The news Amazon has considered acquiring Asos was questioned by analysts today given the US etail giant could have made the move long before the fashion etailer grew to be valued at nearly £2bn. Retail Week takes a look at why Asos could still make a good buy for Amazon.

An easy bolt-on: Both companies are synonymous with online retail. Asos’ head office in Camden, London is just three miles from Amazon’s new ‘Silicon Roundabout’ office in Old Street, doubtless allowing the companies to work together easily. The acquisition would also allow delivery efficiencies and shared ideas for innovation. Amazon would likely leave Asos as a standalone site, as it has with Lovefilm following its acquisition of the DVD rental firm, and therefore integration of the businesses would be smooth.

Fashion credentials: Although it operates in the clothing market, Amazon has a relatively small fashion presence. It has struggled to attract high end fashion brands due to its image as a commodity player. Acquiring Asos would allow Amazon to tap into the lucrative young fashion sector and boost the US etailer’s fashion credentials.

Healthy profits: Asos’s pre-tax profits before exceptionals increased by 43% to £40.9m and group revenue soared 46% to £495m for the year to March 31. On Thursday, it is expected to report a profit hike of more than 40% at its pro forma full-year results for the five months to August 31. The positive numbers are likely to have impressed Amazon founder Jeff Bezos.

Management strength: Asos has an impressive management team, led by chief executive Nick Robertson, who last year topped the Retail Week Etail Powerlist 2011. He has bolstered his team in recent weeks with two notable hires. The long-rumoured move of former Marks & Spencer general merchandise boss Kate Bostock gives the 12-year-old etailer the experience of a former FTSE100 director on its board. And the appointment of former Amazon UK managing director Brian McBride as chairman this month means Asos will have a strong insight into Amazon’s culture and working processes.

International opportunities: There remains considerable opportunity for growth internationally for both companies. For Amazon, bringing a new fashion brand to a number of markets will appeal while for Asos any deal would speed up previously stated ambitions including launching in China.

Topics