In 2020, based on WDD, 50+ enormous fashion retailers experienced drops in earnings north of the million-dollar mark--for example retailers with a stronghold in the fashion industry, like H&M, Levi's, and Nike.
Digital innovation, increasing globalization, and changes in customer spending habits have catapulted the fashion industry into the middle of seismic shifts. And, no thanks to the accelerated retail apocalypse brought on by the coronavirus, the fashion industry is much more unpredictable than ever.
This Report explores where we are and where we are heading, by taking a detailed look at the numbers, trends, and strategies forming the ecommerce fashion sector in 2021 and beyond:
1. Industry-wide data
The international fashion ecommerce industry has been anticipated to decrease from $531.25 billion in 2019 to $485.62 billion in 2020. The negative compound annual growth rate (CAGR) of -8.59% is largely due to the coronavirus pandemic. However, the sector is set to recover and reach $672.71 billion by 2023.
In the US alone, the ecommerce fashion industry accounted for 29.5percent of style retail revenue in 2020. The value of the US market is projected to take a sizable chunk from international predictions, reaching $100 billion by 2021.
Data through Statista and available in The Fashion Industry Report
Driving this growth are five noteworthy chances:
- Expanding international markets outside the West
- Growing online accessibility and smartphone penetration
- Emerging worldwide middle classes with disposable income
- Innovating technology to make experiential ecommerce
- Harnessing the power of celebrity and influencer civilization
The largest threats to established brands include:
- The passing of brand loyalty because of market fragmentation
- The cost of combating online yield rates as high as 50 percent
- Quick fashion's ability to create and release fashions on demand
- Pressure from customers to use ethically sourced and green production substances
We'll get into strategies to fight these issues later. For now, let us examine how these huge numbers play out in business sub-verticals.
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2. The COVID impact
The coronavirus pandemic wreaked havoc on last year's fashion ecommerce predictions. When lockdowns were enforced worldwide in March 2020, 27 percent of US consumers stated they planned to invest"somewhat" or"a lot" less on luxury and style things than they had budgeted prior.
In spite of this, trend online retailers have jumped. Brands such as Zalando reported a 32 percent --34% increase in GMV during the second quarter of 2020. UK merchant Boohoo maintained a 45% increase in earnings across all its (mostly online) fashion brands during precisely the exact same period.
It is no wonder why nearly half of international fashion retailers haven't adjusted their ecommerce programs since the onset of the COVID-19 pandemic.
The 1 branch of fashion retail which has removed is athleisure. The athleisure market size was valued at $155.2 billion in 2018--a figure that is set only to rise. Athleisure is predicted to have a CAGR of 6.7percent from 2019 to 2026 and reach $257.1 billion.
With colleges, brick-and-mortar fashion shops, and offices shut down, nearly a quarter of Americans chose athleisure clothes as a top-three category of how they planned to spend their stimulation check.
The outcome? Fashion manufacturers with a stronghold in athleisure, such as Nike and Lululemon, have reported incredible growth over the duration of the pandemic.
3. Clothing and apparel
Lower digital barriers to entry for all clothing merchants offer you the chance to promote, sell, and fulfill orders internationally and automatically. Because of this, worldwide revenue and earnings per user (ARPU) are both projected to grow.
In Europe alone, it is expected that every consumer will invest $921 on fashion-related items within the course of a year.
But while clothing's absolute numbers are steadily climbing, global revenue growth--as represented by compound annual growth rate--is slowing down: down from 15.3percent in 2018 to 7.6percent by 2022. The CAGR of this trend ecommerce industry is projected to complete only 3.3percent between 2017 and 2024.
Western-market saturation is the most likely source of the trend. When growth rates are compared between the United States, Europe, and China, that fact becomes even starker.
Between 2017 and 2022, CAGR is expected to settle in at:
- 8.8percent in the Usa
- 8.7percent in Europe
- 14.1percent in China
4. Shoes segment
As a segment of ecommerce trend, the shoe business observed comparable peaks in market value. In international market size, the footwear section increases from $365.5 billion in 2022 to $530.3 billion in 2027.
Asia is dominating this section, holding 54 percent of the global footwear market (compared to only 14.8percent for Europe and North America, respectively).
5. Accessories and bags
Not surprising, the accessories and bags section --although still growing at a stronger rate--will likewise see its double-digit growth--15.6percent in 2018--dip into the single digits--8.7percent --by 2022.
Those projections actually make accessories and bags among the healthiest segments of ecommerce style, despite its absolute numbers being the smallest.
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6. Jewelry and luxury
In 2019, the worldwide jewelry market was valued at a total of $229.3 billion. It is forecast to reach $291.7 billion by 2025.
The expansion (despite coronavirus-related recessions) mirror other financial disasters. McKinsey predicts that customers will"return more quickly to paying full price for quality, classic goods, as was the case after the 2008--2009 financial catastrophe."
Jewelry industry dangers stem largely from wholesalers selling direct to customers, plus consumer pressure on jewellery makers to be more transparent about pricing. Additionally, it's expected that the jewelry market will be dominated by major international brands such as Moet Hennessy Louis Vuitton (MHLV), stealing market share from local artisan stores.
Research suggests that the best chance for mono-brand jewelry retailers would be to utilize a multi-channel ecommerce strategy or an omni-channel retail approach.
Multi-brand boutiques can win market share by curating collections for certain sections --a strategy that also works well for apparel retailers.
Growing affluence in Asia-Pacific and in the Middle East is driving up the average revenue per luxury good customer to $313 by 2020. Despite luxury goods sales seeing slow growth at 3.4percent annually, McKinsey forecasts indicate that ecommerce could triple in earnings during the next decade--reaching $70 billion by 2025.
The biggest threat is the cheap luxury market: In the event the business offer luxury goods at multiple price points to increase the industry overall? Or will affordable luxury dilute or erode the high-end luxury market--dampening consumer confidence that what they're purchasing is"true luxury"?
Ecommerce fashion industry: trends and approaches
The above data points provide an abundance of growth opportunities for fashion and apparel retailers--despite the big changes in customer behaviour, global trade, and"normal" daily lives for millions around the world.
Below are a few of the most recent trends which you can work into your long-term fashion ecommerce strategy.
Take a look at our report on how entrepreneurs are changing the world
7. Personalization
By tracking user behaviour, either session by session or by account, trend vendors can build Netflix-like personalization to the onsite experience.
Although this may Begin with product recommendations (i.e., if you watched or Purchased this, you might like to see or purchase that) true personalization extends to the very visuals which are used to present products:
Netflix personalizes the pictures of apps based on an individual's past viewing behaviour. It is a characteristic that nets $1 billion annually in client retention value.
Ecommerce storefronts can be customized to reflect either onsite behavior or purchasing history.
Moving to the future of ecommerce, shoppers will start to expect the exact same sort of personalization in the ecommerce fashion market.
In their simplest form, these product recommendations are similar to the thing a consumer is currently browsing. When 24 million of those recommendations were implemented on Bandier's category and product pages, another 1.6 million clicks were created. Nearly 8 percent of those who clicked on a recommended product converted:
Take personalization further by minding recommendations for people who have browsed or purchased women's clothing. They should undergo a homepage encounter catered to this history:
While those who've browsed or purchased men's clothes should be given an onsite experience that succeeds:
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Situational targeting, based on consumer data points like weather and location, has been promoted by ecommerce specialists as a solution to the erosion of cookie tracking. Nevertheless, nothing has yet to replace the identification and monitoring power--not to mention the revenue possibilities--of an email address.
In regards to the top threat to internet style, learning more about your clients can help you identify those who are more or less inclined to return a product .
First, ensuring your return policy and procedure are positive experiences can actually increase customer lifetime value.
Secondly, personalization can be used to segment serial returners and thereby prevent offering discounts and promotions such as free shipping to people who take advantage of these choices --especially when shown in checkout.
"The ability to personalize with Shopify Plus really lets us push it to the limit and make a personalized checkout encounter clients can trust and be confident in maintaining their personal and payment information secure. It truly makes customers feel like the website will care for them." --John Hart, Ecommerce Manager in Peepers
Third, offering virtual styling supporters to loyal clients as a value-add service (e.g., hiring real people to personalize shoppers' wardrobes online) has been demonstrated to improve retention and margins.
No matter every personalization strategy builds a seamless customer experience when buying through your ecommerce store.
8. Anywhere ecommerce
It goes without saying that social media has been a driving force in the fashion marketplace.
Internet shopping is skyrocketing, with six out of 10 shoppers stating the possibility to shop through mobile is a significant element in deciding which brands to buy from. Fashion brands will need to meet clients wherever they are, on their mobile devices--and not expect them to find their website by chance.
Regrettably, most brands are plagued with a single sin. Andy Crestodina describes the situation perfectly:"Most branded content is advertising under a thin coating of entertainment or information. Scratch the paint, find an advertisement. It is the brand putting itself ."
Luckily, social and fashion websites are a match made in ecommerce paradise. Even in regards to explicitly"branded" content, and especially on Instagram.
Social media participation rates for international fashion brands through Statista
- Instagram: 0.68%
- Facebook: 0.03%
- Twitter: 0.03%
Particularly powerful on this front is mixing product-centric content, mainstream influencer marketing, and micro-influencers in 1 marketing strategy. As a model (pun intended), Fashion Nova excels on all three fronts.
With nearly 20 million followers on Instagram, partnerships with star accounts like Sarcasm Just , Cardi B, and Kylie Jenner, plus an army of over 3,000 micro-influencers, Fashion Nova pairs social-media dominance with a special approach to quickly fashion. CEO Richard Saghian's claim that Fashion Nova is "the fastest-growing women's apparel company" is no exaggeration.
And yet, social networking's real power comes from incorporating multi-channel ecommerce to create anyplace transaction.
Long gone are the days of actors being just someone you would see on TV. Nowadays, anyone with a fire can become a star in the social networking niche--partly on account of the growth of entertainment platforms such as Instagram, LinkedIn, and Twitch.
Beyond simply advertising or sharing on societal, multi-channel ecommerce incorporates native selling off-site to construct direct purchasing avenues in the areas your audience spends their time. Social networking platforms are creating their own trade features--such as Shopping on Instagram, Facebook Shops, Buyable Pins, and much more.
Just keep in mind the words of Kevin Dao, co-founder and CEO/CCO in ORO LA:"In everything we do, we are helping the consumer imagine. We need them to imagine being the guy in every picture. To envision us being their own stylist. To envision,'That could be me wearing these clothes.' We are not so much curating content as curating imagination."
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9. Flashes and drops
Flash earnings are no longer a lowbrow way of unloading out-of-season or"leftover" inventory. Instead, they are the stuff of ecommerce fashion royalty.
Provided that they are combined with exclusivity and expectancy. Obviously, apparel, accessories, and shoes direct the way from the flashiest and most rewarding shopping times of the year: Black Friday and Cyber Monday.
So, how can apparel brands maintain brand integrity and leverage big sales? One of those ways is by making flash revenue members-only"velvet rope" adventures . Talbots, Sephora, Evy's Tree, and Kylie Makeup do so regularly through exclusive collections and early access to social networking lovers and loyalty program members. (More on this later.)
Another method is to merge flash revenue with merchandise drops. Frankies Bikinis, for example, regularly sells out new products in a few minutes. Better still, its merchandise drops generate more than six figures in sales within the first hour of launching. The drawback is that monthly launches and normal flash sales are labour intensive.
Manager of Marketing and Ecommerce Brittney Bowles and a co-worker was responsible for manually executing tasks such as:
- Unhiding products
- Navigation changes
- Landing page updates
- Collection page alterations
- Uploading hero pictures
- Publishing new homepage designs
Today, Frankies Bikinis utilizes Shopify's automation tool, Launchpad:"We program everything during regular business hours," says Bowles,"and Launchpad does all the work for us automatically. This is the reason Launchpad is our savior."
Perhaps the most stunning example--blending social websites, flash selling, and a product launch --is Jordan Brand, Snapchat, and Shopify's collaboration to fall the limited-edition Air Jordan III'Tinker.'
Snapcodes were exhibited to fans throughout the 2018 NBA All-Star weekend. The codes unlocked a live in-app experience, and many purchases were delivered the very same day via fulfillment centers run by Darkstore.
10. Going global
Much was made of fashion's new international landscape. Ecommerce, generally speaking, has already moved beyond the West.
According to Charlotta Forslov, Online Manager in Honey Birdette:"The future of trade --competition is becoming fierce, and it is global now. As a merchant, you will need to stand out. You will need to move quickly, and I believe you've got to be customer-service-focused. You will need to try and stick out in the audience and provide the customer the best experience you can."
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As a merchant, you will need to stand out. You will need to move quickly, and you must be customer-service-focused.
The 10 largest ecommerce markets as of 2020 through business.com:
- China $672bn
- US $340bn
- UK $99bn
- Japan $79bn
- Germany $73bn
- France $43bn
- South Korea $37bn
- Canada $30bn
- Russia $20bn
- Brazil $19m
The percent that apparel and accessories claim in the complete number of ecommerce sales are set to decrease. Yet the whole amount spent on these businesses is predicted to exceed $170 million by 2022.
Data through eMarketer
Due to this change to online-first, fashion retailers are building their ecommerce sites to reach international customers. Require Culture Kings, for instance. It has built four worldwide online storefronts to market in three significant currencies. Almost 60 percent of its revenue now comes from its ecommerce enterprise.
For more on the opportunities, threats, and trends shaping international expansion, download The International Ecommerce Guide.
11. Technological innovations
Augmented reality, virtual reality, wearable technology, and connected fitting rooms are all making big waves in online fashion. Nevertheless, in the war on yields, two innovations stand out:
- Online sizing
- Onsite search
Smart-fitting technologies such as Virtusize enable online shoppers to purchase the ideal size by measuring the clothes in their closet or by comparing particular brands and styles to their own.
Fashion merchant Knix, which generally had tens of thousands of shoppers lineup for its annual warehouse sale, needed to implement virtual fittings when COVID forced the sale on the internet.
Joanna Griffiths, Knix founder and CEO, stated,"We made an immediate decision to accelerate our virtual fitting to advertise. We wanted to keep the expertise our in-store team provided, connecting and educating customers to get the best match for them."
Knix asked customers to decide on a time and date for their 20-minute consultation. When their appointment came, the specialist would walk clients through the way to take their measurements correctly and decide on the ideal size.
Now, Knix hosts tens of thousands of virtual fittings each month--with 97 percent of available time slots booked thus far.
Luxurious jewelry firm With Clarity has grown 900%--from $2 million to $20 million in revenue--over the previous year. Its CMO, Slisha Kankariy, attributes some of its success to virtual try-ons:
Although it's stress-free to buy a low-cost thing on the internet, it can be stress-inducing to buy something which has a high dollar value and psychological value sight unseen online. The best retailers will have the ability to offer an internet experience that alleviates the concerns about buying something a consumer has not held in their hands.
We offer a complimentary at-home preview which allows customers to see an extremely realistic 3D-printed ring customized for metal color, carat weight, and diamond shape.
Because we provide this service at no cost, clients gain confidence in our quality and design. This mix of online and offline which brings advantage to their doorstep goes a long way in blending the best of online and offline.
Through the coronavirus pandemic, we've been able to provide this service to our clients to make sure they have all the advantages of purchasing online and offline rolled into one.
Virtual fitting room apps go beyond clever fitting and allow clients use their telephones or virtual reality glasses to run 3D face or body scans--ensuring accuracy when clients try on makeup, jewelry, or styles online before buying anything.
Perhaps the easiest and most-useful--a kind of artificial intelligence and machine learning revolves around onsite research. Fashion Nova's predictive autocomplete, for instance, not only saves time, but also front-loads popular products:
As Paul Rogers points out in Ecommerce Website Search Best Practices:"If I have been interacting with men's Nike products, the related products would then be boosted for different queries. Using machine learning adds another layer of precision, prioritizing products based on their functionality and also ensuring that outcomes are enhanced over time, based on the'learning' from consumer behaviour (e.g., the products which are being clicked or bought most often )."
Voice-powered AI search (believe Alexa for fashion) will make recommendations based on an individual's past purchase history and online behaviour in addition to enable voice-activated purchases in a app or augmented reality.
Beyond this, wearable styles and accessories which are equipped with special sensors give a chance to use situational targeting to affect purchase behavior. By way of example, a shoe maker could identify if a runner has a problem with their gate. The manufacturer could then use that information to recommend a better shoe for this individual.
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12. Subscription Models
Subscription-forward companies are on the increase across all ecommerce sections --fashion included.
Take TC Running Company, for example. Before COVID-19, just about all of its sales came through in-store visits to its flagship Minnesotian shops. When lockdowns supposed both retail locations had to be closed , it needed to move its entire business online.
That change to online was the starting point because of its subscription model, Run Squad, a paid yearly membership that gives member-only reductions through the internet store.
Jeff Bull, Brand Director, says,"We began to see people get excited outside of our own city, and beyond our own state, since it's a fantastic deal. We're in a position to control the experience a bit more and make it a bit more private and hands on."
Quick fashion retailers such as ASOS, which have consistently been online-only, are tuning into the notion of subscription models. This past year, it declared Premier Delivery. For just #10 yearly, shoppers could get unlimited next-day delivery on any orders they put through the website. That bonus is emphasized in the majority of the website's product descriptions.
13. Stock on demand
The coronavirus pandemic undoubtedly caused difficulties with supply chains. As a result of this, some trend ecommerce websites are ditching their inventory --and, rather, ordering things on demand.
One of these retailers is Dirt Pitch Apparel. Creator Patricia Lopez says,"The biggest trend we've noticed was that the disruption of supply chains. Inventory levels were profoundly influenced by COVID, and we needed to alter our strategy. Rather than working with our international suppliers and overstock to minimize doubts, we began sourcing from several local American factories and printing facilities. This change gave us lots of flexibility, minimizing our stock levels and improving our cash flow. The majority of our orders are now handled on demand by our sourcing partners."
To coincide with this, the amount of style dropshipping retailers is on the upswing. Flexible places, low prices, and the promise of paying for inventory when you get a purchase are appealing to retailers.
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