now that it's enlarging, how are you managing sort of offering that good service, but also the kind of unit economics as well at the same time, particularly as Partner Fulfils, you know, tends to sort of have an impact on the unit economics overall?
Let me just briefly dwell on in terms of the first question, again, the statistics you saw for our overall customer base. Clearly our U.K. proposition within that would be stronger. Cliff, I might ask you to answer the question around experience and Partner Fulfils because I know it's been a big focus of your team. In terms of the economics, again, we're gonna pick up the economics of it later on. If I don't answer the question fully, then pick it up later on. Cliff, over to you.
On the experience in particular, I mean, what we tried to do is create an experience that's as simple and as clear for customers as possible, so they're very clear about it. So that when they at checkout, and from the product page, the principle we took was we wanna tell the customers at the earliest possible part of the experience where the product is coming from, whether that's from another ASOS warehouse or it's coming from a particular partner. If there's a different price because we have to price partners' products differently, if they're selling it at a different price than us. Then all the way through that experience, we've tried to make it as clear as possible, and they know that through the bag, through checkout, and then through their order confirmation details as well. I'm not sure if that answers your question.
Yeah. I was wondering how you balance that.
Yeah. Let me pick up the unit later on.
We can pick that up later.
Let me pick up the unit. Should go over there.
Thank you. It's Charlie Muir-Sands from Exane BNP . Two questions, please. The first one on ASOS Premier in the U.S. Can you just remind me what the proposition was before the first of September? Sorry. Can you say that one?
Yeah. Previously, Premier customers received express delivery, and they could pay $5 extra in order to receive next day. Next day was not part of a free proposition. Also, you know, we believe free is very differentiating within the apparel category for next day.
Fantastic. Then the second question is also for you, please. Are you seeing the unit costs of digital marketing rising again? Particularly with customers much more willing to go back to high street stores, is marketing return coming back under pressure again?
Well, it depends on the channel. You know, we're optimizing to incremental ROAS and incremental ROMI based on where we go. Now, you know, there are many channel shifts. In some channels, actually, the high street returning benefits those channels because if they couldn't open their stores, a whole lot of new money came into digital media, if you understand. Then there are other channels, you know, Facebook, I think, has been, you know, fairly public, as have other advertisers in terms of, you know, that channel's performance has diminished significantly in some lower funnel things because of iOS 14. You know, there are changes. You know, we have a rich media mix so that we can deploy our media profitably in the lower funnel, you know, depending on where things move and across markets. I hope that answered your question.
Yeah. Thanks, Robert.
Do you wanna? Yeah, go on the next door.
Thank you. Oh, sorry.
I've seen you now. No, no. Go for it. Go for it, John.
John Stevenson, Peel Hunt. Jumping the queue. First question just on year one retention rates. Looking at the cohort, I don't know if you can comment on what they look like, you know, ideally by market, but overall, and how that's changed over time. Secondly, just following on from the marketing question from Charlie, are you getting more confident now in terms of your CAC, in terms of what you're willing to spend to win customers over? Or is it just a case of there's green fields and you don't know. You're still optimizing. How do you think about the sort of cost of acquisition in general?
I mean, in terms of the second point, and I'll let Robert comment. I think implicit in the fact that we're investing more means that we're kind of confident in how that algorithm works overall, and you've seen, hopefully, the value of the customer proposition. There's more to come on how we're looking to kind of take people through that customer proposition later on. I almost suggest we pick that up later on. Sorry, your first question, John, remind me.
Year one retention rates.
Do you want to comment on year one retention rates?
Yeah.
I can comment on both of those if you like. On retention rates, you know, those by market, and you know, it's not part of the disclosure, you know, we have a very clear view on where those go by market, and there tends to be a correlation between market share and where those go. You know, I don't think there's any significant change in how those patterns have run over time. In terms of CAC, you know, I think Mat's answer is appropriate, you know, we're obviously increasing spend. We're doing that with a lens toward profitability.
We are not taking big bets anywhere. We are 100% driven by a test-and-learn model. We will test a whole variety of things with controlled AB experiments, and the only things that scale or get retested are things where we learn. I think the answer to the question, short answer is yes, significantly more confidence because we have more visibility into the incremental return on everything we spend.
Are you happy to go beyond sort of first order profitability in terms of driving that customer?
I'm sorry.
You're happy to go beyond first order profitability?
Let me. I mean, I think rather than a detailed, you know, we're doing it equating to the return, and we'll take slightly different approaches depending on market and how we're looking to focus it. The only other comment I'd make just on retention rates, and it's actually a point Robert makes passionately internally, but I think it's an important one, is obviously, and it's our fault because that's how we report it. Effectively, we obviously report it in a kind of 12-month cycle. One of our strongest customer bases on a week-by-week basis is what we call reactivated customers. They're not really reactivated. They're just customers who've chosen to spend 13, 14, 15 months.
Just, you know, we build our customer base over time, and we continue to have an interaction, and lots and lots of customers come back after 12 months. It's just to kind of explain partly how we measure it, but also because that's an important. It feeds into how we think about retention and building the customer base longer term. I thought we must go to Georgina now because she's been hanging on for a long time.
I've been holding this microphone for a while.
Yeah.
Thanks. It's Georgina Johanan from JP Morgan. Just a quick one, please. I guess what I'm still a little bit confused about is just with regards to Partner Fulfils. I understand that starts with being about backfill, but when does it become about widening the range? And ultimately, what is your ambition there? Like, are we talking about going from 85,000 product range to, you know, several hundred thousand like an ABOUT YOU or a Zalando? Or is it more like a 5-10,000 increase just to kind of infill around the edges?
Do you wanna answer the first bit of the question?
The first bit you're talking about, which we call width rather than depth, we actually are starting that piece of work straight after the pilot, so that's our next piece of development as well as looking at Europe in the plan. As we said on the slide, we intend to deliver that this year. We'll start with Adidas as well as we started, but then we'll also focus on how we can expand both width and depth to all the brands.
In terms of the second part of your question, George, we see a significant opportunity to localize our assortment by territory and by implication, therefore, we see a significant opportunity to expand our range. I feel to do it justice, hopefully, José is gonna talk to you about how he sees that in the second section. I think we I guess the simple way I'd describe it is we do wanna retain some of the strength of the model that we've spoken about in terms of the curated nature and the focused nature of our edit. Therefore, by logical extension, I wouldn't expect to see the sort of range you see on pure platform models. It needs to stay focused on 20-somethings, and it needs to stay focused on relevant product for them.
At the same time, we do see a huge with opportunity, and that's, I guess, factored into, which we'll talk about later on, seeing an opportunity of about 25% of GMV as a kinda long-term target. We've got our own brand portfolio as well. That kind of feels like if you compare that to some of the pure platforms that are aiming for maybe 50%, it gives you a feel for kind of how we see the role of it in our portfolio relative to how other people might think about it.
I'll pass to Adam or Simon.
If people can be thinking of, I'm conscious that everybody's probably desperate for a break in the room and especially online. I think there's two more questions in the room, and then there's one online that that poor Ben, who's online, has been holding on since right at the very start. I'll ask his question as well.
It's Simon Irwin from Credit Suisse. As you move towards Partner Fulfils, firstly, what kind of data are you going to be sharing with the brands on those products and on those customers? What's the incentive for the brands now that you're offering them broader options to hold back the better product for the Partner Fulfils rather than previously, obviously, they only had effectively one route to supply you with.
Do you wanna pick up?
I can pick up, and José may be able to add to this. I think a lot of the conversations we've had with the brands is actually they're very interested in both conversations together as part of the strategic accounts. You know, they want to. If you look at the big sportswear brands, part of their strategy is to supply us in both methods. Part of that, you know, we've set up a brand onboarding team within José's team and a commercial team that can have that joined-up conversation together to balance your exact question. I think we're seeing that they're doing that with other players as well. I think that's becoming the norm.
Second.
I don't-
Do you wanna add to?
I don't know if we can get José. I feel-
Should I ask José?
We should just bring in José to answer that question. Otherwise, we're gonna end up. Sorry to drop you in.
No, no worries.
I know you're on later, but.
That's fine. That's impromptu.
Yeah, exactly.
Well, that's a great question, and I think every different partner is gonna have a different approach. We have partners that are expressing their interest in having a, let me call it a hybrid model, where they are interested in continuing with, let's call it, the traditional wholesale model with us and having parallel a Partner Fulfils. The main reason is that they want to control the pricing. That's very clear, and let me offer a very clear example with the top sports brands. They want to control a part of their assortment and their pricing, and that's why they only offer that through Partner Fulfils. That would open for us the door to access this part of the assortment. There are other partners where we might decide to work only under a Partner Fulfils model, especially mainly smaller partners.
If we want to have, I'm gonna mention an example that I know well. If we want to customize our assortment for the Spanish consumers, and we wanna have a brand that is very relevant in Spain but is not relevant in any other markets, or maybe only Spain, France, and Italy, why would we want to work under a traditional wholesale model than we will work under a Partner Fulfils? The beauty of having both is that it will enable us to decide how do we play here and there with the different partners and the different situations. It's not gonna be one size fits all. It's gonna be different for different partners.
I think the only thing I'd add, Simon, and I think it's potentially different for us than it is for some of the other models that you guys might be more used to, is that there are very few people who can service 186 countries, particularly with the level of, you know, 85% of those next day.
Mm-hmm.
For very many of those partners, there's a genuine benefit of us holding their stock. Some of what you're gonna see later on in terms of how we shoot, how we curate product, I think it is a source of significant value. I think it will be, you know, genuinely, it feels like it will be a genuinely partnership model where we're hopefully able to access the best of both worlds. I think Adam was next.
Thank you. It's Adam Cochrane at Deutsche Bank. Apologies, but I've got a personalization question for you. I think you talked about the-
Have you not been able to find what you want on the website?
Well, if the recommendations aren't always accurate. The 2.2% increase that you talked about in conversion, that is absolutely massive. What is there to stop that from being achieved across the board? Is it much harder as you go into webpages than it is in apps? Can you just talk-
So-
-about how that can be achieved?
The 2.2% I mentioned related to when we rolled out to Australia and the U.S., which was our last bit of our rollout. That was a little bit of an easier one, if I'm honest, because you're going from no personalization to a personalized experience.
What is the starting point of conversion, just to put it in context?
Sorry, beg your pardon?
What's the 2.2%? Is it going from 3%-5% or 1%-3%? Or what's the numbers?
It was percent, Adam.
It's percentage on percent.
It's not a percentage point.
Percentage points.
2.2% increase in conversion.
Right.
A lot of the experiments I talked about, whether it's personalization or any other experiments, often we'll get numbers very similar to that. It's not about one. It's a large number of those experiments that adds up to, hopefully, a more meaningful number because you get percentages on percents.
I think that's the way to understand it. The whole point of accelerating experimentation, as both Cliff and Robert spoke about, is you wanna be running hundreds of tests, all of which generate a bit of incremental value. In terms of the overall conversion, though, and again, José is gonna talk a lot about how we're gonna increase conversion, there is a material opportunity to close that conversion between the U.K. and the rest of the world. Some of that's through the brand portfolio and the customer funnel, but it is also in making sure that the experience is as locally relevant as possible.
Even things like where the delivery information is on the site actually changes conversion because some people are used to seeing it at the end of checkout, other people are used to seeing it before they even start to purchase a product. There is, as we speak about that kind of personalization, a lot of that will inform the localization. Let me ask Ben's question, and then I'm gonna give everyone a well-earned break if that's okay. The question comes from Ben Hunt at Investec. Ben's question is specifically about ASOS Fulfils.
The question is, "ASOS Fulfils clearly creates incremental sales and reduces markdown, but how profitable are these sales given likely higher distribution and warehousing costs?" To which the answer, Ben, is a relatively simple one, which is you price the service based on the cost that you incur because it is an incremental value add to the partners that would choose to use it. It's something we're not doing currently, and therefore, something that we'll be able to give more clarity on in time. Our experience in looking at what other parties do in the market, you're offering something to small brands typically or brands that can't do it for themselves, and you would price it economically as such. That's the answer to Ben's question. It is now 2:03 P.M.
If we could have you back in the room at about 2:15 P.M. Hopefully people in the room logistically know where the toilets are. They're up the back there. Help yourself to food and drink. If you can be back in the room at 2:15 P.M., because otherwise it disrupts the video with people coming in and out, 'cause we'll start swiftly at 2:15 P.M. Thanks very much, everyone.
Okay. Good afternoon. Yeah, it's working. Good afternoon, everyone. Super excited to be here. I hope you guys had a lot of coffee and rest, because I'm gonna be torturing you with my crappy accent and English for a while. My apologies. I'll try to do my best. If at a certain point in time you don't understand, just let me know. Now I'm going to be talking a lot about our brands and how we say that we create the secret sauce. Eh? I'm gonna get reprimanded for sharing some secrets with you. I hope that's okay. Mat has been talking a little bit about our business model and the fundamentals of our business model. I would like to give you some color, some additional color about that, how is it that we do it?
Then afterwards, I would like to talk about how do we wanna take this business model one step farther so that it really can cater for all our ambitious growth perspectives and potential. Let me just dive into the content directly. As Mat shared with us, we have this multilayer business model that pretty much starts a journey with the consumers with our own brands. After buying our own brands, they start buying partner brands, and then they move into additional services, namely Premier, and finally they move into additional categories. Right now, fundamentally would be face and body and sports. That is a very interesting model because it creates this journey. It increases, as we have seen, the engagement of the consumer, the average expenditure, the frequency, reduces churn. It's a very, very powerful business model.
What I want to share with you is, as I said before, the secret sauce, which is what is behind this business model? How do we provide so that it happens? This has, again, three main pillars. Three, you know, is a magic number, one of the magic numbers, which are create, curate, and convert. We create, which means we have our own brands. We create our own brands, which is a unique fashion-forward proposal. This is very important, the three words fashion and forward. The two words, sorry, fashion and forward. I will elaborate on that later. This is the source of our credibility as a fashion destination, and that's very important. I will try to explain why. This plays a critical role in attracting new consumers, as Mat has already highlighted, and I will also elaborate a little bit.
We not only create, we curate, which means we complement our offer with the best brands out there. We don't take a platform approach, meaning we take a brand, and we incorporate the whole assortment of the brand. We handpick the part of the assortment of this brand that we consider that is relevant for our consumers. That's very important because we are a fashion destination. We have a perspective. I will elaborate a little bit on that. This is very important because that is what complements our offer, and it's a critical tool to increase the engagement of the consumers, as Mat shared with us. As you see here, more or less 40% of our sales come from the creation part, 60% from the curation part. It's pretty balanced. Both very important, playing different roles, as I said.
Finally, but not less important, we convert. We wrap it all up. As I said, we are not a platform. We're a destination. We have an opinion on fashion. We have a point of view on fashion, and we deliver that opinion through the experience and the visual language. It also plays a very important role that I will get into that later. Let me start with the creation part. We are fashion creators. We have 17 own brands that we create. I could drag you through every single brand, but instead of doing it myself, I'm going to invite Vanessa to join me here because she, as the Design Director, knows that better than anyone. Trust me, she's the most passionate person in this building on our own brands, so I'm pretty sure she's gonna do a much better job than myself. If I may, please, Vanessa.
Perfect.
Mm-hmm.
Thank you, José. We have developed a set of 17 brands to appeal and meet the needs of our fashion-loving twenty-something market. The ASOS own brands took GBP 1.4 billion net sales in FY 2021, with 70,000 options. These brands, we create a really relevant offer to all of our twenty-somethings. Whatever their style, their price point needs or the occasion, like, we've totally got them covered. This puts us in a really unique position to be able to develop our future ambition of growing our own brands over the upcoming years. A really important part of creating brands for twenty-somethings is just really understanding all moments of their lives. We are twenty-something obsessed. Like I know I am. The whole teams are. We know where they go. We focus on what they do.
It's all about the occasion and the end use. Here's a few examples on screen. Like, believe me, there are so many more, but I'll just take you through a few today. If you start with your planned airport look, airport looks, and like, they do need to be planned. You've also got your holiday outfits that have to be social media worthy. Your kind of rooftop. It's all about look at me moments. Your landmark birthday outfits. You've also got a bit of your sort of casual college days, and then your once in a lifetime prom moments. All of these offer a really unique experience. Again, whatever their size, their body type, their style, wherever they live as well, or the occasion, they have a place at ASOS.
We also focus on the different types of twenty-somethings when creating these brands. This is all about being really authentic to their actual style. We have six different consumer types that we cover. Again, I'm just gonna highlight a few today, but starting with Insta-glam and Insta-alpha. This covers your on and off duty. It's extra dressing. It's all about showing off on social media. You have your girl and your guy next door, which is pretty accessible style, and that's for your every day and your every night. Editorial. That's a bit more minimal, aspirational looks, and they're likely to be catwalk inspired. Finally, we have Gen Z. That's your casual styling for the next generation. Again, all of these offer a really unique experience. We've got all twenty-somethings covered, whatever their style.
We've got a video here just to showcase a selection of our owned brands. An amazing video. Hope you agree. That was actually created in-house by our studio team. Hopefully that's just helped to illustrate the differences between the brands, and then I'm just gonna talk you through in a bit more detail about each brand. Starting with COLLUSION. We launched COLLUSION three years ago, it absolutely captured a white space in the market for that Gen Z audience. COLLUSION is all about being casual, it's gender fluid, it's inclusive, 100% animal free. It's also really experimental and collaborative as well. COLLUSION is also the second most searched brand on asos.com, and it really appeals to that younger Gen Z customer. Then on to As You.
As You is one of our newest brands. We launched it in October 2020. It targets that younger 20-something. As You is all about the glam. If you think kind of Kylie, Kendall Jenner, you've got the vibe of it. It was 12 weeks from concept to launch, hence 60% of the manufacturing was in the U.K. For this consumer, like, speed is everything. Like, they want the hottest trends as they drop. Actually, despite launching in the pandemic, the brand has really resonated with that customer base, so the under 25s. We also see huge potential in this brand for spring/summer 2022. With the demand from that customer going back to their sort of proper out-out lifestyle, so being able to go back clubbing and going on holiday, we see huge potential.
The next one is Miss Selfridge, so acquired in February 2021. This also targets a younger age group, but this one's a girl next door with a really pretty style. She's not as glam as the As You customer, and she also targets slightly wider range of occasions. Again, we see huge potential in this brand with an opportunity to triple its sales in the medium term. Topshop Topman, so these are the latest additions to our portfolio. These are definitely iconic brands. They focus on the top end of our target age group. This consumer is really editorial with a fashion stance, and these brands will provide aspirational looks for our twenty-somethings. Topshop and Topman have so much growth potential, and we definitely see an opportunity for them to become a GBP 1 billion brand in the long term.
Then finally, ASOS DESIGN. Our core brand in our portfolio, taking sales of GBP 1.2 billion for FY 2021. ASOS DESIGN is all about all moments of a 20-something life. It covers all consumers and all occasions. ASOS DESIGN is actually really unique in terms of its width and its offer in comparison to lots of our competitors. It offers more than 55,000 options per year, and it's also fully inclusive, so a range of sizes and fits. That includes petite, tall, maternity, plus, and hourglass. Now I'll hand you back over to José. Thank you.
Thank you so much, Vanessa. Well, I would buy them all.
Yeah, please.
From you guys. It's almost like having 17 kids. It's kind of difficult. Well, as you've seen, we have a lot of brands, but there is a reason for that. Because we have a very clear objective that is to cover all, let's say, occasions and type of consumers, but always laser-focused on fashion-loving 20-somethings. That's the critical thing. Here, we are going wide on a very specific target. Our idea and the reason why we have so many brands is because we are trying to cover the significant segments that we see in this space of fashion-loving 20-somethings. Again, as Vanessa explained to us, all occasions, all type of consumers. That is a very important point. We are continuously monitoring what is happening in this space because obviously this is a living animal.
There are new types of consumers, new relevant occasions, and in that sense, we're always looking for new opportunities to tackle the new segments that are popping up in the market. Our intention to be comprehensive with these fashion-loving twenty-somethings goes beyond the occasions and the type of consumers. It also takes a little bit of a, of an age and price approach. If you look into our portfolio brands with these two lenses in mind, what you will see is that we have a set of brands that are the younger brands targeting lower price points. Now, they will be competing with people like Primark or PLT or SHEIN, while we have the core of our assortment. Yes, thank you.
The core of our assortment with ASOS DESIGN being, as Vanessa explained to us, our most important brand, competing against a different set of competitors, H&M, Boohoo, New Look, River Island, a little bit older and a little bit higher in price points. Finally, the top end of our assortment, which will be Topman, Topshop, and ASOS EDITION that will be competing against the more if you want, inspirational, more fashion-oriented, more catwalk-oriented rather than fashion-oriented, like, like the Zara. This is not a scientific graph, but it's to give you an idea of how do we also look into this lens when we create our brands because we want to, as I said before, cover every single fashion-loving twenty-something from all angles. This is a pretty resilient model, and let me try to explain you why.
If you look at the margin contribution of each brand, and if you look at the size of the bubbles, I know it's a little bit of an exercise of imagination, but the size of the bubbles is real. If you look at the size of the bubbles representing the relevance, this is the core of ASOS of our, if you want, value creation. The core of our assortment is the core value of our value creation, which kind of makes sense, of course. That also means that our competition here and here is of course our competition, but to a lesser extent. This is where we are really focused, and this is the core of what we do. There are some other reasons why we think that our model is pretty resilient.
As Vanessa said, we create a lot of options, 70,000 options in total in a year. Just to give you an idea, let me take, for instance, in a specific category like dresses, which is our most critical category. We have right now, if you go to our website right now, and I went this morning, we have more than 15,000 options offering to our consumers. Let me repeat it, 15,000. These are a lot of options. Just to put it in context, when you compare that with some of our core competitors, some of them are in the high hundreds, low thousands, and even if you go to the platforms that compete with us, they would some very, very popular brand coming from the Far East lately, they are 30%-40% behind us.
This is really wide assortment in dresses. Dresses is our core category. It's one of our strengths. Just to give you an idea, this is really one of our core strengths, being able to cater that. That this doesn't really mean that we buy all dresses equally. That doesn't really mean we're throwing dresses left and right because we have a lot of leftovers. By the way, it's one of our categories that runs faster. That's not the point. We know how to buy it and to manage the depth. It's the width of the assortment, and there was before a certain question about width. The width of the assortment we are able to supply to our consumers. That is a great strength of our model. We have a relevant size, GBP 1.4 billion.
Mat mentioned before we are probably the fourth or fifth, I don't know, biggest brand in the U.K. or British brand in the world. That give us access to a lot of economies of scale as well, and that is important to know. We are able to deliver, and we've been able to deliver for years, and that, of course, is based on the relationship that we have with more than 150 suppliers, trusted suppliers, people that we know how to work with. They're partners. They're not just. It's not just a commercial relationship. That's very important. I will try to explain why a little bit later. We do all that. We deliver fashion, but always with integrity, which is also a differential part of our value proposition that makes us very resilient.
This Fashion with Integrity approach is gonna get more and more important, as you guys know very well. Our own brands play a critical role in attracting new consumers, and that's what Mat indicated before, and I wanted to elaborate a little bit more. 60% of our new consumers buy our own brands. 60%. That is the main reason for them to come. 74% of our consumers buy our own brands, of our total consumers. It's in 74% of the baskets, that's massive. That creates 40%, more or less 39, 40%, of the value we generate. We're talking about a critical part of our business. Especially here, this is the critical number because it is the door, it's the gateway for consumers to get into ASOS. It's absolutely critical. This is a success.
As I was saying before, we are GBP 1.4 billion growing 10% annually for the last 10 years. Not for the last two years, for the last 10 years in a row. Not 10%-20% every year. This is, as you know, the average of the 10 years. But it is a consistent growth over 10 years. It is certainly a success. Let me now move into curation. We are curators, and that's a relevant part of our value proposition, as we said before. We work with some of the most important names in the world of fashion and sports and face and body. The reason why we curate is that we want to complement our assortment. We want to give our consumers a comprehensive view on fashion, not just us. That is very differential. You will not find that many models out there that do both things.
You have platforms, you have mono brands or houses of brands, but it's very difficult to see both. That makes ASOS very different. The word curate is very important. We don't just pick a brand and take the whole of the assortment. We handpick the part of the assortment that really can resonate with our consumers. We are adding value to our consumers. We are doing part of the job, if you want. On top of that, we are adding the layer of our visual language, that I will try to explain later, which is adding our perspective on fashion to really become a fashion destination and not just a place where you have stuff. We have relationship with 850 brands. We are offering more than 150,000 options, a really wide assortment, as you see. It's not that we have relationships. We have really high-quality relationships.
These are just two examples. Nike consider us a key strategic partner or Polo Ralph Lauren, fashion leader. All the big names have us in one of their top tiers as a partner. Not top tier only in terms of volume, top tier in terms of the quality of the relationship, because there is always the word fashion in how do they consider us, how they see us, and that is very important, as I will try to explain later. As I said before, this is a parallel way to develop the relationship with our consumers. They enter through our own brands, but then they develop buying third-party brands. The fact that we curate and create enable us to do things like that. As I said before, that is not that easy to see.
We can do outfits where we are mixing our own brands with third-party brands, certain price points with completely different price points, as you see here and here. That is quite unique, and that is something really appreciated by consumers, because consumers normally hate to dress equally top to toe. They like to change, they like because this is part of the reality of this market. That is quite unique to ASOS, and that is very difficult to replicate. Finally, we communicate, we convert. Here I wanted to make a specific mention to our visual language. This is how we wrap it all up. We get the clothing from our own brands, we get the third-party brands, we put them all together in a very specific way. We have a unique way to talk about fashion, because that comes with our perspective.
It's not just putting it together, it comes from our perspective. That is reflected in how we select the models, how we select the poses, how we do the hair, how we do the makeup. It's all in there, and that's very important. Very important. It's not only important, it has become one of our defining characteristics that defines us as a fashion destination. Let me illustrate that with an example. When we shoot merchandise that is not from ASOS, merchandise from brand partners, and this is a real example, this is not fake, this is real. This is how they shoot it, and they ask us, "Please shoot it. Bring us your perspective." This is a completely different way of selling the very same assortment. This is talking to a completely different consumer.
It's talking to a younger consumer, a more fashion consumer, and that brings a lot of value to the brands. That's why brands like Polo Ralph Lauren consider us a key strategic partner, because what we are bringing to them is access to a different type of consumer that they cannot access, and that's very important. Enough of what we do. Let's start talking about what we really wanna do to capture this growth potential. Obviously, I mean, I'm not going to change the framework now. That would be kind of bizarre. I want to talk about that on the main three things we do, that is create, curate, and convert. What is it that we want to do with create? We wanna double down in our fashion credibility. Let me explain to you why.
What is it that we want to do with curate? We want to expand our platform, and there was a question about how we expand our platform. I hope I will be able to answer it now. How do we want to also improve our experience when the consumers are shopping with us, not only shopping, spending time? How do we want to double down in our fashion credibility? There are three things we want to do here. The first one is invest in the functionality, fashionability, sorry, for core lines. This is kind of like a difficult word. I don't know why I choose these difficult words. The second one is we want to transform our brands into iconic brands. Don't you worry, I'm gonna try to explain what I mean with that. I will not leave it here.
Finally, we want to leverage on our team. Let me go to the first one. What do I mean with invest in the fashionability of our core brands? Our business is fashion. You can see that in those facts. This is our business. Our business is to create excitement, and we do that from three specific pillars, which is inclusivity, which is sustainability, and which is cultural events. That's very important. That is a different approach from someone like other brands that would be much more attached to the catwalk. Remember, I know I said it, but it's good to repeat it sometimes. 60% of our new consumers come because of that we do, because the kind of fashion we create. But when you're a fashion creator, the most difficult thing, and the most important, is to remain relevant always.
Because the moment that you stop being relevant, you stop being interesting for the consumers. There are two things that we need to do to remain relevant. To be more exciting, actually, I would like to say to be more faster, but you cannot say that in English. It doesn't work. In Spanish, it would work better. To be faster and more urgent, but let me explain what I mean with that. To be more exciting means newness, because newness is the DNA of ourselves and of this business. This is about bringing something new every day. New material, a new way of doing outerwear, a new way of interpreting track suits, new visual codes, a new way to combine them, new trends. It is absolutely reinventing ourselves every day.
I've been working in a lot of different companies in this industry, and I got from someone that is really a legend in this industry, I got a one-liner that I will never forget. He was saying, "When you work from a utility, you go to bed, you have a million consumers. Next morning, you have a million consumers. When you work in fashion, you go to bed, you have a million consumers. Next morning, you have zero consumers. You start from scratch." How do you capture your consumers? Newness. This is why they come, and that is absolutely critical. I know you know that, guys, and I know it's kind of preaching to the choir, I know.
I like to repeat that because this is so critical that I want to make sure that you know that this is in our minds every single day and every single second of the day. How do we bring newness constantly and we are as right as possible? The answer is speed, and this is absolutely critical in our industry. Speed, speed. This is what we are going to do to try to get better and better every day. Right now, our time to market goes from 4-12 weeks on average. This is across all product classes. This is very difficult to read because it's not the same time to market of a T-shirt and a coat, so just this is pretty much top tier in the industry, we are competing with the best.
We want to reduce 15%-30%, this time to market. How? We're going to do a lot of things. Just some examples here. We're going to widen our supply sources, and we're gonna go from very specific locations to more locations that are closer to our end destinations. That is enabled by our global size, by the way. We are continuously updating the tools we use, and now we are moving more and more into digital. We are working into digital design and sampling. We are working with the best to really get there, and actually, some of it is already working, by the way. We are integrating more and more the management of fabric.
That kind of sounds kind of weird, but that, what that pretty much means is that we will have more flexibility to decide what it is that we want to do with each specific fabric. That is a way to gain speed and flexibility. We're changing our allocation processes from an allocation process to an artificial intelligence supported accelerated allocation process. That means that instead of deciding where we are sending each and every piece two to four months before, we will do it between two weeks and two months. That will enable us to have more information and decide better where to locate the merchandise and make less mistakes or it will be more right. We're changing and evolving the way we create our collections. Traditionally, people create collections with internal intelligence.
You analyze your sales, you analyze the market, and you say, "This is what is gonna happen." We are adding consumers more and more. This is much more about co-creation, made to order, pre-testing, sharing, and we are adding all these tools. Remember, this is about going fast. Going fast will give us the capacity to deliver more newness and to be more exciting for our consumers and remain relevant. The second idea is we can get more from our brands. Vanessa shared with us we have 17 amazing brands, 17 amazing kids, and I love them all. The thing is, they all, with the exception of a few Topshop brands, so Topshop, Topman, Miss Selfridge mainly, they all are limited to the ecosystem of ASOS. You can only find them in ASOS.
We think we can increment the value of these brands by turning them into iconic brands. Okay, sorry, I couldn't find a better word. My apologies. I'm sure there is a better one, but I'm gonna try to explain what I mean with iconic brands. With iconic brands, I mean brands that have their own personality, so that means there is a very clear segment they're going to, and that's very clear. They have a very clear space in this matrix we saw before. They are brands that have their own space, and with that, what I mean, they have potentially different distribution channels, so maybe not only ASOS. That will create traction in the consumers. They will look for it. That would create demand, and that will create that the consumers will be willing to pay a premium to buy those brands.
That is always good because you can make more profit, of course. If you look into our portfolio, we have one brand or one set of brands with the Topshop, Topman that is and has always been an iconic brand, and we can get more out of it. I'm gonna try to explain to you how, but the idea is that we can turn some of our brands into these iconic brands. I was going to use loved brands, but apparently loved brand is something different. What is it that we want to do with Topshop? Well, the idea is that this is an amazing brand, iconic, a little bit underinvested during the course of the last years. There is a fantastic opportunity behind this brand. Vanessa shared with us before, this brand was selling, when they had physical stores, close to GBP 1 billion.
We could go back to sell GBP 1 billion, probably not in two to three years because it makes a big difference not to have a single store, but the potential is out there. The demand is out there. How do we wanna capture it? We are resharpening the brand definition along three lines, very simple. Inclusivity, sustainability, digital. There is a big difference for a brand between physical and digital because that liberates a lot of the restrictions, and that creates a completely different way of creating and developing the collections. We are doing that. We are putting a significant marketing investment behind to regain top of mind of our consumers. We're talking about during the course of the next 12-18 months, somewhere in the ballpark of GBP 10 million-GBP 15 million. That could be more.
In the future, I don't know. It will depend on the reaction. As Robert said, this is all about testing and learning. The other idea is that we have a lot of brands that are not only Topshop. In that sense, what we have done is we have created an incubator of brands. As I said before, we are continuously searching in this matrix where are the opportunities. Right now, we see one that is very clear, that is COLLUSION. COLLUSION is a brand with a unique personality. By the way, a lot of our competitors are trying to copy that. That is right on the spot of genderless, animal-free. That right now has an amazing opportunity, and we are going to back it up and try to make this, let's say, an iconic brand. We're not gonna stop there.
We're gonna be continuously trying to launch new brands, eliminate some of the brands, to make sure that we have a continuous source of options to eventually go there. We are already working in this direction. Finally, our team. Well, finally in this section, sorry. I will continue for a while. Our team. We have an amazing team. Well, you have just seen Vanessa, but we have 450 creative people on buying plus another 130 in design. So it's almost 600 creators. We have between trend hunters and designers. That is quite unique, not that easy to find and to replicate. 61% of them are twenty-somethings. So they are exactly our consumers.
Actually, it's interesting. I got the other day from someone who's like, "I know when I'm getting closer to Mornington Crescent because you look into the Tube, and you know who the people that work for ASOS." Because 61% of them are exactly our consumers. We create 70,000 options per year. You might think, well, this is a lot of people. Why don't you do that with algorithms? Well, that's a good question. We are working on getting more and more and more tech. As I explained before, design, Optitex. Today, I don't know anyone in this industry who's been able to do that without a team of creators. Not yet. One day? Maybe one day. Maybe one day, instead of us being here, it's gonna be a bunch of bots making questions to each other. Maybe so.
Today this takes people, and this is not easy to create and maintain. Trust me, this is very difficult. Finding the right talent is very difficult. We have it here, and they are creators of 17 very successful brands. The second idea is expanding our platform. As I explained before, curation is very important. We are curators. That plays a critical role in what we do because it develops our relationship with our consumers. We can develop it farther, and we're going to. How? First place, as Cliff explained a little bit before, we're gonna take the relationship with some of our key brand partners one step farther. We are adding this Partner Fulfils capability, which will enable us to access the part of the assortment that today we're not adding, but will also enable us to leverage on their stock.
Today, sometimes we stock out, they have stock. There is a consumer that wants to buy. We have 26 million consumers, so there's quite a few. They're trying to buy, they don't find it, but if we can connect them with the stock of our partner, then the consumer is happy, the partner is happy, we are happy, so everybody's happy. This is the first step of this Partner Fulfils. This is only the first step. There is a second way to enlarge our platform. That is adding new brands. Our ambition, and it's an ambition, it's not a target, it's an ambition. I learned that in English, target and ambition is different, so it's good. Our ambition is to double the amount of brands we work with.
Obviously, doubling the amount of brands doesn't really mean finding another Adidas or another Nike or another Vans, because there are not that many. This is about adding local brands, a lot of local relevant brands that we're missing. I can name a lot if you guys are interested. More sustainable brands, more fashionable brands. This is the target. Remember, we want to double the amount of brands. Finally, as Mat mentioned before, we are having certain categories that we are betting on. Our goal is fashion. As I said, our business is fashion, but fashion has gone beyond clothing. Fashion is much more than clothing today. For us, fashion today includes face and body and sports, and these are the two categories I'm going to deep dive now a little bit.
This is changing every day, and there are gonna be new categories coming here, and we will be paying attention, and we will be adding these categories. Because the fact that we are fashion creators and the credibility that gives us, it's the, if you want, the foundation that makes us credible again, sorry, I cannot find a better word, to talk to our 26 million of consumers about that. This is what we have done with face and body and sports. Why are we credible as a face and body destination? Because for us, face and body makeup, beauty, is part of the outfit. That's why we are credible. When you dress up, makeup is part of your outfit. That is something that not everybody understands, except our consumers, that they understand that very well.
They understand that so well that during the course of the last years, we have built a business of GBP 150 million out of pretty much nothing, out of the blue. We have been able to add, in that journey, some of the most iconic names in the industry. There is still some missing, by the way, but some of them are already here, and we have very good relationship with them. Out of this differential approach into face and body, we can take that farther, and we are determined to do so. We have a very clear plan. Just to summarize that, this is pretty much about we need to add more categories and more partners. We need to improve our experience, and actually, Cliff has been touching upon that, how are we going to improve our experience.
We started that from a fashion experience. We have to develop our experience into a face and body experience that is slightly different. We can go to other markets. Today, we're mainly a British, not only a British, but mainly a British business. This is a much more global opportunity, and there are certain operations that we have to improve. The opportunity here is gigantic. This is one of the hottest part in the market right now. You know better than me. I don't have to tell you. You have seen what is happening in the market, the companies that are being bought and sold and so on and so forth, especially in the digital arena, to be clear. The other category where we have really done a lot of things is sports.
We bring a fashion lens to sports. You will not see these visuals anywhere else in the industry. Even in some of our competitors that claim they bring fashion to sports, that is not true. Try to compare their visuals with this one, and then you will see that it's not the same. It's a completely different approach. That is, again, what is giving us credibility. That's why we can go to our 26 million consumers and tell them, "I'm gonna tell you how to style your sneakers in your outfit," because you wear sneakers. I don't see a lot of sneakers here, sorry. A lot of our consumers wear sneakers. They don't wear sneakers to play tennis, or they don't wear sneakers to run a marathon. They wear sneakers as part of their outfit. They want to know how to do it.
In ASOS, they can know how to do it because we are really good at telling them how to do it. Let me go back to this idea that we do sports differently. This is exactly the same option sold by Adidas and sold by us. She's gonna go to the park and probably run. She's going with friends to have a cocktail or whatever, a martini. It's the same thing, completely different approach. This is what we bring to the party, and this is why they call us because they see that and they say, "Wow, this is very interesting for us." They cannot do it, but we can because we have the credibility. That's a fashion statement. That's a sports statement. That is true even when we talk about more, let's say, sports fashion approaches. Ivy Park.
Well, this is not, she's not going to run. That's clear. This is a fashion statement. That's clear. This is a fashion statement. You know what is the difference between this one and this one? This is genderless. This is not. That is a big difference. Inclusivity, genderless. We are bringing a perspective that even Ivy Park. This is Ashley Graham, by the way. I didn't realize until now. She's with Jay-Z. Even Ivy Park is not daring to do. She's not daring to do that. Imagine. That's our credibility, and that's what makes us different. We have built an amazing business, GBP 830 million, pretty fast as well. Great success. We're gonna take it one step forward again. This is about partnership. It's absolutely critical in this arena. Yes, we are working on improving our relationship with our partners.
That will enable us to go deeper in certain product categories. Certainly, sneakers is one of them. It's an amazing opportunity, and we're going deeper here. We're also working on the experience for sure and working on the awareness because here, pushing this concept to our consumers is gonna make a difference. Well, I've been talking for a while, so I'm gonna give you a rest so that you can read now. Oh, no, sorry. I went too fast. Now it's convert. So convert. How do we want to take it one step further? Well, this is. I told you that we have a differential visual language, which is absolutely true. But I also have to acknowledge our visual language is a little bit local. It's a little bit Camden Town-centric.
As someone described that to me, we are working on making this visual language more international. That is not impossible. That's doable. There are a lot of brands who did it. We need to, without losing our personality, do it more international. We're already doing that with very good results, actually. We see that we're starting to resonate more and more with some of our international consumers because of these subtle changes. Sorry, type of models, type of outfits, type of makeup. How do we manage tattoos? There are a lot of details. I will not get you through all these details, but there are a lot of details that matter. The other thing we are doing here, as Cliff mentioned before, and Robert, is experience.
We are working and we're investing in developing better experiences for our consumers. There, if you want, two very clear lines of development here. One is face and body and sports. As I said, we really need to update our experiences in face and body and sports. The other one is gonna go along the lines of personalization and different markets, and we're going to talk about this a little bit later, so I will not get into that right now. This is also going to be part of how do we take one step forward. Now, yes, now I can tell you. I've been talking a lot, so I'm gonna leave you a few minutes reading. Just a joke. All this is into a very detailed plan.
These are only the highlights that we will be delivering during the course of the next three to four years. All this conversation that I shared with you during the last, I don't know how many minutes, a lot probably, it's already prepared and planned and calendared and scheduled and everything. I'm not finished. I'm sorry. My apologies. I'm gonna grab some water if you don't mind, because I've been talking about our plans from a product and brand perspective. Now I wanna talk about our plans from an international perspective. At the end, I'm talking about the same thing. This is almost like a matrix view. I think this is an important lens to share with you, and I hope you are gonna be interested and bear with me for a few more minutes.
I'll try not to be too long here. Let me talk about how do we want to apply that internationally and how do we want to adapt this model. Let me stop for a second in this word "adapt." This is not about exporting our model. We are not exporters. This is not about recreating our model from scratch. That doesn't work. This is about adapting our model, but we need to adapt our model to be able to win out there. Let me explain why and how. The first thing I would like to share with you is why I am convinced that we are well-positioned to accelerate our international growth. There is no question we are the leaders in the U.K. I know you know that, but I like to say that because it sounds good.
It's just like the U.K. is one of the most competitive markets in the world online, and not only online, but online, certainly, trust me. Being a leader within the U.K., we must be doing something right. Otherwise, we wouldn't be the leaders in the U.K. Well, number one in online sales for fashion-loving 20-somethings. Number one screen chosen by our consumers when they are searching for fashion, which by the way connects with this idea that we're not just a place to buy. We're a place where they come and spend a lot of time because we are a destination. 65% retention, more than a 5% conversion rate. These are really impressive numbers. This is not only that we are the leaders, we are the leaders with a model that produces superior returns.
This multilayer business model is giving us a higher profitability than most, many of our competitors. That's quite remarkable. We still have opportunities to grow in the U.K. Even though we are well developed, we have opportunities. Well, online is gonna grow, naturally. You know, you see how more and more consumers are moving from offline to online, and with the pandemic, this has accelerated. I just shared with you our plans to grow more and more in specific categories. That is gonna give us certain growth. I have just shared with you all our plans that we have with our brands. That is gonna give us a specific growth. The big opportunity for us, it's here. This is. I know you know that, but this is the big. This is the game changer, if you want.
If we change the game here, that's it. This is not new. We already started long time ago. I mean, we've been selling outside the U.K., we've been selling in Europe and in the U.S., and actually with decent results for the last five years, 20%-25% annual growth. Not bad. Even more interesting, with a positive contribution everywhere. That's something that not everybody can say, that they generate positive contribution in every geography. We do. So that's quite interesting. We're gaining momentum in those markets, in many, most of those markets. We are top four. It says top five somewhere, but it's not even top five, top four, which makes a difference. Top four in a lot of these critical markets in Europe. Number one fashion U.K. retailer by online sales in the U.S., or number two European.
It's like we are really gaining momentum. Personally, I'm convinced this is the right time to press the gas, to go faster. Let me tell you why I think this is the right time to go faster. The first thing is that we can benefit from the infrastructure we've been building for the last years. We have built warehouses in Atlanta, in Berlin. Since we did it, 10% increase in frequency, 7% increase in average value of consumers. Interesting. We have just landed TGR. We are landing personalization. We are improving our marketing capabilities. When I talk about infrastructure, by the way, I don't mean physical infrastructure. I mean everything that is behind the business, supporting the business. We have also created the right dynamics to improve our value proposition.
About Topshop Topman, just, I'm sure you know that, but 10% of U.S. consumers and 20% of German consumers buy those brands, so that is creating a very interesting way to open those markets. We are launching Partner Fulfils that will enable us to really increase the amount of brands and become much more local and have all these Spanish local sneaker brands that we don't have today, or French, or Italian, or German, and so on and so forth. We can leverage our global perspective. We are already global. Let's not forget that. That helps us understand better the fashion-loving twenty-somethings, because we work for them and have this credibility. We have strong relationships with key partners, as I said before, and our brands are very successful out there.
80% of our American consumers and 70% of our French consumers, just as an example, buy our own brands. We can leverage that in that plan to grow. We have a scale. Half a billion pound business in the U.S., 1.2 in the EU, and a positive return in every market or a positive contribution, if you want. Let's not forget, during these years that we've been working out there, we have learned a lot. We have prepared a plan based on those learnings that I'm gonna share with you. Again, the secret sauce. Please don't tell anyone the secret sauce. What is it that we have learned? Well, I know I'm not gonna get the Nobel Prize for that, but anyway. This is about, as I said before, adapting.
Localizing operations, localizing the experience, having a relevant assortment, and making sure we make the right marketing. You will say, "Well, to do that, you didn't really need to refer to your experience. We all knew that before." Yes, that's right, because the critical thing here is not what, it's how, and that is what is gonna make the difference. Now we know how to do it. We knew what to do, but we didn't know how to do it. Let me elaborate a little bit in each one. Localizing operations. We have tried that in different shapes and forms. We created a local team for MENA. This is not made up. This is real. We created a local team for MENA with a very specific purpose.
You guys need to understand what's happening in the market and connect with all the relevant parts of the organization to make sure that we can cater for those needs, from trading to stock planning, experience, assortment, promotional pricing, marketing, everything. They did that. The results, three years in a row, during Ramadan, 80% growth every year. That's the key. The key is not that we need a local team. That we knew. The key is how we are going to deploy this local team within our operations to make sure that things happen, and they happen in the right direction. We have been doing things in terms of localizing the experience. We launched Atlanta, 10% more, more order frequency. We launched Buy Now, Pay Later. That's what it means, by the way. Took me a while to find out. Those orders increased by 20%.
We optimized our site 2.78%. It's pretty precise, by the way. 2.78% increase in conversion. Every time we invest in local experiences, it pays off. This is just a quote over one of our consumers, saying that, well, what they love about ASOS is our experience. As I said before, the assortment matters. Our own brands matters. I told you before, 60% of our consumers, okay, in the U.S., it's 70% of the new consumers buy own brands. Our own brands, if they are important, outside the U.K. even more. I told you 39% is 43% in the EU, 52% in the U.S. Makes a big difference. Our own brands, if they are important in the British operations, outside even more, much more.
Actually, these are real quotes from an American consumers. "ASOS offers a unique products I can't get anywhere else." That's true. "ASOS carries a lot of different styles as well." Well, 70,000. "ASOS is a one-stop shop for all the fashion products I want to-" It's really critical and that is gonna play a key role. Every time we invest, for instance, when we deal with flexible fulfillment, giving them access to more assortment and to more back sales, 37% of increment on sales. It really pays off. Finally, marketing. We know we have very different situations in the U.K. versus the rest of our markets where we operate. In the U.K., we have high awareness, you guys know, I don't have to explain you why.
That enables us to have a lower marketing investment in relative terms, of course, because we can leverage on our current position, and we can focus on the lower funnel. As Robert shared with us, that is not the case here. We are in a different situation. Here we need to invest more and we need to broaden. This is a very important part of it. We need to broaden our approach. It's not only about the lower funnel, it's about the whole funnel. It's about how do we tell consumers we have 15,000 dresses they can buy. That's the thing. This is our plan to win. I try to summarize it in four things. This is a focused plan, two markets, two countries. Rather markets, I should say. Sorry.
With the customer at the heart of everything we do, as it should be, by the way. It's leveraging everything we have learned and backed by sizable investments in people, experience, and marketing. Focus. Yes, really focused. We have a lot of markets, as you know, we sell in more than 30, I think, directly. We're focusing in two, because if you really wanna go that deep, you cannot do it credibly in 30 markets at the same time. Of course, that doesn't really mean that we forget about that is gonna die. I've been talking for the last hour almost about all the things we're going to do that are gonna benefit these markets. Whatever we learn from these markets, we will apply here later. Right now, and for the next months, this is our focus.
We're gonna be focusing on these two markets to really take them one step further. To save you from sitting here for another hour, I'm going to just talk about one. Don't you worry. This is just an illustration. We are doing the same for both markets. From our learnings, we have put together a plan that, as you may imagine, obviously talk about localizing operations, localizing the experience, the assortment, and marketing, but with the customer at the heart of everything we do. That's so important. We can never forget it. Our customers in the U.S. say things that I really like to read from time to time, like, "My favorite place to shop. Reasonable prices, clothing in my size, and all the latest trends. ASOS is made for the millennial Gen Z generation." By the way, she's absolutely right.
It's made for the millennial Gen Z, as I explained to you before, but for all of them. I will just summarize that in a couple of slides. We have been looking a lot into the American market, and we know the American market, you know that, is very different from the British market, from sociodemographics and behaviorally. A consumer is younger in the U.S. It's more diverse. 24% non-whites, 19% Hispanic versus 14% of non-whites in the U.K. But we have more, of course, for obvious reasons. They have a different behavior. They spend more in fashion. They buy different categories, or they over-index different categories. That is true. But there are a lot of similarities. Fashion is one of the most global phenomenon. They're on the same platforms.
75% of them in both geographies are on Instagram. They have the same tastes. 65% of them buy across genders. I'm pretty sure that is surprising for you guys. Okay, in some cases, you're buying for your partner. Fair enough. But in some cases, it's that you're buying something from another gender to wear it yourself. It's genderless. Remember that I told you COLLUSION has a lot of future. This genderless approach is really, really strong. They have similar needs and interests. 50% of them say they are really worried about what is happening with the planet. By the way, they all identify ASOS brands as global. When we talk about our bestseller, and these are real examples, they are bestsellers everywhere.
This T-shirt, we sell it in 75 countries, and it's a bestseller in all the relevant countries. These shoes, bestseller. So they're different, but they're not that different. The other thing that is important to say about the U.S. is that it's a market that offers very interesting opportunities. It's a very fragmented market, believe it or not. If you look into the online world in the U.S., 28% of sales are produced by the top ten retailers. In the U.K., it's 48%. This is a big difference. Very, very fragmented market. There is also something very interesting there. Department stores still rank really high. We know department stores is a formula that is suffering everywhere else in the world. That is probably telling us there is an opportunity here.
The other thing that is also very different is, like, if you categorize the American market by the level of fashion they consume, and this is a very simple analysis. There's like from, let's say, the mainstream fashion, more mid, and more fashion forward, the American market over-indexes on this side. I've been telling you we are more on this side. You might say, "Okay, why is it good for you?" Well, no, that's not good for us. What is good for us is that in the American market, there is no clear leader here as opposed to other markets. If you go to Europe and you try to go into these markets, it is different because there is a clear leader. While in the U.S., there is no clear leader, and that also opens an opportunity for us. Let me go through our plan. Operations.
We have put together this team based on the learnings we made, and this team already exists, and we have recruited someone coming from the U.S. with a very detailed knowledge of the American market and a lot of experience in the U.S. What is the idea of this team? As I explained before, this is very important, is to gain in-depth insights of what is happening. Why am I not selling this blazer in the U.S.? Why? Is it the size? Is it the color? Is it the fabric? Is it the style? Why am I selling in Germany? What is happening with the competitors? Who's having a promotion? Who's cutting prices? Who's launching something new? What is the new?
They really need to know everything that is happening, and all this information has to flow to the critical people in this building so that we create the best assortment, so we place the stock in the right place. That's very important. We have the right pricing level. We are not pricing anymore like exchange rate. It's the same price, I put exchange rate, I put it there. No, no. We are now strategically betting in specific categories. Trading, promotion, it's very, very critical. This team is in place. We are improving our experience for our consumers in the U.S. along at least five lines: students, Premier, payment and delivery methods, international look and feel of our pictures, and site optimization.
There's a very clear plan behind each and every one of them in terms of the prices we charge, in terms of the delivery methods and payment methods we are offering, the pictures we make. How do we make pictures to connect better with American consumers? This is happening as well. Our assortment, as I told you, absolutely critical. Our own brands, 52% of our sales are originated by our own brands, very important. Own brands, shoppers in the U.S. spend two times more than those that don't buy own brands. Imagine to what extent this is critical in the U.S. Actually, we know that some brands over-index in the U.S., so we are working also with this information. Also third-party brands, we know that there are the specific third-party brands that are very important in the U.S.
As our assortment is important, and they know it, and actually they recognize it, and they say, "I just love ASOS. I've been obsessed with you all for a while. Great deals, current fashion, speedy delivery. It's a real dream. I love ordering from you, from you all, and for myself and Javi." Took me a while to understand that Javi was her husband. I thought it was the dog. Sorry. Yes, not only does ASOS sell other brands, but their own products are great quality and compete with bigger name brands. That they love what we're doing. But that is not enough. We're gonna take it one step farther. We're taking that one step farther, again, through our three lenses of create, curate, and convert. We are improving our specific assortment for the U.S. We're improving and increasing.
We have for this season created 150 options of dresses specifically for the U.S. You might think, well, 150 options in 15,000 is not a lot, which is true. As I told you before, some of our head-to-head competitors offer hundreds of options worldwide. That is almost 25% of the assortment offered by a very close European competitor selling in the U.S., so it's a lot. We are offering specific options on tailoring and inclusive, and I'm only illustrating here three categories, but we are illustrating more. Pushing local collabs, collaborations with local American brands and our own brands. Curate, adding more brands.
As I told you, the ambition is to double the amount of brands with a lot of locally relevant brands we are not carrying today. Convert. We have 15,000 dresses. The question is, which of those dresses are the more relevant for the American consumers? Let me run a small experiment with you here. If we ranked our dresses by global sales, and we put our ranking, it's not the way it works, but this is just to illustrate what I'm trying to say, and we put them in that order in your page when you're trying to buy a dress, those would be the 10 dresses you would see first because these are the top sellers worldwide. If I do that for the American market only, those are the dresses you're gonna see. There is only one in common, by the way.
I rechecked that three times. I couldn't find more similarities. This is really different. We have to show them this and not this. By the way, this is also telling us a lot of things. Our average American consumer is more fashion-forward. That would be closer to our fashion-forward consumers here than this, because here we have a lot of consumers. Here, we're market leaders. Here, we resonate within a specific segment. The other thing it tells us is, by the way, Americans seem to be very interested in going out right now. That seems to be very clear. In this part it looks, for whatever reason. These are real. By the way, this is real. It's not fake. These are the top ten sold dresses in the U.S., top ten sold dresses worldwide.
We need to make sure that in this huge assortment, we highlight what is relevant for each type of consumer. The personalization that it was explained as before is absolutely critical to make sure that we land this properly. The possibilities of our existing assortment are huge, and we have to land them. The last piece of the plan is marketing, and here I'm gonna take a break, and I'm gonna hand it over to my colleague and friend, Robert, who's gonna do a much better job.
Thank you, José. Thanks, José and Vanessa. That should give you a clear picture of how we're planning to bolster our offering internationally. Now for how we're gonna expand marketing. We plan to more than double our marketing investment in the U.S. over the next three to four years, and the key parts of our plan include three things. One, broad reach advertising. Two, our partnership with Nordstrom. And three, leveraging the existing equity of Topshop in the U.S. Before I go through these points, I wanna reiterate one point that Mat discussed earlier. This isn't just a plan for the next three to six months. We're looking at a three- to four-year window. We've established a sizable business in the U.S. already, and this isn't about a big bet plan to accelerate that overnight.
This is about continuing to build from previous investments and methodically working toward a plan to scale investment increases. Just to quickly frame the context of our brand development in key markets, we work with a research firm called System1 to evaluate our brand equity. If any of you are familiar with Danny Kahneman, that would be where the name comes from. Their framework utilizes three main concepts, fame, feeling, and fluency, based on their research tying brand equity to predicted market share. Very simply, fame measures how quickly a brand comes to mind, essentially spontaneous awareness. Feeling measures how positively someone feels about the brand, and fluency measures brand distinctiveness, how quickly do people recognize a brand? This chart shows the ASOS brand percentile ranking of the three metrics in aggregate across System1's database.
As you would expect, the ASOS brand is strongest in the U.K., but still actually has upside. While the brand has significant room to grow in the U.S., Germany, and France, and this gap drives our plan to invest more in these markets over the coming years and to expand the mix of marketing vehicles that we deploy. We launched a new advertising campaign in the U.S. and select markets last month. The role of this advertising is to provide always-on reach. We're targeting young female fashion-loving audience through several video channels, including YouTube, premium video-on-demand channels such as Hulu, which is the leading U.S. OTT video network, and social media channels. As I mentioned earlier, we employ a test and learn model to all of our media investments.
We've launched this advertising in large-scale, controlled experiments designed to provide reliable measurability, where we will gain confident measurement on the incremental impact of everything we measure from visits, orders, new customer acquisition, and brand metrics such as unaided awareness. As with everything we do, we will test and learn, optimize and retest, continually improving on the impact and return on the marketing investment prior to scaling. We're investing right now at the level that we need to gain clear insight, and we've already learned a great deal in only four to five weeks. We'll continue this process potentially through the fiscal year, and we won't scale the investment until we have clear evidence the formula drives the required outcomes. Now, as part of this, I think it's important to briefly talk about our brand.
Now, I think you just heard a pretty lengthy discussion that we provide our customers with a unique fashion offering. We know from our research, they gain much more from shopping with ASOS. Because we offer such a breadth of fashion, and because of our engaging experience, we help our customers amplify their style, and in a way no one else can. Fashion-loving 20-somethings are passionate about how they dress, and style is about self-expression. It's deeply personal and emotive. We help them fuel something that's already inside of them. Our brand strategy relaunches the idea As Seen On Screen, the words behind the acronym ASOS. Now, the original idea of ASOS was about fashion inspiration and access. There used to be a straight line from fashion inspiration, the screen, a television screen, or even a glossy magazine 20 years ago, to the point of access, asos.com.
Fashion inspiration and access. In the past 20 years, the screens have changed. They've gotten smaller, they've multiplied, the users have become publishers. Everyone has a smartphone. I feel like I've been in this presentation 100 times. Whether it's TikTok, YouTube, a snap from a friend, or a myriad of other sources, style inspiration can be found on screens anywhere now. The screens have changed. The idea that ASOS provides fashion-loving 20-somethings with access to the latest sources of fashion inspiration endures. As seen on screen, we plan to show up at every place in this infinite loop of inspiration, providing what we call magical access to fashion inspiration at every stage in the journey.
With that, I'll show you a short sampling of the advertising, which is just the beginning of building this brand idea throughout the experience. Please go ahead and play the video.
As I'm sure you're aware, earlier this year we announced a strategic joint venture with Nordstrom. This partnership will enable American consumers to find ASOS in brick-and-mortar stores. There's tremendous mutual benefit, and we're fortunate Nordstrom sees the potential of our fashion brands to attract a young, fashion-loving audience in North America. Scroll. They forgot to scroll my words. Sorry. From our vantage, we're gaining exposure to a large audience through the lens of a highly regarded retail brand. We've gained a partner with tremendous insight on the American audience. In the coming weeks, select ASOS brands will first be available on nordstrom.com.
In the first half of 2022, for the first time anywhere, customers will be able to shop the best of ASOS brands in person at select Nordstrom stores in New York, L.A., Seattle, and other top markets with innovative in-store experiences. This is the famous Seattle flagship store. I don't know how many of you have been to Seattle. If any of you have been to New York, the store there is beautiful. It's also in an incredibly high traffic location at 57th and Broadway. I actually used to live around the corner, so I can attest to the fact that it's an incredible showcase for our brands. Nordstrom is a storied retailer in America with stores in some of the most prominent locations in America's most important metro areas. We're very excited about this partnership.
One more part of our U.S. marketing plans we wanna highlight is leveraging the Topshop brand in the U.S. Topshop has an existing audience in the U.S. with a built-in shopper base on ASOS and within Nordstrom, and the brand enjoys very strong fashion credentials, as José had mentioned. Two-thirds consider Topshop a fashion trendsetter. Importantly, ASOS customers in the U.S. who purchase Topshop are very valuable with high frequency and high spend. I don't wanna share too many specifics regarding our playbook for Topshop, but this will be part of our U.S. investments over the next three to four years. With that, I'm gonna hand it back to José to discuss how we're thinking about phasing the plans, and then we'll take a few good questions and have another break.
Thank you, Robert. I really loved the video, by the way. I have already seen it. I think that shows very well what I was referring before to our own visual language. When you see that video, you understand what I mean. This is what we offer to a lot of our partners. This way. I always get the funny part, which is to share with you our specific plan. This one has the font even smaller than the previous ones. Don't you worry, I'm not gonna get into details. My only point here is, like, this is a really detailed plan. It's pretty much the other side of the medal of the other one. Obviously, these are not two detached plans. They are the same.
One is from a brand's point of view, the other one is from a geographical point of view or market point of view. It is the two sides of the medal. Obviously, we're going to focus on the first 12, 13 months because this is why you make plans, because you go step by step. This is what we're gonna be doing for the next 12 to 18 months. I didn't want to finish before. Yes, I'm finishing. Thank you so much for your patience, by the way. It must be more than an hour supporting me. I didn't want to finish before just revisiting three messages that for me are critical. The first one is, like, as I said, now is the perfect time.
Now is the perfect time to leverage on what we have, on Atlanta, on Berlin, on personalization, on Topshop, on Partner Fulfils. The second one is, this is a very focused plan, two countries. We are really gonna go full speed on two. That's very important. The third thing is that this is backed with internal resources, with assortment improvement, and with a very clear marketing effort. That makes a difference in my opinion. These three things is what is behind our ambition to double our sales in the EU and the U.S. during the course of the next years, in the medium term. Again, thank you so much for your patience with me and my accent and my bad jokes. We are now gonna move into Q&A, so I'm gonna hand it over to Mat, who's gonna chair the Q&A. Thank you so much.
Thanks, José, Robert, and Vanessa. Again, if we can keep questions focused on that section, and I know we've covered a huge amount of content, so we'll try and do as many questions justice as possible. As Robert said, we'll have a five-minute break. Just in terms of questions, the one question we're not gonna answer before anyone asks it is which is the other country. We'd rather keep that to ourselves for now. Not that we don't know what it is, but there seems little point in telling everybody else what it is and giving everyone a heads up as to where we'll be going in Europe. At that point, let me open up to questions same as before. Go ahead.
Good afternoon. Rebecca McClellan, Santander. Thanks for that detail on the U.S. I think what was apparent from the shots of the dresses is just how different the U.S. sort of demand profile is from perhaps the broader group. Can you sort of develop a bit your plans on localization? I think you mentioned as well sourcing and more localized sourcing and what the plan is perhaps in that respect.
Do you wanna go, José?
Yeah, sure. Not sure I understood what you mean with our plans for localization because this is about localizing the team, localizing the experience. We have explained a lot. I don't know if it's a little bit more specific on sourcing. If you want, let me answer sourcing, and maybe you can-
Just in terms of the assortment, how much of the assortment is gonna be sort of U.S. specific?
Okay, sorry. Right now, as I share with you, we have started with a small part of the assortment. How big this is going to be is something we're going to learn over the course of time. We don't have any specific target. The beauty is that with a business that is already half a billion pounds, that gives us enough size and critical mass to really go as deep as necessary. I think in certain categories like dresses, most likely we don't need a lot of super specific assortment because with 15,000 dresses, I bet you will have enough for most of the American consumers. There might be some categories, and let me illustrate my point with a specific one, denim, where we will really need to, and we are.
We are already developing specific options for the American market because their needs are different. It is a very complex one market by product class by product class, but certainly we will. On the local sourcing, yes, we are starting already with local sourcing. I don't know, when are we launching it? In a few months.
Yeah.
The local sourcing in-
In the fall.
Yeah. That's gonna start in a few months, and then we have already started on footwear in Brazil. That's already in progress.
That's the beauty again of having the critical mass of half a billion pounds. We cannot start already to have local sourcing. For Europe it's less relevant because we have already local sourcing for Europe, but certainly for the U.S. it is relevant.
Yeah.
Can I add one other point?
Definitely.
To help answer your question. Cliff spoke about a lot of our personalization efforts. In many cases, personalization is such a broad word. It loses meaning. Much of what we're doing in personalization ends up being less overt. If you think about any e-commerce experience, the main part of the experience is I'm shown search results for products, a ranking of products from a large catalog. When you think about that many dresses, it's enormous. The more we're able to personalize, that's gonna benefit, you know, the U.S. Nordstrom deal. You know, there are so many consumers there that, you know, we have an offering for them. It's just surfacing the right ones to them, particularly, you know, between, you know, the next periods of our growth. That's gonna benefit that as well.
I think I do. We're just gonna build on Robert's point and José's with just two comments on that. I think, don't underestimate some of what José described. If you saw the U.K. bestsellers, which is what José showed you, and you looked at the London bestsellers, they probably look somewhere in between. A, that localization opportunity isn't just unique to the U.S. or the personalization, but also dresses is the most acute area because of the width and the range of options. It'd also be, you know, some of the big global sportswear brands, face and body, et cetera, where there'd be much more uniformity. It will be an amalgam of that global portfolio and the localization to try and do. You know, we have to do both to maximize the opportunity inherent in the offer.
Right.
Hi there. Andy Wade at Jefferies. A couple from me. First one, just, I think one of the slides mentioned U.K. retention, customer retention of 65%. Is that correct?
Depends which slide you were looking at.
I'm not sure of the slide.
I don't think so.
Sorry. You mean retention or you mean the percentage of consumers who were buying our own?
No, it was.
Retention?
I'm pretty sure it mentioned retention.
Okay.
Might have to check that.
You mean the one with?
If that doesn't sound like the right number, then, it's gonna be a bit pointless going on with the next question.
It depends what period of time and so on. Ask your question, Andy.
Well, the question was gonna be, based on that 65 number-
Yeah
-which may or may not be the right number, it looked like your spend by retained customers sort of goes up from an earlier chart about 10% or 15% a year. Net-net, you're sort of down about 25% as your starting point.
We'll come back to you with the more specific detail and for anyone else that wants it. As I said when I was talking, there are two. Our retained customers spend more over time, which is the chart that you saw.
Yep.
However, the chart we didn't show, but we could have. We had two charts we were gonna show. The other chart shows you that over time, the value of those retained customers more than offsets any customers that we don't so that that are churned through the process. Therefore, after year two or three, the value of the whole cohort is more than the value at the start. It might make sense for us to add that chart to the presentation, which we're happy to do. We'll get it, and you can see that. Then if there are any further questions, I can pick them up there. Effectively, you'd-
From year to year, the retained base isn't.
-yeah, not in the first year because you lose a number of customers.
Yeah, yeah.
Beyond that, it starts to grow in value in terms of-
Fine
-total cohort, as well as the value of the individual customers in the cohort.
Okay. That's very clear. Thank you.
Let's add that. We'll add that chart into the presentation as part of the appendix, and then you can have a look at it. There's nothing that you can't see there.
Thanks. Second one, on marketing. You sort of talk about sort of four new directors coming in, you know, the data science side of things having been really beefed up. I'd be interested if you could just give a bit more detail about just how much has changed. It feels like it's been a complete overhaul of the marketing approach. If you could sort of bring that to life a little bit, just how much has changed or am I over-egging that?
Let me just give a perspective, 'cause apart from Vanessa, I think I'm the longest serving member of the ASOS on the panel. It's quite an achievement when I've been around for two and a half years. I think, you know, for me, there's been quite a fundamental transformation in capability in a number of areas, and marketing is definitely one, and Robert can speak to what he's done. I think the easy way to understand it is two and a half years ago, we were performance marketing driven, and that was our focus. What you've seen today and the capability that Robert and the team has built is about being able to broaden that reach of channels. It has been a significant overhaul, but it's about broadening our capability set. We've got much better in our core area as well.
Rob, I don't know if you want to expand on that particularly, but.
Yeah, I'm not sure I'd characterize it as a complete overhaul because we certainly haven't thrown the baby out with the bathwater. You know, ASOS built a very powerful brand, really understood relevancy. But I think, you know, to build on what Mat said, you know, we were investing a great deal in performance marketing. We've invested a great deal, so we can do that even more effectively. Then what we've done next to that is invest in really putting a greater understanding of our brand, how it's recognized, how it's different, how we can use the brand to leverage the advantage that's created from our product offer, so that we actually have a better ability to add full funnel marketing on top of things.
As we gain operating leverage to make those investments, we wanna make sure those investments return as we do that. You know, we need to play our cards wisely as we do that, and we wanted to make sure we had a marketing function that was capable of doing that. I think many of the things you see, ASOS was one of the great innovators in connecting to people through organic brand content that's published in social media with influencer marketing and so forth. You know, we've doubled down on that, frankly. I hope that answers your question.
Yeah, that's helpful. Thanks. Then, final one, for José probably. Just how do you think about balancing sort of personalization versus curation? Because perfect personalization almost sort feels like it would trump curation in the sense that you've got broader range, you can appeal to more people, and you can offer whatever you want to whoever you want, you can curate it by the individual. How do you think about balancing up those two sort of?
Well, that's a great question. We are not there yet in terms of perfect personalization. In a world with perfect personalization and Partner Fulfils, you could go for, let's say, an even broader assortment. We're not there yet, and I have not seen anyone there yet. As you know, this market is very dynamic. Things change. But today, I still see a lot of value in the curation part. Still, we would be co-curating which brands we consider relevant or not, which is part of the curation. It would never go down to zero, but it could change over time.
I think the other thing I'd add then, a lot of people are shopping for inspiration, and inspiration is in part-
Yeah.
-showing them things that they didn't know they wanted. For me, that'll always be the kind in essence. They'll experience ASOS, especially as we broaden the marketing channels, in lots of different ways. You know, we need it to be authentic to the experience, whether it's in Instagram or whether it's in other ways that they experience it. There'll always be both elements of it. I'm not sure it's possible to do it any other way, to be honest. Time will tell, as José said.
Helpful. Thank you.
Simon.
Hi, it's Simon Bowler from Numis. Two questions, please. First one is quite short and fast. I'll just do it separately. It's just that you mentioned kinda going into two countries at a time, and obviously you've got two identified at the moment. How long before the next two are targeted? How far do you have to go with these two before you move on to the next generation?
Yeah. We're starting with two countries and, you know, the plan is to execute it well, and we'll go as fast or as slow as our capability allows us. The intent is to go as quick as possible. I think, you know, we'd all know that focusing on execution and getting those right is fundamental before we move on. Let's not give an exact timing, but, you know, the intent is to go as fast as we can. As you've seen from the plan and you saw from the plan I showed earlier on, there's an awful lot we need, you know, we wanna get done in the next 12-18 months. We wanna get that done and then move on and that's how we'll approach it.
Yeah. Having been involved in expanding a brand into many markets rapidly through a process-driven approach, you know, every time we do this, we're gonna learn in two dimensions. One dimension we will learn that's an exportable learning and some things we will learn, which is a way of solving the problem in a local market. Each of those things, as we learn it, our playbook will get better and we can, you know, answer that question better, I think.
I think it builds on a point José made, but it is worth reinforcing. If you like two-thirds of what we've spoken about today, if not 75% of what is applicable to all markets. The technology, the capability we've built, and then a lot of what we're doing around the brands, both our own brands and the curation of others. You shouldn't read into it, you know, but there's very specific localization efforts that will go on in two countries initially.
Okay. The second area was, can you just expand a bit more on the management structure to deliver that localization? I think you mentioned hiring an individual into the U.S. What would they have? P&L responsibility? Will they have control over marketing, product? How does that work and how is that changing or perhaps not changing from how the business has previously operated?
Do you want me to start and then? The first thing to say is it has to be evolution, not revolution. Doing a hard cut over from one model to another model is unlikely to work. I'll talk about the P&L bit, because that seems to be what I should talk about, and then I'll get José to talk about the other bits. In practice, therefore, what you would do over time is you'd say, "Right, you're now responsible for revenue and the promotional levers associated with that." Then you might layer on pricing.
We'll do it over time as we build out the capability and depth of that team, and effectively, we don't wanna run before we can walk. José, do you wanna speak to how you're thinking about that-
Yeah, yeah.
-in conjunction with Robert and then-
It's an interesting question. The idea is not to replicate the structure in the U.S. We're not going to create a new structure in the U.S. to manage the U.S. If you want, let me share with you two clear arguments why. The first one is like, we are a digital business, so we don't really need to be in the U.S. to know what is happening in the U.S. because this is a digital world. In a physical world, you need to be there to know what is happening with your stores. We don't have stores, so we don't need to be there. We don't need such a big structure in the U.S. The second thing is, there are a lot of international companies in this segment successfully in the U.S. with very little operations in the U.S. because the thing is that the critical decisions are happening here.
If tomorrow we replicate the structure in the U.S. and it's not connected with the structure here, this structure would have no traction. There is no point. We're starting here. We want the teams here knowing exactly what is happening in the U.S. Over time, and as Mat said, we might see that we are buying, I'm gonna say something stupid just to illustrate my point, 100 local brands. At this point in time, you need a local structure in the U.S. because you have to manage the relationship with these brands and so on and so forth. Then you create a local structure. There is a lot that is happening. To know what the American consumers are buying and are wearing, we don't need 50 people in the U.S.
We need them here because they have to talk to the teams of Vanessa and the buying teams to make sure that these needs are properly catered. There are things like the critical thing, as I said here, is we need a team who understands the insights. We are not going to create specific buyers, a specific designer, a specific. Not in principle, unless we get a lot of local brands, but not in principle. This is about understanding what is happening in the U.S. so that the local teams can cater for that. Today we are creating 15,000 dresses. This is like we have capacity to create enough dresses for Europe and the U.S. and France and Germany and Italy and Spain. That's not the point. What we're missing in some cases is the intelligence to know exactly what are we missing in our assortment.
I don't know if this is really clear enough or you were expecting something more like it's 15 people.
I think as with a lot of what we've shared today, as we and some of the, you know, we covered it quickly, our plan will be to keep you guys updated in terms of this is where we are and, you know, as much in the initiatives we've laid out as to what the numbers are. Then maybe I'll hand over to Simon, and I'm conscious of time, but there's at least one question online that we should answer as well.
Can we just talk about what hasn't worked in the U.S.? Obviously, having a relatively low percentage of third-party brands suggests that either the brands aren't supplying you with a decent product in the U.S. or the U.S. consumer doesn't think of you as being a kind of credible supplier of Levi's or Nike or whatever. Kind of what's been the problem in the U.S., and why is that going to be different going forward?
I can give a very brief perspective and then if anyone wants to expand. I think the risk of sounding defensive, we have grown the U.S. at 17% CAGR over the last few years. I think having built the infrastructure we've now built, the technological capability, it feels like we're in a different place and therefore we're able to do significantly more, and the significantly more is what the team have been speaking about. In that sense, I think there's an awful lot more we can do to enhance the U.S. performance than we've been able to do to this point. I think therefore it's as much about executing on the plan as it is about anything else.
Inevitably as part of that, we've learned a lot from what we've done so far. The other point I'd make, which is a customer-specific one, if you look at that customer funnel that José spoke about, that I've spoken about, people discover ASOS through ASOS brands. As they discover us through ASOS brands, 60%, as I think we've both said, more times today than probably any other statistic, it takes any consumer a while to build out that experience and go. I think you should see almost in terms of where the maturity curve is of the business as opposed to those brands are offering isn't attractive. It is of course true to say that the current U.S. consumer habits would they're buying those brands from somewhere else if they're not buying them from us.
3.5 million consumers are already shopping with us and, you know, the opportunity is to through all the stuff we've spoken about, to get more and more consumers to know what we have to offer. I don't think it's as much about what we can do rather than what we haven't done would be my answer.
I'd just give you one more answer on the point about the mix in the U.S. I actually am an American, by the way. You know, notwithstanding the third-party brand offering, the ASOS brands offering is more distinct in the U.S. versus the market than it is in the U.K. and Europe. You know, I think this is a general truism. Americans are, on average, a bit more conservative. So you see more American men are gonna be in khakis and a blue shirt at a business meeting. You see, you know, brands like the Gap and other things. It's not a criticism of my country people. It's just a fact. ASOS' offering is more different. In a market where we're not nearly as well-known, the parts that are standing out even more so are where they're gravitating. You know, I just wanna make sure you understand that as well.
Yeah.
Dresses is clearly a core part of that.
If I may. Sorry, and probably using elements of both. I don't think we are talking about a big problem in the U.S. that we need to solve. It's like we have a certain growth that we want to accelerate, and I think that changes a little bit the perspective. What is different now, as I said, I think is like now we are better prepared than ever because of infrastructure, because of brands, because of capacities. If you want, I was gonna say committed, but probably committed is not the right word in English, but this is like, now we're gonna put more on the table than ever. What Robert was explaining about how we're going to connect with the American consumer is very important. We always had a differential assortment, we still have it.
As Robert said, it's even more differential in the U.S. Actually, it's overwhelming to see the reviews from the consumers when they say, "What I love about ASOS," from American consumers, "is that what I can find in ASOS, I cannot find it anywhere else." We need to connect with these consumers that they still don't know us. The difficulty in the U.S., if you want, is that, as Robert explained, we're not talking to the core or the market. We're talking to a specific segment. That is gigantic, by the way, because the size of this segment is bigger than some countries in Europe. We need to find the ways to get to these consumers. That's one of the critical things.
I think that the plan, you know, which is a word that in Spanish makes sense, but not in English. The plan, it's really clear in that direction. We're going behind these consumers, and we're putting resources behind that. That's what I think is different. Sorry.
I think that's right and hopefully, the fact we all wanted to ask that question shows you the conviction we've got behind it. Let me just and so there's some questions that have been hanging on for a long time online. There's one about listing and one about M&A that I'm gonna propose we answer in the last section 'cause they feel more appropriate for there. For the two people hanging on, we appreciate your patience. I appreciate your patience. We appreciate it. The question, I think that's particularly pertinent, and I'm sure it's a question that's gonna get asked by other people, which is from Liv Townsend at UBS, is, "Do you see any downside to selling ASOS Design through other retailers, e.g., reducing brand exclusivity, or is this minor in the context of the incremental sales?" I think-
How-
Any of us could give a perspective.
Yeah.
Why don't you start, José, as the-
Okay, sure.
-kind of brand owner.
It is minor in the context of incremental sales, certainly so. It's tiny. It's a drop in the ocean. That is not going to. We are not only going to be selling a tiny part of ASOS DESIGN in Nordstrom. It's just like, it's nothing. It's a drop in the ocean. It's gonna be a good way for a lot of American consumers to have contact with ASOS as a brand, and as a. We don't really see that as a problem. The idea is not to give ASOS DESIGN to our competitors. That's not the point. It's just to facilitate the access of American consumers to ASOS universe or ASOS ecosystem.
Yeah.
I was just gonna say.
Right.
You know, we haven't done it in the U.K. You can only buy ASOS at asos.com. Everyone in the U.K. has heard of asos.com. In the U.S., they haven't. Not anywhere close.
Actually, if I may build on that.
Yeah.
We were doing that before we bought Topman. Topshop could be bought through other channels in the U.K. Not anymore. Which I think it clarifies a little bit.
Yeah.
Good question.
Our position.
You know, in the U.S. now, you can buy ASOS at asos.com if you've heard of it or if you've found it through our marketing. You will be able to discover it in a Nordstrom store. Some of it, not all of it. You know, it will be the best of ASOS. If, you know, if we're at a point where we have the level of mental availability that we have in the U.K. one day, we'll. You can answer the question again, but I'll probably be on a yacht by then.
I think it. I mean, it's worth making that last point, just at the risk of overlaboring it, which is there's no way you can replicate 55,000 options in a-
No. Yeah.
In any store or any-
No.
-a set of physical stores. That's why the brand is one of the reasons the brand's so powerful, as Vanessa said.
The short answer is no.
Vanessa, I don't know if you've got anything to add. I feel like there's nothing to add, but
No, I feel like-
You're very passionate about ASOS.
Yeah, no, I feel like you said everything, but it is, it's about having, you know, the best edit of ASOS. Like you say, it will just be a selection. I think it's a really good opportunity for us to learn as well, so I think it'll be really interesting to see, you know, the sales from the Nordstrom stores as well. Yeah, we're really excited.
Perfect. All right. I'm gonna cut it there just in the interest of time. It is now. Let me check.
3:54.
3:50. Thank you. Took me a while to get that bit of my watch working. 3:54. I'm gonna suggest a really quick five minute comfort break, to be back at 4:00. Again, if you can be back in the room, I appreciate it's quick. Otherwise, the video doesn't work very well. That'd be great. Well, welcome back, everyone. I can promise you we're on the home stretch. This is the final session, and then we'll have some more time for Q&A. In this final session, we're gonna be looking at our margin evolution. I'm gonna just briefly look back at what we've done while they clear the break. Probably more importantly, look ahead to both the medium and longer term. Pause there for effect. Right.
Let me start by looking at the financial platform that we will be building on. Since 2019, as you all know, we've delivered strong growth compounding at 20%, and we've restored the group's profitability to 4.6% in adjusted EBIT in FY 2020 and 5.3% in FY 2021. Obviously, that's been assisted by COVID, but even excluding the COVID benefit, as you can see on the chart, the improvement has been a strong one, and as Robert mentioned in his presentation, has funded significant incremental investment already. We've achieved this through a strong focus on stripping out non-strategic costs from across the business. While we've increased our overall margins and profitability, we have seen a reduction in our gross margin over the past few years.
This has been driven by a number of deliberate investment choices that benefit our customer, as well as macro factors that you all know well, including COVID, Brexit, and FX. In terms of the investments, there have been two key ones. Firstly, we've invested in local fulfillment in the U.S., which has resulted in increased freight and duty costs. It's important to remember though that these have largely been offset by delivery savings further down the P&L. This decision was an important one for us, as it allowed us to effectively service 100% of the U.S. market on a next-day basis, while significantly releasing costs and producing better insulation from supply shocks, even. Secondly, we've realigned our pricing architecture in key markets, most notably in Europe.
Following the launch of TGR, we have been able to implement more territory-specific pricing architectures rather than historically where we priced more like a U.K. exporter. In addition to this, we've invested in our promotional offer to make it more relevant to consumers and to better leverage localized promotional calendars. Although it's not fully offset the headwinds, we've also driven improvements in our underlying sourcing margin, and I'll come back to this later on. For those of you who followed ASOS for the last three years or more, you'll remember that in 2019, we set out six priorities to build greater fitness for growth. In essence, a focus on continuous improvement in the customer experience and in our productivity and effectiveness as we leveraged our scale and investments. The benefit of this focus is evident in the table set out on the left-hand side of this chart.
Over the last two years, we've reduced our underlying cost base, excluding marketing, to 37% of sales, down by a whole 6 percentage points in that period, a significant improvement over a relatively short space of time. We've done this by removing around GBP 80 million worth of non-strategic costs over those past two years from automation benefits in Eurohub and from implementing lean methodologies across the supply chain, as well as leveraging the scale of our fixed cost base. This has enabled us not only to grow margin, but also start to reinvest those savings to support growth and profitability. A significant part of these improvements is driven by the investment we've made in automating Eurohub.
Looking more closely at how we have leveraged these supply chain investments, you can see on the left-hand side of this chart, the pick and pack rates in both Barnsley and Berlin, which have both improved significantly post-automation. This is a significant increase in productivity and, in turn, this drives increased throughput and capacity. On the right-hand side of the chart is a short case study of the Eurohub benefits which we've accrued since automation. You can see from the perspective of labor costs associated with fulfilling an order, we've seen a 36% reduction and overall warehousing costs as a percentage of sales have dropped by 350 basis points in the EU. These kind of benefits have been instrumental in our decision to now automate the Atlanta facility. The benefits of our efforts to restore margin have also benefited cash flow.
Through our focus on costs, leveraging investment, and improving customer value, we've been able to generate free cash flow at the same time as investing. In fact, we've generated over GBP 295 million of free cash flow after CapEx since 2019, and this cash flow has, in effect, allowed us to fund the acquisition of the Topshop brands from free cash flow. We've also significantly strengthened our balance sheet through both the equity raise undertaken during the early stages of COVID and the more recent convertible bond issue, leaving us with a strong net cash position. In summary, we've driven revenue growth of 20% CAGR since 2019, while restoring our margins to greater than 5% as we've leveraged our fixed cost base, pulled out the cost efficiencies, and driven reinvestment.
As a result of these improvements, we enter the next phase of our growth with a strong financial foundation, and these are themes you will continue to see us focus on in the medium term. Let's take a closer look at the targets which we recently announced in our full year results presentation. Last month, we set out the headlines to these targets, but let me just briefly recap. We set out to deliver GBP 7 billion of sales with an EBIT margin of at least 4% over the next three to four years. This translates to a compound average revenue growth rate of between 15% and 20% over that period. If we drill down and look at the drivers of this growth, many of which we've been speaking about today, there are three main building blocks.
Firstly, doubling down on our winning offer by adding an additional GBP 1 billion worth of own brand sales, together with a circa 5% share of GMV coming from our Partner Fulfils program. Secondly, adapting our winning offer to win in the most important markets. By doing so, we will double the size of our U.S. and EU businesses. A continued focus on margin evolution and operational excellence. We've shown over the last 3 years, as I've just shown, that we can, through our focus on this, fund our growth at the same time as improving profitability. If we take a look at our GBP 7 billion growth aspiration from an international perspective, let me just recap what José and Robert talked about in terms of what to expect from each region.
We believe that the U.K. will continue to be a strong growth driver as we continue to expand our categories and better, more fully leverage the power of our Premier proposition. In the U.S. and EU, we start with a strong and scalable platform. We know that key to winning in those geographies, having built that platform, is to better localize the experience alongside greater brand awareness. Lastly, in Rest of World, a topic we haven't dwelled on much today, we have good resilient businesses in this region, and our focus for the medium term will be weighted towards continuing to trade those profitably. We will be supporting this revenue growth ambition through up-weighted investment in both CapEx and marketing.
In 2021, our total CapEx spend was GBP 156 million, and we are looking to lift that to between GBP 200 million and GBP 250 million over the 3- to 4-year period on an annual basis. To help provide some color on where we will be making this investment, we split the investment into two main areas, tech and supply chain. Investment in tech remains a key priority for us, enabling much of what we have spoken about today. Clearly, scaling to GBP 7 billion of revenue will require investment in infrastructure, but having done so much work on our infrastructure in recent years, the balance of our investment is set to change, with more being deployed in both the core customer experience and our data and AI capability.
In particular, we will be investing in the continued rollout of our Partner Fulfils program to enable this to scale following the initial pilot. In terms of data and AI, we will grow our investment in support of personalization and to enable cost efficiencies. For example, using AI and automation to improve our stock planning and pricing flexibility. From a supply chain perspective, we're expecting a step-up in investment as we complete the automation of Atlanta and Lichfield. In addition to this, the build-out of the fifth fulfillment center that we announced we will be working towards in the summer will be required as well. This is not yet committed, but is necessary to support our growth ambitions.
Alongside CapEx investment, we will be increasing our investment in marketing to in excess of 6% of revenue as we look to build greater brand awareness in support of the plans we've laid out today. As you saw from the chart earlier, the one area where we've seen a reduction over the last three years is gross margin, and so I thought it would be helpful to walk you through the moving parts and why we expect that we'll start to see gross margin stepping back up in the next three to four years. If you look at the downward pressures we've faced, there is an element of structural change as a result of our investments as well as macro changes like Brexit, but a number of the pressures we've seen more recently should start to unwind.
Most notably, freight and delivery costs should ease as we move beyond the current global supply chain challenges that have arisen as a result of COVID. We should also see product mix support improvement as going out demand goes back to a more normal level. We also see a number of opportunities to improve our sourcing and therefore buying margin, which should support margins going forward. This is something we've already been doing, but there is significant further work we can do in this area, which I will cover on the next slide as part of our ongoing cost efficiency efforts.
In terms of our overall cost profile, I've already illustrated the progress we've made, but I'm confident there is significant further opportunity in the next few years as we continue to optimize our sourcing, reap the benefits from TGR, and drive process efficiencies in areas such as returns and, as you've seen, from applying our operational excellence to areas right across the business. We expect this operational excellence program to deliver a further GBP 50 million-GBP 100 million of benefit in the midterm across four key buckets. In terms of sourcing and supply value, we will focus on improving our cost visibility to better negotiate pricing, drive fabric consolidation as José spoke about, and increase our proportion of direct sourcing into FC.
As always, we'll look to leverage our increasing scale to drive improvements in supply sourcing, an example of which Vanessa and José spoke about in terms of more sourcing into the U.S. The rollout of TGR will enable us to improve our planning and ranging by fulfillment center and should help us to improve margin realization through more localized pricing capability, as well as providing better real-time margin visibility, which should in time enable us to make better decisions on both sourcing and pricing. I've already mentioned that we have improved our returns process, but we plan to take that further by streamlining our returns network and doing further work on optimizing size and fit. Lastly, by continuing to drive our operational efficiency across the organization, particularly process excellence, we can and will continue to simplify the way we do things.
Taking all of these elements together, I'm really confident we can deliver the 4% margin we've outlined despite increasing marketing investment by at least 100 basis points. While clearly our focus today has been on the medium term plans and targets, we don't believe we're done. While we definitely aren't here to set long-term targets, I did wanna share a perspective on what we believe is achievable in the longer term. With the size of opportunity ahead of us, we believe we will be able to continue to sustain revenue growth in line with what we've laid out. Even if we achieve this for another five to six years, we still have only captured 3%-4% of the TAM in our core markets.
A number of the initiatives we've covered, international growth, our partner program, should create a platform for margin in excess of 8%. Let me talk you through briefly why I believe we can achieve this. If we start with growth, we believe that we can sustain our growth through a combination of further channel shift combined with the growth levers we've outlined today. I realize you will all need to see proof, but if we deliver what we've laid out, I'm sure you can all see that the growth opportunity here is not a 3-4-year one, but one that is much longer term. In terms of future margin opportunity, there are three key drivers. Firstly, further improvement in operating efficiencies, something we've been doing and know how to do.
Secondly, driving scale efficiencies in our international business by growing our awareness and moving customers through our value proposition. Thirdly, the growth of Partner Fulfils and wholesale, which attract higher margins. Let me talk you through each of these in turn, starting briefly with operational excellence. I believe the runway here is substantial. It is clear that as technologies mature, the opportunity to digitalize product design and supply chain will only increase. This will allow us to reduce costs, increase speed, and remove inefficiencies. There are also a number of areas where we can improve margins further as we reach higher levels of scale. For example, as we spoke about, we don't currently source any product locally to the U.S. as we don't have the scale to make this for this to make sense across a broad range of our portfolio.
In time, this should provide further cost and speed benefits to us. In terms of our international opportunity, I thought it would be helpful to give you a geographical breakdown of EBIT, as this is probably the most asked for disclosure. What you can see clearly is that while all our segments drive a positive contribution to the group margin, the U.K., as our strongest and most mature business, is the highest. The U.K. margin is higher than international for a number of reasons. Lower distribution costs, which is driven by both our scale, but also the size of the country.
Lower warehousing costs, given it's both the most automated and highly utilized of our warehouse assets, and lower marketing costs, a function of the size of the customer base, driven by that much greater awareness as you've seen, as well as a higher mix of Premier and higher overall ACVs. It is also worth noting that it carries the lowest gross margin driven by, in part, our more mature product mix, but also because the pricing reflects the competitiveness of the market itself. There is more to go for in the U.K., particularly as we continue our cost efficiency efforts and expand categories, which should hopefully deliver further value for us and our consumers. The big opportunity is in closing the gap between the U.K. and the rest of our business.
If you take the drivers of profitability in turn, it's clear that there are opportunities to migrate all of our international territories towards the U.K. EBIT margin. Firstly, the level of warehousing efficiency we have in the U.K. is replicable, and our automation projects really underline that. Secondly, as our customer base grows, the value we derive from them can and will increase as we seek to capture a greater level of conversion and customer wallet through the plan we've laid out today. As we scale our customer base, our rate of marketing investment should migrate more towards the U.K. level. In fact, marketing is perhaps the most scale-efficient element of our business, and you can see that clearly when comparing the EU EBIT margin with the U.S.
The third driver of future profitability is the benefit of expanding our current model into higher margin revenue streams with incremental contributions from wholesale and Partner Fulfils, both supportive of overall margins. The chart illustrates the relative margins of each model and their impact on the P&L. Own brand and third-party EBIT margins are in the same range, between 6% and 8%. They are part of the same basket, and the combination maximize profitability overall, as we've seen today. Wholesale, e.g., wholesaling our Topshop brands, delivers a higher EBIT margin given it's essentially a B2B model, whilst Partner Fulfils is a commission-based model, as you all know, which result in higher EBIT margins. Therefore, depending on the relative mix, these new revenue streams should be significantly margin enhancing.
As you know, we are targeting a 5% GMV mix in the medium term, but we believe longer term, we can deliver circa 20%-25% of our business through the Partner Fulfils model. This target is clearly lower than pure marketplace models, but it makes sense for us given the strength of our own brands, but also because our global scale and reach is an asset for many of our partners, and one that many of them will want to continue to use. As a result, a 75/25 GMV mix is our aspiration, balancing the relative economic benefits to us of each model. This chart illustrates the relative contribution of each model as a percentage of GMV. As it clearly illustrates, the cash profit for us is higher where ASOS Fulfils, but only where it makes sense to invest in the associated net working capital and CapEx.
Essentially, high volume and value products and SKUs. With a strong own brand and strong partner brands, this will remain the largest part of our business and will underpin our profitability. Where that stock investment makes less sense, more locally relevant brands as we've spoken about today, which probably will have for us lower volume and therefore demand less of a space in our warehouse, or where our partner wishes to retain a more consolidated stock pool, or where we just want to augment our stock pool by backfilling stuff we already have in stock, that's where Partner Fulfils comes into its own with a lower investment requiring incrementally profitable sales. Before we close and turn over to Q&A, let me briefly summarize. Since 2019, we've strengthened our financial foundations while continuing to invest and grow our business.
Our medium targets will build on this progress with our continued growth underpinned by further investment. Importantly, this investment will be funded through our P&L, enabled by continued efficiencies and the support to our margin from Partner Fulfils. Long term, there is much more growth to go for with the work we are doing today, setting us up for future sustained revenue growth. As we continue our efficiency journey, grow our business internationally, and increase the scope and scale of Partner Fulfils, we are confident we can increase our EBIT margin well beyond where it is today. As we've laid out through the drivers we've just been through, we believe a margin in excess of 8% is achievable. We've covered a lot of content today, both in terms of the current makeup of our business and about our future plans.
It's clear there is much for us to do, but the opportunity is real, and we are clear about how we progress on the next phase of our journey. We are, as a team, able and ready for the challenges ahead. We'd now like, given the amount of content we've covered, to facilitate another Q&A, and I'm gonna ask the whole of the team who's spoken today to join me on the stage, if that's okay? Hopefully we can take any question that anybody's got, either again, in the room or online.
Hi there, it's Bianca from BNP Paribas. I've just got a quick question that I actually posed to Rob earlier, but I didn't get the full question out. So with Partner Fulfils, that's obviously gonna be a big part of the business going forward, it's 20%-25% of GMV and higher EBIT margins. So question just around the partners, will they have standardized delivery terms, and will they abide by the same sort of delivery terms that ASOS has? Otherwise, there could be some sort of reputational damage.
Do you wanna answer that, Cliff?
I can talk to how we're doing with Adidas. Every single partner that we bring on board, we obviously need to look at their fulfillment capabilities and offer their delivery propositions. If they can offer next day delivery, they will do so. There'll be some smaller, locally relevant brands that may not be able to do so, but the key thing is that we have a flexible experience that essentially allows them to offer everything that they can do. Also back to the presentation, where a particular partner can't fulfill a certain delivery proposition that we think is important, that's where Fulfilled by ASOS can come into play, so we can do it for them to meet our customers' expectations.
Every brand, we're gonna have to look at on a case-by-case basis, and some of the commercials and the contracts we put in place for the brands include those service levels.
I think the only thing I'd add, Bianca, is that I think it's a fairly well-established principle in consumers' minds that if they're getting brands fulfilled from elsewhere, that the delivery propositions will vary. As long as it's part of a seamless experience, I don't think we'll be the first in the world to be doing that by any stretch of the imagination.
The key is managing the customer expectation and-
Yeah.
-the experience.
It's the clarity of that experience.
You've had your hand up for a while.
Yeah, yeah.
I think I'm the only one noticed 'cause I'm sitting by-
It's all right.
I don't have an answer to whatever you have.
I thought so. Maybe none of us do. We'll find out in a minute.
No numbers this time. John Stevenson at Peel Hunt. Just on brand exclusivity, you talked about, you know, Partner Fulfils, obviously, does that get you access, I think about sports brands really, to the sort of drops that are sort of retained for their D2C, and sort of the Tier One partners? Are you seeing access to that product already? And the second question, maybe naive to expect traction on day one, but obviously, you know, you've launched all this stuff a month ago, you know, Black Friday is coming up, we've got the peak party season. When we stand up in January, is it naive to expect we're starting to see U.S. factors move and some of the KPIs we can see, you know, what this initial, I know it's a 3-4-year program we're talking about, but you know, the initial sort of signs of green shoots?
Let me answer. I think it's a good try. We've already given pretty clear guidance for the half year. I would suggest that we don't try and ask that question, just in case anyone was tempted. José, do you wanna talk about brand exclusivity?
Sure, sure. On the less conflicted part of the question.
Yeah, yeah.
Right now with the two brands that we're working, we're only doing backfill, so we are not adding to additional part of the assortment. That's certainly the plan. The plan is to do so. One of the reasons why we were not able to add to this part of the assortment was precisely because some of these brands saying, "I will only give you access to this part of the assortment if I can control the pricing," which means D2C, Partner Fulfill, whatever you wanna call it. Certainly that opens the door to have these kind of conversations with all of them. I don't see why they would not offer that to us. I mean, in the conversations we have with them, they are super interested because of this specific and differential approach we bring.
I'm pretty sure that is not going to be a problem. We are not there yet. To your question, not there yet. Certainly, yes, this is part of the plan with the big brands, especially with the big sport brands.
I think the only thing I'd add already, even though done through a different model, at any one point in time, up to 10% of our assortment is exclusives or collaborations with brands, because they like working with Vanessa and the team or having exclusive products. It's not, for me, a big stretch to imagine that Partner Fulfils can only own a lot more of that opportunity, because we're already doing it in collaboration with a lot of those brands.
Mat, I'm not answering this question, but whenever somebody asks me a question that's about advertising and they start leading up and it says January, I'm just waiting for, "So are you gonna have a Super Bowl ad?" The answer is no.
It's always good to answer the question no one did ask. That's good.
The whole budget's gone in one.
I was just waiting for it. I'm like, "Oh, here goes the Super Bowl question.
Thank you.
Adam is behind you.
Hey, it's Adam Cochrane at Deutsche again. A question in terms of your 4% margin over the next couple of years, or at least 4%.
Yeah.
If things don't plan out, would you rather give up the sales growth or the margin target?
I think I'm gonna have to answer that one, aren't I? I was just wondering if I could give it to anyone else. I think you need to see it in the context of value creation. Ultimately, our objective is to maximize the customer opportunity and, you know, at target, at end state, to do that with a maximum level of profitability. Therefore, as we think about any phase of the journey, let's take the next three or four years as an example of that. We are looking to try and make sure that we're attracting and bringing in customers that will have a longevity and attract the sort of economics you've seen. But it's important, actually, I thought José expressed it really effectively. We have 26 million customers today.
Effectively, we've got zero tomorrow. We have to price our offer and economics every day we're competing for customers so that the level of structural profitability, particularly in terms of order economics, that will always make sense for our business. Because you know, for example, there's no point pricing it at, you know, at a certain level thinking that you're gonna build customer longevity and loyalty through that. There are certain elements we'd look to flex. We've consciously said at least 100 basis points of marketing investment, because if we see the opportunity to invest that with a return, then we wouldn't feel constrained to do that. But there are other areas where that structural profitability, in that sense, there'll always be a balance and a yin and yang between those two things, I think.
To use your poker analogy of doubling down earlier on, why aren't you going all in? Why 6%? Why not 7%? Why not do these things more quickly and invest that money? Obviously, you know, when you get a compound growth of 15% or 20%, to do 6% of sales or 25% of sales makes a big difference as you head into the outer years.
Yeah. I mean, I might ask Robert to comment in terms of how you build, you know, customer engagement and loyalty over time. I think the reality is, and we've spoken about it a lot today, we're using a test and learn approach. If that test and learn approach reveals a bigger opportunity, I hope no one in the room or listening would not expect us to take that. I think we have a strong expectation that building customer engagement is not something where you can just go and bet, to use your analogy, you know, GBP 300 million-GBP 400 million in one go and expect to build sustained customer loyalty. Robert, something you're very passionate about. Do you wanna talk about it?
Well, I would just, you know, start with, you know, anyone who thinks from the U.K. or frankly, if you're sitting with a brand, if this were a U.S.-based company and we were trying to grow the U.S.-based company from $500 million up, that a big bet approach would be a good idea in that market. So that's one. You know, the second thing is the way we're approaching marketing is giving ourselves financial options over time so that we can invest. At the moment, in the stage that we're in the U.S., we're developing that added financial option. You know, we doubled our marketing investment from where we were in the past two years.
We did that by providing better information so we know where the incremental return on ad spend is from a revenue, if we wanna go for top line, and where the incremental ROI is if we needed to go for profitability by channel and by market. That allowed us to better allocate that marketing capital and double it. Now, as we're expanding the mix, we need to develop that information base as well, where we will then have the option to invest as we see fit. At the moment, we don't have that information, therefore, we don't have that option. Does that make sense?
That's great. My final one is, you talk about the better unit economics than peers. Some of your peers are growing faster with worse unit economics and a higher EBIT margin. Can you explain the difference between your better unit economics and the bottom line, why your EBIT margin is not as high as some peers?
Without wanting to get drawn into a debate about it, I'm not sure that anyone who's got a scale proposition has better EBIT margins. I think you'd have to look at the relative sizes, the relative scale that they've built. If you're really gonna do a true comparison, I think if you were ever, and I don't think you can do it because it's just not. If you could ever do an apples to apples comparison, I'd be very surprised if you can find anyone with a better EBIT margin doing stuff at the scale and scope we are. Because we're investing, you know, whether it's through depreciation or amortization, there's a number of structural investments. That would be my view. We obviously do benchmark that, in particular, to try and learn from competitors.
Where can we, you know, do things differently or where do we see opportunity? We've done quite a lot of work on that, but we haven't. As I say, we're really confident that our order economics is superior, and that's ultimately what's gonna dictate profitability in the long term, not necessarily in the short term.
Thanks.
Hi, thanks. It's Georgina from JP Morgan. Yeah, just two from me, please. The first one, just, well, actually both thinking about your longer term targets and the 8% margin. Where you talk about that 15%-20% margin on Partner Fulfils, can you just talk a little bit about the sort of commission rate that you're assuming there, particularly given that obviously more and more players are growing-
Yeah
-in that area? That would be the first one, please. The second one is, assuming that you can get to this 25% of GMV from more of a marketplace model, but that obviously relies on localization and smaller brands working with you that will presumably need your support in fulfillment initiatives. What, and sorry if I've missed it in the presentation, but what are you penciling in for fulfillment by ASOS as a proportion of those marketplace?
You haven't missed it, and as we're starting on the journey, you know, time will tell exactly what that mix is gonna be. I think, you know, and the pandemic's Covid is one big. I'll answer your second question, then I'll answer the first one. The pandemic has forced a lot of people to be able to service their customer online. I think if you take in the context of a country, I would suspect the vast majority of brands and retailers will have some kind of online offering. I guess my only perspective on that, there will be value added, particularly if we're taking brands to other territories. If you remember, the core of it is localizing our assortment. I guess instinctively, we should only do it where we can add value to them. So that would be my instinctive answer. You know, let-
May I-
Yeah, yeah, please.
-just build on that. When we're talking about more local brands, smaller brands, don't go direct to think of couple of million, 5 million GBP brands, because these are really, really small brands. Before getting there are a myriad of 50-100 million GBP brands that we can work with. These brands, they have their own logistics capability, and they have next day delivery, at least in their home countries. Not to say in the whole of Europe, for instance, if we're talking about European brands. I was working for a small brand out of Portugal, out of Porto. We were doing same-day delivery all the way to Czech Republic. It's with our own logistics capability, and we were a 150 million EUR brand.
This is like there is a myriad of local brands that we can contact, and they can do that. Of course, there is a point where you go below a certain threshold, where you're going to brands that they don't have their own logistics capability, but this is really long and actually not sure when we are gonna get there.
To answer your first question just briefly. I'm not gonna give a specific number of commission rates, but it would be in line with both what our pilot is telling us at the level of commission that we can achieve and also what we see in terms of the broader industry. It's not difficult to find out what commission rates other people are charging. It's benchmark based on those. The honest answer is time will tell. I think you have to remember a lot about what José showed you earlier on. The uniqueness of what we offer in terms of how we position brands, the way that we shoot brands, the customer that we access, of which there are 27 million or the best part of, is a fairly unique proposition.
I think that's one of the reasons. If we go right back to why do we focus on fashion credibility, it's because we believe that's differentiating versus a platform model or a house of brands model. We think there's inherent value for our brand partners in that. What they tell us today is there's inherent value. I don't wanna sound overconfident about it because it, you know, it's a competitive space, but we genuinely believe what we can do for people is different to everybody else.
Well, I've already got the mic. Don't really need to put my hand up. It's Andy Wade at Jefferies. One on the long-term targets, sort of talking about an 8% EBIT margin. Sort of if you do go from 0% to 25%, Partner Fulfils at a 20% margin, that's gonna sort of add 4% on its own.
Remember, you're calculating it as a percentage of GMV and not of revenue.
Right.
So it doesn't do-
Oh, yeah, of course. Yeah.
Yeah.
Yes. Okay.
It catches everyone out, including us.
That's answered my question. That's good. Thank you.
That's that one.
The second one, in terms of depreciation, obviously, you've talked about the CapEx maintain-
Yeah.
Maintaining medium-term CapEx, it's sort of GBP 200 million-GBP 250 million. Are we gonna see depreciation head up towards that number? 'Cause it sort of stubbornly remains low.
I mean, I guess the simple answer is it has to, right?
Yeah.
That's, you know, longer term capital intensity. I would expect to be structurally a bit lower because technology investment scales. I would expect our depreciation set to settle out somewhere around 3.5% of sales if you took a long-run view.
And, uh-
Which broadly would get you to then the level of equilibrium, essentially.
Has the implementation, timing-wise, of the TGR meant that we're gonna see a step up in that depreciation level?
No. We started depreciating TGR in last financial year because it launched.
Yeah
Kinda halfway through. There's a step up, but it's not significant.
Right.
The trajectory of depreciation and amortization, if you want a specific number, Andy.
Yeah.
Again, Tarek can give it you after.
Cool. Thanks.
To Simon and then Mike.
Hi. Simon Bowler from Numis. A couple questions. First one, the regional margin detail that you've given. Is that something that you use internally and monitor and think about the business, or is that kind of for our benefit more?
No, it's definitely not for your benefit. It is today. No. We actually look at it more on a in terms of how we, how our management approach works, we look at profit per order by country to drive a lot of our. When Robert's thinking about how he's optimizing his marketing mix or José's looking at the brand profitability, we look at it on a by order or by brand or by customer basis. We can kinda slice and dice it different ways. As we're now starting to look more geographically, obviously we're starting to think about incentives geographically and how that might fit together. It's an active part of the discussion. I think it's fair to say that it's an area where we've got quite a lot of further opportunity.
It's something Katie, who's sat in the room, who I know a lot of you I've met, she's over there, who's obviously stepping up to be Interim CFO. It's something that she's brought to us in terms of really trying to build that into all of our management reporting and information systems. We use it now, but there's an opportunity to take it further.
Okay. Following on from that, the U.S. contribution margin differential looks to be about 900 basis points. I know you've quite deliberately not filled in all of the numbers to help us-
I haven't.
-how to get there. Can you give a sense of how much of that delta is driven by marketing? From here, given some of the growth initiatives into the U.S., should we expect that delta to the U.K. to grow before inevitably recovering as you scale the business?
If you look at the delta today, let me do it in EBIT margin. If you look at the delta today, it's about 13 points at EBIT margin, U.K. to U.S., if my math is working at this time after all of this. About half of that is driven by broadly the structural efficiency of the P&L, which automation should help to close. It won't be instant, and it won't necessarily close all of it because we'll obviously not be fully utilized from a capacity. The balance of that gives you a feel for what the investment cost is, not necessarily all of which is marketing, let me say that. The opportunity, within that, if we are then looking to accelerate our investment, you can probably all do your own math as to what you think that might look like.
Don't forget that, you know, we are automating at the same time as accelerating investment. Shall I take a couple of questions online just before you go, Mike? Is that all right? I'm conscious of answering some of those. So there's, could you just scroll down for me? 'Cause the question I was gonna ask is, there's a couple of people have asked this. So there's a question from Howard Jones at LSE Capital, and it's very similar to a question from Miriam Adisa at Morgan Stanley. So I'm just gonna ask one of them, but they're asking the same question. You've highlighted the importance of own brand, and you've had success organically developing brands. Is there a preference for organic development versus more M&A? So I suspect a number of people, I don't know if you want to give your perspective, José, and then I'm happy to give-
Sure
-a more overarching answer if necessary.
Clearly what we've been sharing today is organic. We have not been talking about M&A. If we go back to the last M&A thing we have done with Topman, Topshop, I think it's been really successful. Actually, the growth rates we're seeing in Topshop are really good. There are opportunities out there. I think if I can convince Mat, and if we find good opportunities, why not? I think that's clearly an option. There are a number of fields where we could kind of chase these opportunities, that is not only specifically buying brands. This is certainly an option, but there are more options out there.
Yeah.
I don't know if you want me to be more specific.
Well, no. No, please don't.
Okay.
No.
That was kind of like a balancing act.
Yeah. Exactly. No. I think the reason I asked José to answer that first is, I think our intent is, you know, we should look at lots of things and understand whether it adds something to our overall customer franchise, right? We've already got 17 brands that play in most spaces. I guess the only thing I'd add to what José said is, we will apply a high bar, both financially, but also in terms of is it truly additive to our business? That's the only thing I'd add. We've obviously got the strategic optionality through the balance sheet to have, you know, to have that ability to look at things. I wouldn't be expecting a whole sea of transactions over the next 12 months.
Then the only other thing I'd say is the guidance we've given today, both medium term and the kind of expected M&A is not included in any of those assumptions. I think that deals with that question. Mike, I'm conscious you should ask a question, and there's another interesting question online, which I'll ask as well.
Thanks a lot. Just one on ASOS Media Solutions, please. I wondered how we should think about the potential size or opportunity there. Then also is the sort of margin-accretive nature of that business within guidance, or is that additional upside?
Robert, do you wanna talk about the possibility, and then I can talk about how it's reflected in guidance?
Yeah, absolutely. I mean, I think the way you should think about possibility is we started that roughly a year ago. It was a very what I would say modest effort that we took at it. We wanted to work very closely with two things carefully. First and foremost, how it impacted the customer experience. We're very comfortable with that today. Then also how we work with partners. You know, I think in terms of the total potential for us, I don't think we're prepared to answer what our view on that is. You certainly can look at other examples in the marketplace to understand, you know what that is, and so, you know, that I leave to you.
In that sense, yes, we factored in assumptions into guidance, but it is based on our current efforts rather than, you know, some of the opportunities. In that sense, I guess there is upside depending on how we might think about it in the future. Let me take a couple of questions then from online. The question from Anne Critchlow at Soc Gén, which I'll ask you to answer that, José, if that's okay, which is, where do you see own label percentage in the medium and longer term? I guess she means percentage of total portfolio, i.e. of sales.
Well, that's a good question. I mean, we see our own label, as I said, as you said, as a critical tool to attract new consumers. We're not going to stop the development of own label or our own brands. The thing is that with Partner Fulfils, obviously, we are pressing gas also. On the other hand, on the other side, on curate, most likely we're gonna see a certain acceleration on the curate side, but not because we are stopping our own label. It's just like because of the steroids we're putting on curate. Difficult to say. Most likely in the short term, it will be less as a percentage, but that doesn't really mean that it's not going to grow. Quite the opposite is that it's because of the steroids on the curation side. So-
I think, again, if there's one key chart to take away from it's probably that pyramid or inverted pyramid. You know, we maximize basket, we maximize customer value, and therefore we maximize profitability when people are shopping all elements of our offer. Therefore, in some ways, we're not constrained in our thinking about either one. We'll look to maximize the opportunity in both. A question from Liv Townsend at UBS again, which is: Other players seem to be moving away from Partner Fulfils models, given split baskets and the negative impact on NPS. What makes you sure this won't happen to ASOS? I feel you probably covered NPS enough. I don't know if you wanna give a little bit on NPS, then I might just give a perspective on it.
Well, I'll probably just repeat what I said earlier. What we really try to do is really think about the customer experience and explain to the customers from the earliest possible point in the journey from the product page through to the basket, through to checkout, very clear on the proposition and the delivery dates, and that it's coming from another place, managing the service levels. We've looked at some of the, you know, the leading marketplace players in our space, and they're very good at managing service levels with brands, and then we intend to do the same. I think that's really important in terms of making sure you maintain that NPS position.
I think the only thing I'd add, and I communicated it.
Mm.
With my CFO hat on, but where it makes sense for us to sell a brand and have it through our logistics, we will do so because it makes more cash profit where it makes sense to do so. In that sense, our ambitions in Partner Fulfils, Liv, are to add something to the experience. Where it's not additive, then it will make more sense for us to do it ourselves. I think therefore we're kind of approaching it with a slightly different philosophy to perhaps some of the people you're referring to, albeit hard for us to tell. I guess that's the thing that kind of conditions what Cliff said. There's another question online which I fear I'll have to answer. The question is about listing.
The question is effectively when will you move from AIM to the main market? I'm resisting the temptation to ask Ian to ask that question for me. I'll answer it. In terms of that, clearly there is a journey for us to go on and ultimately as part of that journey, it's gonna make sense for us to move off AIM at a certain point in time. As all of you know, there is a fair amount of effort required in terms of prospectuses and all of the stuff that go alongside that. Therefore, it's something the board discusses, keeps under review and at the appropriate time, I suspect it's an action that will happen. It's not something that obviously we're announcing today, but it's something that we'll keep under review and we'll of course keep the market updated should our intentions become more definitive.
Simon?
You having given us those regional splits of margin, obviously with the U.K. you've got your entire business within 150 miles of Barnsley. You've got kind of fabulous densities and relatively-
Sure.
-short deliveries into customers. You know, what gives you the confidence you can get anywhere close to that in the rest of the world where, say in America, you've got customers who are several thousand miles away from the DC, and Australia where they're tens of thousands of miles away? I mean, how much of a kind of permanent margin gap should that give you?
Yeah, it's a good question. There are probably slightly different answers for the two examples you gave. In somewhere like Australia and you saw, I suspect the Rest of World profitability was perhaps a bit of a surprise for some people today based on the feedback we've had. We price delivery costs into the way that we monetize Rest of World, so in that sense, we don't invest in delivery in the same way that we invest in delivery in more strategic markets for us. In that sense, the margins are somewhat insulated from that. Obviously, that's a decision we could change, but ultimately that's the case.
One thing Cliff referred to in passing, but that clearly does potentially reframe the way we currently think about that is the capability we've got where we can effectively take an order off from somebody else's supply chain and fulfill it. That allows us to potentially think then longer term about are there logistics solutions, et cetera, that we might use in some of those territories. Now that's probably a debate for a very different day, but we've deliberately developed the technology infrastructure to open up some of those opportunities longer term. Let me remind you, everything we've talked about today is very much the focus of the next three to four years. In terms of the U.S. and other places, your point is absolutely right, Simon.
When I spoke about opportunities to close the gap, I spoke consciously about warehousing, cost efficiency, marketing costs, and taking the customers through the journey. It will vary by territory, but in some cases there will be structural differences in distribution costs because of the size and scope of the market. Therefore it's not necessarily a sensible assumption to assume everything would migrate towards the U.K. profitability, but I suspect most of the analysts in the room weren't intending to do that anyway. I certainly wouldn't recommend it. Don't forget though that there is an opportunity, and somebody asked that question online. There is an opportunity to increase the U.K. margin further. I wouldn't see the U.K. margin that we've given today as a ceiling on what we think is possible in the U.K. either.
As you think about it and how you might think about it, you've gotta kinda take all those things into account.
Just to follow up since we're on Rest of World, I think we're all kind of quite impressed by how much money you managed to lose in Russia in a year. I mean, how much difference will TGR have on this?
We didn't. Yeah. I think that's an-
Unless you expressed it very-
Badly
-in a strange way on the call.
You can say. Yeah. Strange way is a polite way of saying it. Russia's profitable for us. There's no way our Rest of World segment could be as profitable as it is if Russia wasn't making a profit. What we quoted, and it has confused a number of people, so we apologize for the clarity of our comms. That was the pure FX impact. We obviously priced for FX, and it would affect a number of the other cost lines as well. The number you're referring to, which is in our year-end results for those wondering what Simon's asking about. We didn't lose anywhere near that. In fact, we didn't lose money in Russia. Apologies for the communication.
The basic question is, does TGR make it easier for you to kind of run these businesses in areas with volatile-
So a-
-FX, et cetera?
-a combination of TGR, plus some of the data and AI capability that Chris has been speaking about, gives us the ability to be much more dynamic and flexible in our pricing at scale. Things that we would have had to do manually two and a half years ago, we can now do automatically through a combination of TGR and the AI capability that we're speaking. In that sense, it gives us-
Okay.
A lot more pricing flexibility because we can do it at scale automatically.
Great. Thank you.
Hi, it's Anubhav Malhotra from Liberum. I had a couple of questions. Firstly, on the gross margin bridge that you shared with us, with some portions coming from better sourcing and product mix. Is there within those two bridges, those two bars, a built-in investment into pricing and promotion, or you think you are at the right level at the moment? And then secondly, on the point you made about internationalizing the look and feel of the website and the photographs and videos on it, I just want to understand how it would look in real terms, what would change, and why did you come to that decision? Probably a bit more clarity around that. Was that one of the factors that have been limiting, you think the growth in the U.K., if you have you seen that? Because some consumers may not.
That kind of photograph may not appeal to all consumers in the 20-something bracket. Thank you.
Yep. Do you wanna try and answer that second question?
Yeah.
Yeah.
Okay. Making our look and feel more international. Sorry. That's a great question. There is always the risk to lose connection with our current consumers. That's why we're doing that very carefully. That's not something that one day you poof, move 180 degrees from one place to the other. It's something that in some cases is very subtle, but we have to manage properly. Let me give you an example to illustrate my point. Sometimes we use models with tattoos on their necks. In some countries, that has a very negative perception because it's related with some kind of Latin mafia. We have to be aware of that and not use it anymore. Have we seen a negative reaction of our British consumers because we are not using or we're using less people with their tattooed neck? Not really.
It is like being aware of these nuances and managing that is very important, and we will do it carefully. For instance, we need to reflect differently diversity in our models. Today, we reflect diversity, but we reflect the diversity of this country. If we really wanna grow in the U.S., we have to reflect a little bit of different diversity. Is it going to have a negative impact on our sales? We have started to do it. We don't really see it. It's everything. There are things that are really subtle, that are important, that are subtle. It's important to know them, and it's important to move the needle slowly until we get there. I'm not sure if this is really what you were looking for, but. Okay.
Remind me your first question.
On the gross margin bridge, is there any pricing that you?
As we've said in our last financial year, we've done quite a lot of our price architecture realignment. There are some assumptions on promotional efficiency, effectiveness, and what that looks like. I would say the bulk of that investment has been done. I think in some ways, the question that Simon asked around pricing flexibility, that will mean in some cases, as we look to manage our pricing on a more day-to-day basis rather than month-to-month basis, if I use that, I think that'll mean some items get cheaper, some items will get more expensive. It's our best estimate of where we are today, but we think a lot of that investment we've already put into the business over the last two years or so.
There's one more question online from Ben Hunt at Investec, which is, "To hit revenue targets requires some heroic growth assumptions. How should we think about the split in growth from active customers and sales per customer?" I guess my perspective is I don't think we think they're heroic growth assumptions. In fact, a few of you in the room have written that you don't think they're aspirational enough. I'm not sure I'd agree that they're heroic growth assumptions. In fact, they'll be sustaining a 15%-20% CAGR versus the run rate we've achieved over the last three years of 20%. I think we disagree with the comment around them being heroic.
We think they're hopefully well thought through and backed up by the plan we've shared today, but you guys can be the judge of that rather than us. In terms of the split in growth from active customers and sales per customer, I think we see both opportunities as hopefully everybody's seen through the course of the day. There is an opportunity to grow our awareness and therefore our customer base outside of the U.K. in particular, but there's also an opportunity, both in the U.K. and outside, to derive more value from those customers as we bring them through the proposition. So I'm not gonna try and split it in detail, but we see both opportunities supportive of our long-term revenue growth. Which I think feels like a decent place for us to call it a day.
Thank you very, very much, both in the room and those of you that have lasted for four and a half hours online for your patience and for listening to us. Hopefully, you've found it useful. If anyone's got follow-up questions or things they'd like to know, please reach out to Taryn and the IR team. Keen to answer anything that anybody else would like to know or to have further dialogue. In terms of logistics and practicalities, because there's lots of you and a fairly limited exit, if we could ask you to just remain in your seats for a couple of minutes, we'll clear the ASOS people out, and then Adi, who's behind me, who's right behind you all, will help you all exit the building. Otherwise, you'll all be here for ages.
If that's okay, if you can go sit in your seats for a second and we'll move, and then we'll ask you guys to wait, and Adi will take you all out. Again, thanks very much for everyone's patience.