A “major overhaul” of ASOS’ warehouse technology led to reduced stock availability in Europe and is expected to cost the business up to £25m.
The online retailer introduced an automated storage and retrieval system to improve operational efficiencies at its European warehouse, called the Eurohub, earlier this year, but delays to stock being put away led to restricted availability for customers.
Matt Dunn, CFO at ASOS, told investors the impact on the bottom line would be in the range of £20-25m, due to disruption costs and missed sales.
Plans to implement automation in the Eurohub had been a “lot bumpier and taken a lot longer than initially planned”, said Nick Beighton, CEO of ASOS.
He explained while product was being retrieved by the automated system as intended, stock was not being put away as quickly as required, leading to reduced stock availability for customers.
The issue also affected ASOS’ returns process, further reducing availability, with German and French markets the most affected.
“We've had some issues with the pick algorithms, essentially meaning orders arrived at the pick bench incomplete and needed to be cancelled. We weren't getting the operational efficiencies that we expected,” Beighton said.
While ASOS had built in contingency plans, “the magnitude of the impact was ahead of our expectations, both in terms of the scale and the sales disruption and the complexity of the issues we faced, hence the time taken to unpick and resolve”, he added.
Beighton said ASOS is working with its technology supplier to ensure the automated system is fully embedded and working as planned at the Eurohub by September.
Meanwhile, the brand was also hit with stock availability issues in the US and struggled to build up the amount of stock needed at its Atlanta warehouse due to issues with third party suppliers.
Some third party brands had not shipped to the US before, leading to compliance issues which meant building up stock was “a much slower process than we originally thought,” Beighton said.
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