It is interesting to note that the global fashion e-commerce market is predicted to reach $713 billion by 2020. In the USA alone, fashion eCommerce accounts for a fifth of total fashion retail sales which is quite impressive.
One of the important reasons why online fashion retailing is evolving is the increased digitization that we have been witnessing since the last decade. It is estimated that 95% of purchases will be made via e-commerce in 2040.
As a result, many fashion e-commerce players are adapting their business strategy with a change in consumer behavior.
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Key players in fashion E-commerce
Amazon is a well-known brand all over the world, but you will be surprised to know that Macy’s is giving it tough competition in the USA where both the brands account for around 40 % of fashion e-commerce sales.
The picture is different in other developed markets like Europe where Amazon, Tesco, and Otto account for more than 30 % of the market share. Amazon struggled a lot to establish itself in China. And, in April 2019 the company had to shut its operations in China.
Alibaba and Tencet occupy more than 70% of the market share in China. In India which is an emerging market, Amazon, Flipkart, and Myntra are big players in India which occupy more than 80 % of the market share.
Who Buys Fashion Items Online?
Let us ponder upon who buys fashion items online. It is very easy to guess the affluent and urban households who reside in big cities, but it is not the complete answer.
People from generation X(born between 1965- 1985) and generation Y(born between 1985- 2000) account for the largest portion of online fashion customers. Last but not the least, people who are tech-savvy and who have an aptitude to adapt to the coming technology cannot be ignored as customers.
According to a marketing research firm, Global marketing Insights, on average 10% of fashion retail customers are going from offline to online every year.
Do You Know?
Let us shed some light on some of the important facts for the fashion e-commerce business. You will be surprised to know that Zappos was the first online fashion retailer which started in 1999 in the USA.
Also, 60% of all the online fashion item orders are influenced by mobile in the USA. It is because the internet is widely available in developed countries unlike developing countries like India.
In addition, the whole Asia Pacific region, which comprises some of the emerging economies like India, Indonesia, Vietnam, etc, is the number one market for B2C e-commerce in the world.
Also, Fashion e-commerce sales in Europe are increasing at 12-13 % annually. And, one interesting fact that might be eye-openers for many businesses is that a customer takes only 3 seconds to judge a fashion e-commerce website.
It clearly shows that technology has reduced the attention span of customers. Therefore, companies or start-ups need to revamp their business model in order to cater to customer requirements.
Trends Disrupting the Fashion eCommerce Industry
There are some trends that are disrupting the fashion e-commerce industry. Let us have a look at some of those trends. The first is Personalisation i.e nowadays, customers need fashion items tailored to their needs.
If you can’t provide them customised products then they might switch to another buyer and your business will suffer. Artificial Intelligence (AI), this technology has helped in developing the real-time chatbots which are helpful in resolving the queries of customers instantaneously and they are helpful in engaging your customers.
Influencer effect, it is not very surprising to see why brands choose celebrities to endorse their brands, because celebrities resonate well with the emotions of the customers, and they have been successful in changing their perception about a brand.
Return Policy, availability of return options removes a perceived risk from the mind of a customer and it increases the chances that he might buy again from you.
Post Purchase Services, it means customers find a retailer trustworthy if it listens to his customers even after making a purchase.
Operational Challenges in Fashion E-commerce
Although online fashion e-commerce is witnessing good business, the overall picture is not very rosy. According to the IMF- the World economy will witness negative GDP growth in the near future because of the COVID-19 crisis.
Because of insufficient stimulus packages by various governments, many sectors of the economy are suffering from the problem of liquidity i.e many companies don’t have the required credit or working capital for managing their day-to-day operations.
Also, this industry is regulated by various governments all over the world by inflexible FDI norms. Last but not the least, over-dependence on the economy of the USA, which is considered as the driving engine for the world’s economy, and European countries coupled with a lack of investor confidence is making the situation worse for online fashion e-commerce.