17 Jul How eCommerce changes the fashion industry
Customer behaviour has changed enormously in the face of digitalization. The new era is also emerging in the fashion industry and makes the offices of fashion companies look more like huge IT control centers: countless computers, and huge screens on the walls for continuous control and monitoring of goods and information flows.
In addition to the big players like Amazon and Zalando, it is above all the customers who dictate the tempo and direction with the smartphone usage of the fashion industry. Through the World Wide Web, fashion is accessible and affordable anywhere 24/7. This leads to more and more shut downs, job losses and a declining diversity of every small town image. Oliver Samwer, one of the most well-known German internet entrepreneurs and Zalando investor, aptly formulated: “Shops are from the Middle Age. They were only built because there was no internet “.
Zara & Co. are leading the way
The industry is also not spared from the struggle for survival. Especially in the luxury sector, some manufacturers, such as Richemont or Burberry, are breaking sales. But also the middle class gets to feel the change clearly.
A combination of stationary trade and e-commerce is required to cover customer needs.
Vertical manufacturers such as H&M, Zara or Primark are the winners. From the design of fashion to sales, they all take the steps in one hand and have achieved an average of 60% sales growth over the last five years.
Today, 20% of all fashion articles are bought on the internet and in four years it should already be 50%. The offer is especially determined by foreign providers. A wide range of services, different payment options, various offers, a non-stop accessible service: A matter of course for the customer. The rapid development is particularly evident when shopping online with the smart-phone. In 2011, 5% of Zalando’s purchases were handled by mobile phones, and in 2015 it was already 56%.
The interaction of eCommerce and stationary trading is crucial
However, it should be stressed that pure distribution via online trading is not enough. A combination of stationary trade and eCommerce is required to cover customer needs. As customers often buy their goods after an internet search in the store, get inspired in physical stores to order online or pick up the ordered merchandise in the shop.
Melancholy can be expressed, but the future is decided with every click.
Contrary to the unlimited communication through online commerce, however, fashion seems to be moving more and more into simplicity. Buyers take fewer risks. They rely on basics and bestsellers from large, established brands. Designers don’t have time for inspiration. While in the past, three weeks were taken for the creation of a garment, complete collections are now being produced in this period.
The online business is becoming more and more a oligopoly, dominated by Amazon, Otto and Zalando. Amazon wants to establish itself in the fashion industry by 2020. About 25% of companies have not yet recognized the digital transformation and will fall victim to the omissions of the market. Thus, traditional business models and marketing methods must be challenged and adapted to the new generation of digital natives. Melancholy can be expressed, but the future is decided with every click.