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360 Commerce November 13, 2018

Fashion commerce is the world as a shopping street

Fashion commerce

Until recently, you could easily find your way around the 9 Little Streets in Amsterdam. Now, though, you just head home disappointed: too many tourists, expensive parking and not enough choice. Nothing against the 9 Little Streets, because we #loveit. Visit it by bike after opening hours, get help from a fashionista and you are guaranteed to find what you are looking for. But the concept of the 9 Little Streets is simply not scalable and is only reserved for the happy few. Nowadays, consumers are doing the research themselves and are a contributing factor in the direction that fashion brands are taking.

Customers make their voices heard among a multitude of opinions on social media channels, where the influencer’s voice is the loudest, and together, they influence brands. This is why buying fashion at a distance has taken an important place in commerce. Today’s modern consumer is sitting in the driver’s seat. People are no longer buying stuff whatever is on display the shop window or in marketing.

The good news for the fashion industry is that specialists predict global growth of $408 billion to $712 billion by 2022. The emerging global middle class – particularly in Asia – and the improvement of online access are playing an important role in this. But these global market developments also involve some risks, such as the high cost of returning purchased goods. Fast fashion puts pressure on existing production cycles. There is a growing preference for ethically produced goods and ecological production materials. And there is a huge amount available, which results in brand fragmentation.

Takeaway: Digital is one of the most important drivers in the transformation of the fashion industry. The new foundation for fashion commerce is the convergence of fashion brands with consumers who create an ecosystem of brand preference, convenience and innovation.

Brand Preference

Influencers and social media channels help you to quickly recognise trends that make you feel comfortable as a consumer. They are the modern personal assistants. Check out Jamie Chung, actress, influencer and blogger, and her platform ‘What the Chung?’ Or Chiara Ferragni, blogger and fashion mogul with her influential personal styling blog ‘The Blond Salad’. With Instagram followers of 1.2 million and 15.4 million respectively, brands can quickly find their way to consumers through these influencers. This has a flip side, though, since the paid Instagram blog posts are relatively high and the results are hard to determine in the long run. Influencers can’t talk endlessly about the same brand.

An excellent example of creating brand preference is Nike and their relaunch of “Just do it”. Colin Kaepernick played the main role in the iconic video dream crazy. This was unique because at the time Kaepernick was the most controversial sportsperson in the US. Yet Nike chose to make a dramatic statement, resulting in out-of-this-world sales records: shares +7%, sales +30%, merchandising +61%.

In other industries, we can spot signs of what the modern consumer expects. Netflix uses profiles to offer you the right films and series, with images customised to your viewing behaviour. For example, the images shown in a series such as Stranger Things differ per profile based on data, machine learning and A/B testing. If we extend this to fashion commerce, you see that clothing categories and product ranges are being tailored to the needs of the visitor. Intellistyle, an AI-powered personal assistant, makes this personalised offering possible. Try Metail personalises product images based on sizes and the look and feel of each unique visitor, resulting in a highly relevant one-to-one experience in the shop.

An important trend in the fashion industry is the conscious consumer who places importance on society and the environment. A service promise from Nudie jeans responds to this in a smart way by offering a lifetime repair guarantee. BrightLabel creates transparency throughout the entire production chain of a product. This gives the consumer insight into sustainability, and the brand itself gains a better insight into the channel. Here, the ‘why’ is to contribute to a better world, and the result is more loyal customers who ultimately spend more. It is important to understand that there are no quick wins. Responsible entrepreneurship only works if it is in your DNA as a brand.

Takeaway: An integrated 360 approach to the digital marketing channels, contextual experience, smart service and accountability collectively create brand preference.

Innovation

Digital technology has fundamentally changed our view of fashion. The street scene is now one of the many influences and each day is a rat race as the latest trends penetrate digital channels at great speed. Consumers miss nothing; they share what they like on social media channels and have it delivered to their homes. And that is the crux of the matter – direct human advice is often no longer needed. The new motto is: find it out for yourself. For the fashionistas among us this is a dream come true, but for the rest of us, it means hard work. What suits me? Can I pull this off?

For many people, freedom of choice leads to stressful choices. Given so many options, is this the right product for me? Can I find anything in the jungle of brand sites, marketplaces, apps and filters? Amazon.de offers – and delivers to the Netherlands – more than 50,000 women’s blouses and over 5,000 women’s black blouses. Nevertheless, the wide choice has a number of important advantages. It acts as a safety net for people when they are searching. For Google, this long tail – a large number of products and content – is crucial to being found. This is important because it is not sustainable to buy in all the traffic around your shopping environment. In the long term, newcomers should look for a mix of paid, owned and earned.

Whether something suits you has everything to do with whether it fits you. Startups are responding to this. zozo.com came up with a unique black suit with white balls. You scan yourself with the app and voilà: you will find your perfect size (in theory). Virtusize gives visitors the chance to find the size they need in just a few steps. You can then store the information and use it in a variety of shops. True Fit helps you find the correct clothing and shoe size by asking you the sizes of the brands you already have. True Fit then makes a perfect size match based on that information. The task of premium brands is to embrace this kind of innovation quickly within this 360 customer approach.

There are smart fashion startups that help to link the products from fashion brands to the (latent) wishes of consumers. They give advice about which colour suits you and whether horizontal stripes across your Christmas belly are a good idea. Fashwell allows you to ‘shop the look’ by photographing a passer-by or scanning an Instagram post. Bombfell connects you with a personal shopper who creates a “fashion box” for you and provides an insight in advance into what you will get, including the cost per item. And everything is customisable. The less you return from the box you receive, the greater the discount will be. Choosy is all about fast fashion at its most extreme. Through #getchoosy, fans tag clothes they would like to wear themselves on celebrities’ social media channels. The most popular items are chosen at the end of the week, based on machine learning. You can then buy them a few days afterwards, and they are delivered to your home a couple of weeks later. Since the clothing is made to order, there is no waste. All items of clothing cost less than $100.

Many fashion brands work based on their instincts. Designers travel across the world, visit shows and choose the direction. This intuition is crucial for a brand with its own identity. At the same time, competition is fierce. When do you have to deliver the new collection? When do you go on sale? What can you do better? Edited and Trendalytics help to provide insights into the fashion market using big data. They scan the entire market and look at developments in price, campaigns and product structure. From this perspective, the designer, the marketing team and the buying specialists can determine a strategy based on market data, determine whether their plans are effective and find out where the missed opportunities lie.

Takeaway: Innovation helps the consumer. Digital technology takes on the role of the advisor and enables the consumer to have online success by offering smarter choices based on personal preferences.

Convenience

Distance buying makes it difficult to know whether something suits you or whether a material feels nice. The 9 Little Streets is a good example of different tastes that come together in one physical location in the heart of Amsterdam. This same effect is copied digitally in online fashion marketplaces. Farfetch and Shoptique are examples of a single location where hundreds and thousands of boutiques converge. For boutiques, this is the best way to present yourself to the world with no major investments, as well as to achieve sales and organise logistics. Lyst is taking over the role of Google Shopping and Amazon. It has grown into a hybrid shopping mall model with quick links to tens of thousands of stores, including information, current pricing and deep links to individual products. StockX takes a slightly different approach. It is a genuine exchange of buyers and sellers of often limited editions of new trainers, handbags and watches. The popularity of this special fashion is proven by the fact that StockX – after only three years in business – has already achieved a turnover of one billion this year alone!

You can now buy fashion anywhere and have it quickly delivered to your home, without having to give it much thought. After all, you can nearly always return it. In fashion, there are return percentages of over 50%, with high costs on top of that. It is recommended to make return periods as long as possible. Consumers then feel less pressure and often end up finding a home for the products they have ordered. Test out what works best for your brand. There is no one-size-fits-all model thanks to variations in product range, target group, region and pricing. The affordability of fashion makes it more accessible to a broader group. This transparency is a way of democratising fashion. Transparency also provides insight into the prices charged by brands in different parts of the world. This does not always have a positive effect on the consumer. For example, at Zara.com – an affordable store – you can see a price difference of +30% (including exchange rate difference) between the same products in the United States and the Netherlands.

By starting a conversation, brands can reduce the distance with consumers. Headliner Labs is a platform where you can quickly initiate an automated one-to-one chat. When any one of Facebook’s two billion users visits a site, they are recognised and greeted by name without needing to log in. They can immediately start a conversation and may even get advice.

Takeaway: Modern fashion brands are setting up their commerce environments just as they did in their physical flagship stores. They focus on a beautiful entrance, a clear range, dialogue, shopping convenience and a good feeling. Digital adds an extra dimension by giving the consumer a personal and contextual experience.

The next step

At the moment, fashion brands in e-commerce often look at the world in terms of processes: how do I get the right technology, and how do I ensure fast logistics or a clever one-off marketing campaign? In doing so, they carry out isolated experiments: influencers/AR/AI – they try it all. Results are often poor; sales or conversion are hardly affected.

We need to fundamentally change the way in which we look at fashion commerce. Successful brands are moving towards a world where they have an integrated approach to their own platforms, marketplaces and retail. This approach fits seamlessly with brand promise, embraces integrated innovation and is closely linked to marketing, social media channels and influencers. And last but not least, they understand and respect the consumer and provide good service. The ‘new gold’ is, therefore, one integrated experience, powered by rapid innovation and convenience, resulting in brand preference. This is the recipe for future-proof, successful fashion commerce.

Disclaimer & completeness: none of the examples and brands mentioned are (knowingly) relations of Dept, apart from Amazon and Google. The solutions and examples mentioned are indicative, and good alternatives are also available.

Questions? We are here to help!