Online fashion apparel – how much do you buy?
These days, many of us already shop on the internet in some form – some of us do it selectively depending on the product or the store, others use the internet for research before making purchases at an actual store front and many of us now use the internet as our main shopping destination. And of course, online shopping means the store is open 24 hours a day!
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One of the most popular items being bought online is fashion apparel – online penetration is 10% for this category, one of the highest amongst consumer products. Although fashion is still very much about personal tastes and choices, we as consumers are increasingly comfortable with browsing and shopping online, particularly if we know the brand and associated sizing well. Many of us no longer feel that we must necessarily try on an item before making the decision to purchase, especially since exchanges and refunds have become increasingly easier. Nor is the notion of instant gratification as important anymore with many online retailers in larger markets offering same or next day delivery. Traditional retailers have had to offer similar delivery options including in-store pick up within hours of the online purchase. As a business, fashion apparel lends itself to being an ideal online category given it easy to store, handle and deliver to the end customer.
Although competition has increased between online retailers and traditional retailers who are attempting to build their online presence, there are actually only a few, large publicly listed pure play fashion apparel online retailers with sufficient scale to compete with the traditional retailers. These include Germany’s Zalando, the U.K.’s ASOS, the Italian listed, Yoox Net-A-Porter and Japan’s Start Today. Outside of these, one can look to marketplaces such as Amazon.com and eBay to shop online for clothes as well as hundreds of other sites catering mainly to a more niche consumer following.
Locally, the choices are largely non-existent in public markets – Surfstitch, a company with a market capitalisation of only A$60 million offers apparel and equipment in a niche market of action sports and that is really where the examples end in Australia. The Iconic is an example of a local success story in online fashion apparel having generated over A$100 million in sales in 2015. However, it is a private company and part of the Global Fashion Group, a collection of six online fashion retailers in emerging markets, owned by German incubator, Rocket Internet and Sweden’s Kinnevik.
Although the trend towards online shopping is becoming increasingly accepted and popular in Australia, traditional retailers in Australia have been slow to act – Citigroup believes that online sales at Australia’s 10 largest listed retailers represent on average 5.9% of total sales, well below national online retail spending of almost 11% and average global online sales penetration of 11%.
Zalando, the European leader
In Europe, the online fashion apparel industry is significant and worth €46 billion per year but still only represents 10% of the total fashion market in Europe. Online fashion in Europe has grown 16% per annum between 2010 and 2015 whilst the total European fashion market has not grown at all during this period.
Although many people are unlikely to have heard of the brand in Australia, Zalando has become Europe’s largest pure play fashion apparel online retailer.
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