Rise of the mediatailer…

London investors in ASOS are cooling down on the red hot share price for what is now one of the UK’s largest fashion retailers and certainly the fastest growing one (sales up 50% year-on-year and predicted to reach £1bn within four years). But don’t be fooled by the share price pundits.

This online retailer , launched in 2000 as ‘As Seen on Screen’, has rocketed on the back of the celeb boom and the “need” to look like Kate Moss on a budget. For media owners,though, ASOS is more significant (and, potentially, more threatening) than just as the retailer of choice for hundreds of thousands of young women many of whom happen to be readers of the UK celeb weeklies.

We are all waking up to the fact that “retailers must be media companies and media companies must be retailers”. This is the era of the mediatailer

New revenue streams

For media companies, this directs the need to develop serious and sustainable new revenue streams to replace at least some of their advertising and to create more durable customer relationships in the digital world. Some newspapers and magazines are quietly building very significant retail revenues off the page (watch the weekend editions of the Daily Mail and, of course, the Daily Telegraph). But all traditional media has to get serious (and online) about retail in an era of pressured advertising and accelerating reader reluctance to pay for general content.

Online transactions can be the glue in the media relationship with customers – as well as a major revenue source in the longterm. Selling banner ads on web sites won’t cut it in the search for longterm business models to replace the old ones. But, to succeed as mediatailers, media owners may have to change their whole approach to online content, branding and promotion. For some, that should involve quick-start partnerships with retailers.

Retail becomes media

For their part, retailers must add more and more ‘editorial’ to keep online customers coming back to their sites…like ASOS. This increasingly international operation is not just a very cool etailer of fashion for (today Britain’s, tomorrow the world’s) young women. It is also a very compelling web and social media operation that attracts its myriad of followers even when they are not planning to buy. It is a real community in the traditional media sense. The ASOS relationship with its customers and ‘followers’ is very strong. ASOS is, in effect, a media brand with a fantastic retail operation – launched and run by former media buyer Nick Robertson. But, just to pile on the agony, ASOS also publishes a monthly (hard copy and online) magazine with a circulation of 450,000 that is making serious waves among young women’s magazines.

UK young women’s magazine sales have seemed gravitational for a few years now, but it could be worse. Look at Australia. Oh, and guess where ASOS is just about to open up…

What do you think?