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Asos recovers quickly from second fire

The recent fire at the Asos distribution warehouse near Barnsley, South Yorkshire, brought the online-only business to a halt on Friday 20th of June. Although the fashion retailer has begun trading again, the incident gave an interesting example of business continuity in action.

The fire, which is being attributed to an arson attack, broke out at around 21:50 on Friday 20th of June. The incident forced Asos to shut down their website for approximately 48 hours, halting new orders and providing refunds on purchased items. An estimated 20% of the stock at the warehouse was damaged.

Asos lost approximately £20 million in stock, revenue for 2 days of potential sales and lost out on all the orders they had to refund (not something a physical shop would have to account for). Surprising though, the value of the company on the stock market was barely affected. When trading recommenced, Asos shares only fell by 2% before rising just above their starting position. More damaging was the news at the start of June that Asos profits for the year would be lower than expected. That news saw their shares drop by 40%.

Learning from experience

Asos is no stranger to crises of this kind. In 2005, shortly after the business moved to a new location, they were caught in the collateral damage of the Buncefield fuel depot explosion in Hemel Hempstead. When the depot exploded it destroyed all the stock in Asos’s neighbouring warehouse. The loss of stock forced the company to stop trading over the Christmas period, the busiest shopping period for any retailer.

From a risk management perspective Asos had two major risks; first, all their stock was held in one warehouse and second, that warehouse was situated next to a fuel depot.

19, 000 orders had to be refunded and temporary premises found. Their shop also shut down for over a month.

An article in the Financial Times reveals that Asos had a very limited business continuity plan at the time of the 2005 disaster. Nick Robertson said that although they recognised the risks of housing all their stock in one warehouse that their business continuity plan hinged on its insurance cover. Their other important measure was to house their information systems separately to their stock. This meant that although they were unable to fill customers’ orders they did have the information needed to process refunds.

In the wake of the Buncefield disaster Asos made several changes to their business continuity. These were:

  • securing backup space to trade from in the event of another disaster
  • housing their computer systems in a bomb proof silo
  • splitting these systems between locations
  • increasing their business interruption insurance

We know that although the recent fire didn’t cause as much damage as the previous one that Asos were almost certainly more prepared to deal with it.

Keeping customers and shareholders informed

Social media has played an interesting part in this event. At the time of the Buncefield explosion Twitter hadn’t yet been invented and Facebook was still a closed network for American university students. There were no social conversions (as we know them today) happening online about events like the Buncefield explosion.

Nine years later the public, the media and Asos themselves used social media to talk about the Asos fire. Asos took to Facebook and Twitter at approximately 01:35 on Saturday 21st of June (around 4.5 hours after the alarm was raised) to announce the incident themselves.

“We experienced a fire in our warehouse last night and fortunately nobody was hurt. We have pressed pause on the website whilst we ascertain the situation but we expect to be back up and running in the next day or so. ASOS”

-Facebook 01:35 21/06/14

“We’ve had a fire in our warehouse & fortunately nobody’s hurt. There’s some damage so we can’t take any orders right now. Sincere apologies”

– Twitter at 01:39 on 21/06/14

It wasn’t until the 23rd that Asos released a statement on their corporate site, while the holding message on their website gave brief details of the shut down but didn’t change until it was taken down. Social media formed the bulk of conversation between Asos and their customers.

Social media even played a part in Asos’s recovery. A big summer sale launched on Tuesday 24th, just one day after the company was able to reassure customers that they were taking orders again. With a rousing cry and just the right amount of self-aware humour Asos announced

“The ASOS Sale in ON! It’s up to 50% off and too hot to handle (but absolutely, positively not on fire).”

-Facebook, 24/06/14.