A Guide to Selling Fashion Around the World Online

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A guide to selling fashion around the world online

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CONTENTS

Introduction ...... 3

Fashion by numbers ...... 4

How do consumers buy online? ...... 7

Being discovered in new markets ...... 14

Getting your clothes to international customers ...... 19

Looking after your international customers ...... 21

Focus on China ...... 25

Interview with Lei ...... 27 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

INTRODUCTION The opportunities available to retailers within the fashion industry are enormous.

As the world becomes increasingly connected, it also becomes easier and cheaper to sell clothes, footwear and accessories to consumers in new countries. At the same time, as more people buy products online, the more sophisticated, streamlined and cost-effective the associated logistics become, making it faster and cheaper for sellers to reach their customers, wherever they may be.

The first section of this whitepaper takes an in-depth look at the statistics associated with the fashion industry and the size of the opportunity available to brands willing to take advantage of both the digitalisation and internationalisation of consumer culture.

The following sections address some of the questions that a fashion retailer must consider before selling their products online to multiple countries. We examine the habits of online consumers, the best way to market your online products in new regions, the different means of getting your products to your customers, and how to look after your international customers after purchase. The information provided should give retailers an idea of the various options available to them and how to choose the best ones for their business.

The final part of the whitepaper focuses on China, which is quickly becoming the most significant market for the fashion industry. The world’s most populous country also acts as an indicator of worldwide sales of clothes, footwear and accessories in the years to come.

3 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

FASHION BY NUMBERS The fashion industry, consisting of clothing (or apparel), footwear and accessories (e.g. bags, watches, jewellery, eyewear, and cosmetics and fragrances) was valued at an estimated $2.5 trillion making up 3% of global GDP in 2017. 1 In the same year, clothing and footwear accounted for 7.25% of total worldwide retail sales, valued at $1.7 trillion.

8.0% These numbers demonstrate the wealth 7.0% Where will growth emerge? of opportunity available for fashion retailers,6.0% with approximately 7 billion McKinsey predicts 3.5-4.5% growth in customers using their products every global sales within the fashion industry day.5.0% But which sectors and regions are in 2019 (down from 4.5-5.5% growth in

expected4.0% to grow fastest over the next 2018), with emerging markets in APAC, few years, and how is the consumer Europe and Latin America forming the landscape3.0% changing within the industry? fastest growing regions. A look at some specific numbers can provide2.0% some clues.

1.0%

0.0% Percentage sales growth in the APAC Emerging Europe Emerging Latin America Total fashion MEA North America APAC Mature Europe Mature fashion industry worldwideindustry in 2019, by region 8% 8.0% Low estimate High estimate

7%7.0%

1 obaninternational.com 6.0%6%

5%5.0%

4.0%4%

3%3.0%

2%2.0%

1%1.0%

0.0%0% APAC Emerging Europe Emerging Latin America Total fashion MEA North America APAC Mature Europe Mature industry

Low estimate High estimate

1 The State of Fashion 2018, Link 2 1 Statista, Link obaninternational.com 3 The State of Fashion 2018, Link 4 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

In 2019, China is expected to overtake the US as the largest fashion market in the world, with apparel sales reaching $335.5 billion.4 Growth is predicted to remain high at an average of 7.5% until 2021.5

In the US, growth is expected to decelerate from 2.7% in 2017 to just 2.0% in 2021.6 Apparel sales in the US are forecast to reach $334.2 billion in 2019, according to Statista’s Consumer Market Outlook, with growth averaging 2.2% over the next three years.7 However, some experts suggest there has been a decline in apparel sales in recent years, with some reports estimating a 2% decline between 2016 and 2017.8 Each of these reports measures slightly differing categories, but the overriding conclusion is that growth in the world’s largest fashion market is slowing dramatically.

Americans are also spending less on fashion. From 1977 to 2016 the percentage of consumer expenditure on apparel and related services has fallen by half, from 6.2% to 3.1%. The average US consumer now spends more on technology (3.4%) and “experiences” such as eating out, travel and other leisure activities.9

The trend outlined above is indicative of a more significant overall trend in The growing importance of fashion spending.10 By 2025, McKinsey e-commerce expects revenue from outside of E-commerce is a critical force for Europe and North America will make growth in the fashion industry. In 2017, up 55% of all fashion spending. With e-commerce accounted for $450.7 APAC, Latin American and African billion of global fashion sales.11 In 2019, economies continuing to stabilise, and the amount is expected to grow by greater individual engagement with the 14.1% year on year, reaching just under internet, this trend is unlike to reverse $600 billion over the 12-month period. any time soon.

4,5 Statista, Link 6,7 Statista, Link 8 NPD Group, Link 9 Bloomberg, Link 10 The State of Fashion 2018, Link 11 Statista, Link 5 $900,000.00 18.0%

$800,000.00 16.0%

$700,000.00 14.0%

$600,000.00 12.0%

$500,000.00 10.0%

$400,000.00 8.0% in millions $US millions in

$300,000.00 6.0%

A GUIDE $200,000.00 TO SELLING FASHION AROUND THE WORLD ONLINE 4.0%

$100,000.00 2.0%

$- E-commerce revenue growth in the fashion industry 0.0% 2017 2018 2019 2020 2021 2022 2023

Apparel Footwear Bags & Accessories %Growth

2 obaninternational.com

$900,000.00$900 18.0%

$800,000.00$800 16.0%

$700,000.00$700 14.0%

$600,000.00$600 12.0%

$500,000.00$500 10.0%

$400,000.00$400 8.0% in millions $US millions in

$300,000.00 6.0% in billions $US $300

$200,000.00$200 4.0%

$100,000.00$100 2.0%

$- 0.0% 2017 2018 2019 2020 2021 2022 2023

Apparel Footwear Bags & Accessories %Growth

2 Already the biggest slice of the In the US, 31% of cross-border onlineobaninternational.com e-commerce pie (29.4%), online purchases are those of clothing and fashion sales are predicted to grow accessories, but consumers are still at a compound annual growth rate concerned about increased delivery (CAGR) of 8.7% (faster than the overall times and expensive returns.16 e-commerce market), resulting in a market volume of $836 billion by 2023.12 In 2020, China is expected to become the largest cross-border B2C market, At the same time, the amount of with 200 million consumers receiving money spent online across borders is goods from overseas, and the volume estimated to top $1 trillion by 2020, of imported goods purchased online equating to a 27.5% CAGR since 2014.13 reaching $245 billion (or 25% of all A survey of consumers across 12 cross-border e-commerce revenue).17 countries revealed that 64% of online The main reasons for this include buyers purchased from a foreign site in concerns about the quality of domestic 2018.14 As consumers search for better products and high-levels of counterfeit prices, different brands or speciality products.18 products not currently available in their home markets, and they become Forward thinking businesses such as increasingly comfortable buying Alibaba’s foresee a merging of the online from international websites, benefits of traditional shopping and the opportunity for retailers to reach e-commerce, heralding a “new retail” new customers around the globe in which the distinction between online increases exponentially. By 2020, 45% and offline will become increasingly of all online shoppers – more than 900 obscured. million people – will purchase products internationally.15

12 Statista, Link 13 McKinsey, Link 14 Pitney Bowes, Link 15, 17 Alizila, Link 16 Invesp, Link 18 eMarketer, Link 6 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

HOW DO CONSUMERS BUY ONLINE? As technology continues to develop new methods for people to consume content, the ways in which people purchase changes accordingly.

A few of the resulting channels through which you can now sell your items online include: your own website (desktop and mobile), marketplaces, your own mobile app, various social media platforms, smart devices and crowdfunding campaigns.

Different markets do not only have different preferences when it comes to channels, but they also have different platforms and platform preferences within these channels. For example, Amazon may seem ubiquitous in most of the western world, and while the list of international sites and countries that it now ships to is always growing, it is often not the first choice for fashion consumers in all markets. In the US, customers are au fait with using Amazon to buy clothes, but in the UK it is not most customers first thought.

In 2017, Amazon was the 8th most popular destination for UK fashion e-commerce sales, with companies such as Next, John Lewis and Asos making far more sales.19 In the same year, Amazon was the second largest apparel retailer in the US (overall, not just e-commerce), and was expected to overtake Walmart in 2018 according to a Morgan Stanley report.20

Other factors to consider are the most popular devices within each market and the internet speeds available. In large portions of Africa, people must rely upon slower internet speeds and are more likely to make purchases on smartphones than a desktop computer. As a result, a simple, mobile-first webshop may be your most important channel in these markets.

19 Statista, Link 20 CNBC, Link 7 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

E-commerce site financial affairs, is also a necessity. As previously mentioned, in some Making sales directly from your own markets, mobile devices are used most e-commerce site presents several commonly for online purchases, and in advantages. You have complete those countries your mobile site and ownership of the platform and the user experience must be perfected. versatility to adapt it as you please. Even in regions where purchases tend Additionally, you are not required to to be made on a desktop browser, pay any fees to a marketplace for the searching for and evaluating products privilege of listing your goods on their may still occur on mobile devices and platform. Further positives include mobile sites therefore are a priority. complete control over your customer data, and more control over your shipping/return methods. There is also an increasing trend for brands to create their own apps, Conversely, adapting your website to allowing customers to install a mobile ensure it drives sales in all your target shopping experience on their phone markets will require significant time or tablet. Apps are very effective in and effort. It is not just the cost of promoting brand loyalty, increasing translations, but also guaranteeing repeat and regular custom, but can the website is user-friendly, correctly also be very expensive to run, keep localised and optimised to drive updated, and translate and localise to sales. Deciding if the investment many countries. is worthwhile may depend on the importance of brand to your product. If you benefit from having a one-on- one conversation with your customers directly through your website, it may be an important sales channel. The creation of partnerships in new markets for warehousing, shipping, returns, payments, customer service and 8 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Credit: Casimiro PT / Shutterstock.com Marketplaces Globally, almost 50% of online retail Customer research shows that customer sales take place on marketplaces and choose marketplaces when they are sales grew by 34% last year to $1.55 looking for a range of choice, ease of trillion.21 The increasing dominance of comparing items and convenience marketplaces is also evident in e.g. the of looking in a single place. They also fact that online shoppers in the USA are benefit from only having to sign-up more likely to start a search for a new once, fast checkouts and insurance purchase on Amazon than Google.22 against items that do not match their descriptions or fail to be delivered. This What all marketplaces have in in contrast to other customers who common is that the product or service prefer purchasing directly from brand information is provided by multiple websites because they have strong third parties, while the transactions are brand loyalty and trust, want to take processed by the marketplace operator. advantage of loyalty programmes, and Marketplaces usually charge a fixed fee are looking for the top end customer 23 and a percentage fee and many now experience that some brands offer. offer additional services like fulfilment and financing. As such marketplaces There is no doubt that marketplaces offer a fantastic eco-system of solutions somehow flatten the customer for online retailers experience for each brand. Marketplaces will always be more interested in Some marketplaces have become promoting their brand than yours. retailers in their own right, next to But those platforms are continuously facilitating the sales of third parties. innovating, e.g. Amazon adding Others like eBay are designed to work Brandshop, and Tmall setting up Luxury on an auction basis and allow individuals pavilions. Other more fashion specialist to sell used or unwanted items, as well platforms like Farfetch, Mr. Porter an as enabling shops to sell new products. Zalando are now including social media Amazon, Tmall, bol.com, Fruugo are and content as part of their positioning generalists in the sense that they offer and marketing activities, both off and a wide range of products . Others on platform – creating much improved specialise in market segments like Mano appeal for both fahion-istas and fashion Mano (DIY and home improvement), retailers. or Farfetch, Mr. Porter and Zalando in fashion.

21 Digital Commerce 360, Link 22 Infinity Blue webinar: ‘You can Export: Set-up and Sell Successfully on Global Marketplaces’, Link 23 Pitney Bowes, Link 9 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Why should you consider using a marketplace? • Access an additional route to market – the benefit of opening up a second or third route to market will depend on many things, but in some countries marketplaces represent over 85% of online B2C purchases • Export with ease - when expanding into new countries, you will only need to translate and localise the product copy for new marketplaces, without worrying too much about the complexity of customer delivery and returns • Protect your band - brand registry (or the non-Amazon equivalent on other marketplaces) will ensure sellers that sell your products comply with your listing and brand standards. You can do this even if you do not intend to sell yourself.

Tip: Note that research has shown that the average retailer underestimates the importance of marketplaces for online buyers.24 So ignore marketplaces at your peril.

Which marketplaces should I choose? Any discussion on specific marketplaces There are at least 250 dedicated needs to start with Amazon and fashion marketplaces that are regularly Alibaba, behemoths of online retailing. discussed, including Farfetch, Mr. Porter, Amazon is dominant in the USA and Net-a-Porter, Asos, Zalando, Bonobos, the EU (and barely touches China) The Iconic and Poshmark. They differ in while TMall’s dominance in China is geography, audiences, brand protection, even more substantial . TMall provides on-platform marketing and promotional more opportunities for branding than possibilities, integration with social Amazon. It is also much more focussed media, key opinion leaders etc. on the overall e-commerce ecosystem (including working closely with brick For more information on marketplaces, and mortar retailers). For now, the including practical tips on how to threat of Amazon and Tmall to fashion overcome challenges and make the brands depends mostly on the type of most of opportunities, see our guide, apparel in question. Amazon customers ‘You can export: Set-up and sell for instance, when buying fashion successfully on Global Marketplaces’.26 largely buy underwear, socks, jeans and workout clothes.

Both super-marketplaces are experimenting with fashion and luxury products. Tmall launched the Tmall Luxury Pavilion, offering its shoppers access to dozens of brands including Burberry, Hugo Boss and La Mer. Amazon is developing its own private labels, offering a testing service known as Amazon Wardrobe, which allows users to have items delivered to their homes in order to try them on and either keep or return. Amazon is also rumoured to be working on an automated clothing factory that uses personal preference data to create personalised tailormade clothing.25

24 Pitney Bowes, Link 25 Quartz, Link 26 InfinityBlue, Link 10 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Bonanza is a seller-friendly marketplace. Therefore Farfetch positions itself as the “only truly global luxury ASOS is a U.K-based marketplace, targets Originating in Germany, Zalando has made high street to high-end there are no listing fees and no monthly store fees. digital marketplace”. Dedicated to lovers of fashion, younger shoppers giving them the space fashion easily accessible by offering Europe’s largest selection of Allowing sellers to make sales and build a brand by visitors can pick from an “unrivalled” range of products. to be uniquely themselves and express clothing, accessories and shoes online. developing relationships with their customers. They offer same-day delivery in 19 major global cities themselves, selling over 30 sizes and home to + 24,6 million users including Milan, Berlin, London and Paris. 700 boutiques. > 50,000 brands + 200,000 items > 995 luxury sellers > 10 million items > 18 million users + 2,000 brands > 3,000 plus luxury brands 13 countries: Germany, Netherlands, France, UK, Italy, Switzerland, 7 countries: Canada, UK, France, India, Germany, > 1,000 brands > 2.6m marketplace users Mexico, Spain 8 countries: UK, Australia, US, France, Sweden, Denmark, Finland, Norway, 11 countries: UK, Germany, Italy, Portugal, India, China, Germany, Spain, Russia, Italy Belgium, Spain, Poland France, Russia, Japan, Brazil, UAE

Walmart started accepting online third-party sellers in XiaoHongShu (Little Red Book) is aimed at 18-to- 2016. Since then thousands have listed their products 35-year-old Chinese women buying luxury products for free. Their aim is to help people save money and from overseas brands. Their app combines social live better – anytime and anywhere online and on their media and e-commerce, driving sales through mobile devices. customer recommendations, shopping tips and fashion inspiration. > 265 million users > 11,200 brands > 70 million users 27 countries 1 country: China

Dafiti is one of the four top fashion markets in Latin Ymatou is a C2C and M2C e-commerce marketplace America, built on a unique value chain which is and was one of the first cross-boarder e-commerce ahead of the market based on warehousing, logistics, marketplaces that allowed overseas franchises to sell payments and customer service. directly to Chinese consumers. > 5 million users > 1 million users > 60 million visits per month > 10,000 orders per day 4 countries: Argentina, Brazil, Chile, Colombia 1 country: China

Jumia is the largest marketplace in Africa, covering Superbalist is a niche, trendy and designer The Iconic targets younger women with approximately 80 percent of the African internet marketplace, selling fashion and décor on their Zalora is one of Asia’s leading online fashion the promise of allowing them to express population, selling everything from fashion to food. online, mobile, and award-winning app – telling destinations. They focus on giving millions of fashion their story on their blog, The Way of Us, as well as consumers a great shopping experience with perfectly their true self. Their success is built on a customer centric experience, technical > 1.2 billion million users on social channels. fitting styles and trends. They have localised sites innovations, unrivalled product ranges and > 41,000 local and international brands offering top international and local fashion brands to > 3 million users per month personalised inspirations. 14 Countries: Nigeria, Egypt, Morocco, Kenya, Ivory men and women. > 300 local and international brands Coast, South Africa, Tunisia, Algeria, Cameroon, Ghana, 1 country: South Africa > 2 million users > 13 million visits per month Senegal, Tanzania, Uganda, Rwanda > 40 million visitors per month > 1,000 brands Australia, New Zealand Zando is part of the Jumia group and is the biggest 7 countries: Indonesia, Philippines, Singapore, 2 countries: on-line fashion marketplace in South Africa. Malaysia, Brunei, Taiwan, Hong Kong.

11 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Social e-commerce: See it, buy it standalone e-commerce app, on which users would be able to buy products The evolution of mobile and its growing from the brands and creators they role in the lives of consumers offers us follow on Instagram.27 Snapchat have some insight into the future of social partnered with Amazon to enable users e-commerce. Is it possible that one to point their camera onto a product’s day we will wake up to realise we are barcode and be directed to the product spending a significant portion of our page on Amazon. discretionary income through social media purchases? Research from Business Insider tells us that 72% of Instagram users have Social and e-commerce have a purchased a product as a result of complicated history. Facebook and seeing it on Instagram. However, this Twitter have tried several features self-reported data is still not telling that never took off, including a Twitter us whether users will purchase on the Buy button that was gradually phased platforms themselves, or whether the out. Some analysts complained at the platform is simply used for inspiration. time that users go on social media “to No company has been too quick to connect with friends, not to shop”, volunteer statistics on the volume but as social media has become truly of sales they are seeing from these mainstream and the use-case for social features. media has grown dramatically in the lives of consumers, it is time to consider: In China, social media and e-commerce will social media become a crucial have been deeply integrated for a channel for fashion purchases? longer time.

We know that the incentive for social While the mobile app ecosystem in the media platforms to perfect this is West has been going through a period significant, and no better testament to of unbundling (standalone apps splitting this exists than the new enthusiasm in from their parent apps to offer narrower rolling out shopping features across all features), the East has experienced a social media giants. process of bundling, with apps such as WeChat becoming the main entry point In the last year, Instagram has launched to most online tasks. For several years, shopping tags in feed, stories and Chinese and other WeChat users have even its own channel in the ‘Discover’ paid, booked tables, hailed taxis, sent tab. This enables users to tap on a files and scanned WeChat QR codes product, learn more about it, and as from their phones. In other words, for a last step visit the merchant’s site. In Asian users WeChat was not a way to fact, The Verge has reported rumours “connect with friends”, but a way to use that Instagram might be releasing a the internet to get things done.

Credit: Pixeljoy / Shutterstock.com

27 Business Insider, Link 12 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Angela Wang, from the BCG group Perhaps there is something about China believes the entire social e-commerce that facilitates this more spontaneous experience “is like you are exploring in shopping behaviour. This may be an amusement park. It is chaotic, it is attributed to a larger percentage of fun and it’s even a little bit addictive.” mobile users and bigger ratio of online The whole purchase funnel and journey to offline purchases, the new middle (e.g. seeing something on social media, class with an appetite for shopping thinking about it, seeing it again on a or better integrations with payments display ad, doing additional research via systems that decrease friction. But search engines, and finally buying it on it can also be argued that China is an e-commerce platform) has collapsed offering a peek into the future of online into “see it, buy it”.28 purchasing in the West. It is easy to see that major social media platforms are attempting to create frictionless purchase experiences. Additionally, brands are using a combination of personalisation and entertaining content to try and increase the number of people purchasing as a result of, and via, social media platforms.

28 TED, Link 13 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

BEING DISCOVERED IN NEW MARKETS Developing a reputation for your products in a new market is easier said than done. How do you go from having no presence to capturing the attention of all the customers seeking clothing, footwear or accessories? The answer will depend massively upon your products, target audience, budget and sales channels, as well as the country that you are selling to.

The most obvious marketing channels for those seeking to sell products online are those native to the internet. These channels benefit from being flexible regarding budgets. Additionally, the amount of time and money spent on each channel can usually be increased or decreased quickly and easily.

Another benefit of the major digital marketing channels is that it is easier to see what is working and what is not and adjust your methods accordingly. Paid media (in all its forms) and SEO produce vast amounts of data which helps you to calculate which areas are making the best return on investment and which channels are the most profitable. By continually testing new opportunities and refining your adverts and website, you can create the marketing mix that works best for your product, and evolve as new platforms, formats and technologies emerge.

14 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Paid Media There are numerous ways of promoting products online with paid advertising. They offer the most cost-effective method for quickly enhancing your brand’s visibility within a new market. The bread and butter of paid media advertising is pay per click (PPC) advertisements, that show as promoted listings on the results pages of search engine enquiries.

On top of this you can create image or video-based adverts that show as banners on other websites. These can be particularly effective for retargeting or remarketing, when you want to get someone who has visited your site to return to a product page and continue their customer journey. However, they can also be used to increase your brand presence by showing your logo and brand imagery to your target audiences.

Social media advertising has proven to be particularly effective for fashion retailers. The variety of platforms and formats available is vast and creating the most effective campaign will usually involve a series of experiments to discover what works best. The rise of Instagram, and the influencer, (discussed below) has created impressive results in some cases. A social media presence and related advertising can have a massive impact, and fashion is the perfect industry for highly visual image- and-video-based content formats.

The most popular platforms for paid media advertising vary massively by country. Not only do different search engines dominate, but many countries have a variety of social media platforms designed for different purposes and with different audiences. Putting in the time to do your research and figure out the best platforms and formats for your products will pay off in the long run. If you have a limited budget, concentrating your efforts on fewer platforms can help to ensure a bigger impact while saving you time in regards to developing the associated creatives. Credit: WDnet Creation / Shutterstock.com 15 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

SEO Marketplace marketing If you are selling directly from your Being present on the most relevant own e-commerce shop, then SEO is an marketplaces within your target markets important factor in being discovered. is a great start when it comes to being One of the key factors to address is the discovered by customers in a new language used by a particular group, country. However, unless you are selling when searching for a product. Once this a very niche product, you are probably is identified, you can start producing going to find others are already selling content that includes key phrases something similar, and they have prominently and by consequence, already established a reputation on the feature prominently in search results. platform. In that case you are going to need to do something to make users While Google dominates the western choose your product over competing world of search, they are by no means sellers. ubiquitous, and they are still banned in what is soon to be the world’s largest Marketplaces will have their own fashion market, China, where Baidu algorithms to help return the most currently takes precedence. When relevant results for their users. Ensuring creating multiple versions of your pages that your listings contain as much for your new markets, keep in mind that information as possible about your the algorithm behind the rankings may products, use the marketplace’s best differ for the most dominant search practice guidelines for creating your engine in that region. pages. Including product images is a good way to ensure your product is In addition, it is important to make sure featured in the correct results pages. that the right version of your webpages is served in the right region. There is Some marketplaces will also have their no point spending lots of money on a own equivalent sponsored adverts or beautifully translated, fully localised postings, allowing you to pay money to Russian site if your servers are still appear higher up the search results for sending them the UK version. There are certain keywords or displaying banner a few things to consider here including ads for the goods you are selling on how you will set up URLs for your their platform. If the marketplace is international sites and what languages going to be your main (or only) route your site is going to be available in, to market in a region, these sponsored as well as which currencies you will listings may be worth considering. accept. For fashion retailers, it is also important to show the sizes of your clothing, footwear or accessories in the correct format for that country. Further considerations are required for how you will alter listings when items are out of stock.

Many search engines also have a shopping feed functionality. In these cases, it is worth setting up an account with the search engine to list your products directly in their listings or using other methods to ensure you show up in these results, so that shoppers can compare your products directly on the search engine’s results pages. Credit: Hadrian / Shutterstock.com

16 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Social media - the fashion influencer by the World Federation of Advertisers (WFA), 65% of brands declared planning The rise of influencers, especially those to increase their expenditure next year. advocating for fashion, may be the final piece of the puzzle that enables social This is particularly true for the fashion media platforms to become mainstream and beauty segment, a sector which has purchasing channels. enthusiastically jumped into influencer programmes and activities. Revolve, Initially, influencers began using trading a millennial-oriented designer retailer their influence and consumer attention in the US, has hired a five-strong team to advertise brands. More recently, and built proprietary technology for this has begun to evolve, with more influencer tracking and monitoring. influencers releasing their own fashion According to the company, 70% of sales brands. The phenomenon is again come from influencer activity. bigger in China, given the sweet spot of mobile, social and payment. Andreessen Indeed, the power of influencer Horowitz said last year that 5 of the relationships is clear not only with top 10 womens apparel brands on promotion, but also in communication Alibaba Group’s Taobao online shopping of product information. This was seen platform were founded by influencers. recently with the brand Sunday Riley and the consumer confusion and upset However, the US is also seeing big around a formula change due to EU inroads with these partnerships too. regulations. The brand asked influencer Snapchat launched native commerce Caroline Hirons to convey the brand’s features in 2018, available to top message and reasoning to her audience, creators, with Kylie Jenner as the launch rather than the brand using the partner promoting her cosmetics with a ‘conventional’ press. simple swipe to buy functionality.29 In China, the power of celebrity However, brands and influencers are still endorsements remains the most working together. Even though many effective way for luxury brands to marketers have not found the best way create online engagement with users, to execute partnerships (given concerns according to the Gartner L2 report. around fraud from fake followers and Over 95% of luxury fashion brands false engagement, or past issues with included in the report said they relied the ASA), the amount of time and effort on celebrities to engage with users spent in making influencer programmes of China’s Twitter-like social media is likely to increase. In a recent survey platform Sina Weibo.

29 Digiday, Link 17 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

However, the cost of working with such in activity.30 The platform, funded by celebrities is incredibly high and many Alibaba, Tencent and K11 is becoming brands felt that an influencer’s following the destination for marketing beauty may not be the best fit for the brand. and fashion items. However, luxury brands are yet to adopt the platform. For example, the Chinese boyband Less than 3% of Redbook influencer ‘TFBoys’ was cited by the L2 Gartner posts include links to the commerce report as the Chinese celebrities who sites of luxury brands. This is certainly best generated outsized engagement an area of untapped potential for luxury through brand partnerships. However, brands in China and one to harness now, with the band’s fans largely coming before the masses descend. from Generation-Z, the power of this partnership does not necessarily Ultimately, brands should consider transfer into sales. Indeed, when one whether the influencer is the best fit member, Jackson Yee, partnered with for their target audience. Harnessing Bottega, many fans spoke out about the the power of micro-influencers price point of the products simply not for more engaged content over being accessible to them. longer partnerships, while ensuring transparency, should lead to more cost- Outside of influencer marketing within effective marketing while maintaining the Chinese platforms Weibo and consumer trust. WeChat, the social commerce app Redbook has also seen significant rise

30 Jing Daily, Link 18 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

GETTING YOUR CLOTHES TO YOUR INTERNATIONAL CUSTOMERS In 2017, 74.4 billion parcels were delivered to online shoppers, that almost 40 per annum for each online shopper on the planet.30

Warehousing, last mile delivery and reverse logistics (i.e. returns) present significant Did you know? challenges to any company - solution design, • 85% of consumers prefer cost control and process monitoring to name free delivery over fast delivery just three. In the fashion industry, returns However, this drops to 65% have a massive impact on profitability. 34 Almost half of e-commerce fashion shops amongst Millennials. report a return rate of between 25 and 50%, • Same day delivery is now offered the highest rates of any B2C e-commerce by 51% of online retailers.35 sector. 32 23% of these returns derive from 33 the wish to try on different sizes. • 67% of European online shoppers check the returns page At the same time actual delivery time, the before making a purchase. Make ‘unwrap experience’ and return policies sure your returns policy is clear and practices are an important part of and not detrimental to your sales.36 the customer experience. Customers are expecting more each year. Therefor keeping • 92% of shoppers that have track of wishes as well as feasible solutions returned products to a company is important for your conversion and loyalty have found the experience difficult rates on the one hand and economics and and as a result will not buy again.37 efficiency on the other.

31 Pitney Bowes, Link 32 Whiteboard, Link 33 KPMG, Link 34 Salesupply, Link 35 Invesp, Link 36 E-commerce Europe Foundation 2016 37 E-commerce Europe Foundation 19 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Cross-border fulfilment Cross-border fulfilment refers to the integrated warehouse, delivery and return solutions companies put in place to service their international clientele.

There are two basic models: • cross-border shipment (sending directly from your native warehouses)

• cross-border fulfilment (sending items from multiple warehouses closer to your clients).

Working with international depots reduces your delivery times, as well as your cost of last mile delivery. It may also reduce the cost of customer service as customers are less likely to inquire about delivery.

However, cross-border fulfilment normally requires that you hold more stock, leading to higher warehousing costs.38

As a rule of thumb, if you are delivering 1000 or more units per month to a country or region, consider a local warehouse. At these volumes the benefits will start outweighing the extra costs.

For fashion retailers it will not come as a surprise that there is no ‘one size fits all’ solution. Some smart A/B testing and financial modelling will go a long way to find the best choices for your company.

Tip: A trusted and low-cost return solution through a free return or a local return address really does make a difference, so much so that Amazon and other marketplaces now make this mandatory.

Tip: Use one local return address for all your returns in one country, even if you use different last mile delivery solutions or sales channels. It will reduce your overall return costs and headaches.

38 Montapacking, Link 20 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

LOOKING AFTER YOUR INTERNATIONAL CUSTOMERS Providing excellent customer service is paramount for any fashion retailer. The challenge of ensuring you meet the expectations of all your patrons is intensified by your expansion into new markets.

How to turn customer service from cost to competitive weapon The all-in cost of answering one customer call or responding to one e-mail might be £5 or more, and many retailers deal with 1000 or more events per day. Still many companies continue to make investments in better customer care. Why? Firstly, they know that a happy customer is a loyal customer, and customer retention pays off big time: a regular loyal customer spends about 3 times more than a repeat customer and 10 times more than a first-time customer.39 Secondly, successful companies know that bad customer care can be detrimental: while a happy customer will on average tell 3 people about their experience, an unhappy customer will tell 10.40

39 The Balance Small Business, Link 40 CustomerThermometer, Link 21 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Developing your own customer service strategy The best solution for customer care will be different for each organisation. It will most likely also develop over time and with the scale and complexity of their operations. In order to develop the optimal solution for your company there are several key questions that will help you make the right decisions:

1. How should your customers be able to reach you? Email and telephone are still the most important channels in the UK and Europe, but as Millennials and Generation-Z become an increasingly important part of our demographics, there is a clear and definite change towards social and chat.

Mail 1.7m Telephone

Average duration in minutes 2.7m 96.3% 80.7% 3.6m 4m 4.4m 72.6%

70.5% 3.8m 66.7% 4.2m 2.4m 3.8m 58.7% 56.3% 54.3% 53.9% 46.1% 45.7% 43.7% 41.3% 33.3% 39.5% 27.4% 19.3% % 3.7

COUNTRY U.K Italy Spain France Nordics Belgium Germany Netherlands United States United

22 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

3 WHY DO PEOPLE CONTACT VIA SOCIAL MEDIA* 10%

21% Note about online experience

34% 12% Note Compliment a about offline service / product experience 2%

45% Product 2016 2017 57% issue Question SOCIAL MEDIA AS CUSTOMER CONTACT CHANNEL

2. What software solution are you using to support your communication and track customer information and enquiries? As your company grows and customer expectations develop, the demand for efficiency and quality will increase. Does your software allow you to keep track of your conversations, does it allow for (part) automation, and will it support chat and social?

3. When should your customers be able to reach you? Most customers would like to be able to communicate with you after-hours and on weekends. Can you support that? Should you? 37% of customers expect a service response within an hour.41

4. What level of personalisation and automation fits your company? Implementing auto-generated messages helps in efficiency but in many cases reduces the customer experience. Consider what is right for your company.

5. How are you going to deal with detailed product enquiries as opposed to general enquiries? Would you have a well-trained and more expensive member of staff also deal with simple enquiries?

6. How are you going to work to continuously improving your customer service experience and reducing your cost of the service you provide? What is your path to continuous improvement? E.g. Do you capture the nature of enquiries and then use the resulting insights to improve your FAQ section, website content (e.g. improved seizing tables), or pro- active communication with the client? Do you have a clear idea what your customer would like?

7. Would you consider outsourcing? Outsourcing your customer service can have several decisive benefits including: lower upfront investment and lower monthly fixed costs; access to the best technology and new channels of communication; ease of scaling up and down.

41 Shopify, Link 23 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Cross-border customer service Clothing, footwear and accessories are the most popular category for cross-border purchases. To effectively support your sales plus achieve customer satisfaction in other countries it will be important to adapt to the expectations of your overseas customer. They are clear in what works for them and what does not:

88% 26% of retailers believe it of retailers see is essential to answer customer experience customer service queries as the most important in the consumer’s local way to distinguish language42,43 themselves44

74% 60% 57% of consumers of companies say that of customers will want customer customer service has been not order from service in their own improved by multilingual a website that is language45 customer service46 not in their own

Local customer service telephone numbers and email addresses as well as locally- based and e-commerce-trained call centre teams create trust and appreciation. They are, therefore important drivers of international success.

Providing excellent customer service for customers with different cultural backgrounds and across time zones adds complexity and risk – some companies can put this together themselves. For others the step to start exporting might be a good time to start considering outsourcing.

42 Statista, Link 43 Thuiswinkel Waarborg, Link 44 Adobe, Link 45 Common Sense Advisory, Link 46 Lionbridge, Link 47 Deloitte The Netherlands 2017, Link 24 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

FOCUS ON CHINA When we think of fashion, we probably imagine places like Milan, Paris, London and New York, but to understand the evolution and future of fashion, particularly through the lens of e-commerce, we must primarily consider China.

China’s population of 1.4 billion boasts unique market, but more importantly a fast-growing internet penetration of China is likely to influence the global 55%, combined with a booming new online shopping landscape for many middle class and its position as the fifth years. The fast and furious adoption highest consumer confidence index in of mobile shopping, mobile payments the world. China is already the biggest and contextual commerce in China market for online fashion spending and are offering insights into how fashion almost a quarter of all fashion sales are e-commerce might progress elsewhere. made online. (In the US only one eighth of fashion sales occur online.)48 The Chinese out-rank any other country in their reliance on their phones to To see an example of this volume access the internet. According to data in action, we need look no further from Global Web Index, over 80% than Single’s Day, the world’s largest consider their smartphone the most e-commerce event. Publicised by Alibaba important internet-enabled device, as a discount shopping day thanks to compared to 43% of Americans and star-studded promotional galas, it drove 28% of Germans. £20 billion in revenue for the Chinese platform in 2017, and £14 billion for This is not just an interesting rival JD.com.49 Single’s Day is now in observation. The rate of mobile the calendar of many Western fashion adoption and technology in general brands, which comprise almost half of has dramatically accelerated the rate of sales during the event. Take Nike for innovation in the country. In 2015, China example, who became the first company devoted 2.05% of their GDP to research to make 1 billion RMB (£111m) at this and development, more than the year’s event.50 Netherlands and the UK (World Bank).

However, by focusing on volume and While many still consider Silicon Valley projected revenue, we would potentially the pinnacle of technological innovation, overlook a more important aspect of we need to bear in mind that as the Chinese market: Chinese shopping many as 22 e-commerce unicorns are behaviour. Understanding how they Chinese.51 You should no longer expect are inspired, discover brands and make e-commerce innovation to only arise purchases is essential information for from the US or Europe. any retailer hoping to operate in this

48 Euromonitor 49 Forbes, Link 50 Azoya Group, Link 51 Hurun Research Institute, WalktheChat, Link 25 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

The Chinese mobile-first approach to fashion companies with many more shopping online could also beChinese impacting vs American opportunitiesLuxury Shopper for personalisation. the40 strength of platforms in this country. At faster rates than Europeans and China is already a huge focus for luxury Americans,35 the Chinese are skipping fashion brands, as Chinese consumers search engines for platforms when it are buying luxury fashion at higher comes30 to research and purchase. As rates. By 2025, Chinese consumers are many as 61% will go straight to Tmall, expected to account for at least 45% 25 instead of Baidu, to search for apparel. of global luxury sales.53 Interestingly,

20 the demographic of the Chinese luxury The Chinese are also the happiest users shopper is decidedly younger than its to15 share their personal data in a value Western counterpart, which is having exchange (38% of Chinese, vs 25% in a huge impact on the fashion houses the10 US and 12% in Germany).52 This ability to drive revenue. provides technology start-ups and 5

0 Chinese vs American Luxury Shopper 16 to 24 Chinese25 to 34 vs American35 to 44 Luxury Shopper45 to 54 55 to 64 40 Chinese Luxury Shopper American Luxury Shopper copy

35% Made a purchase from these brands last year (%) 3 50 obaninternational.com 30%

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20% 35

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0% 10 16 to 24 25 to 34 35 to 44 45 to 54 55 to 64 Chinese Luxury Shopper American Luxury Shopper copy 5

3 0 Made a purchase from these brands last year (%) obaninternational.com ChinaMade a purchase from theseUSA brands last year (%)Germany 50 Chanel Dior Gucci Louis Vuitton

45 % 4 obaninternational.com 40 %

35 %

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0 % China USA Germany Chanel Dior Gucci Louis Vuitton

52 Kleiner Perkins, Link 4 53 Bain, Link obaninternational.com 26 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

INTERVIEW WITH LEI Oban interviewed one of its Chinese LIMEs (Local In-Market Experts) to uncover his thoughts on the growing fashion opportunities within his country.

Which Western fashion brands do you think are doing well in China? What can other brands learn from their efforts? “I would say Gucci is one of the fashion brands that has grown the fastest in China, with double-digit increases for both web traffic and revenue in the first quarter of 2018. It is apparent that Gucci has recently changed its strategic focus to seduce younger consumers, who are eager to spend large portions of their engagement with the brand. On disposable income on stand-out pieces. WeChat, those engaging with Gucci’s programme can buy and send gift cards Having said that, a big part of Gucci’s to their contacts and upload selfies a-la success comes from their use of digital Snapchat. marketing. Luxury brands have been quick to realise how fundamental it is to Gucci has also succeeded in their build a presence and reach consumers use of celebrities and influencers, on WeChat and Instagram, and Gucci having signed actress Ni Ni as the new has been no exception. spokesperson for the Asian series of glasses, and signed singer Li Yuchun Gucci launched one of the more as Gucci’s latest Asian ambassador innovative ‘mini-programmes’ on for watches and jewellery. Brand WeChat. Mini-programmes are ambassadors, celebrities and other essentially apps within the WeChat app public figures have brought the distance that enable further functionality and between luxury brands and customers closer, allowing them to build an emotional bridge with the younger “LUXURY BRANDS HAVE generation. BEEN QUICK TO REALISE I do think other brands can learn a lot HOW FUNDAMENTAL IT IS from Gucci. But they’re not the only TO BUILD A PRESENCE AND company succeeding in China. Most REACH CONSUMERS ON traditional luxury fashion brands are WECHAT AND INSTAGRAM.” making a fair effort and reaping the benefits.”

27 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

What do you think is important for Reports increasingly show most a Western brand to get right, when Chinese fashion buyers are starting selling in China online? their product search in Tmall. Does this mean Baidu has a less significant “There are three main areas in which role to play in the discovery of apparel Western brands need to focus: brands?

Firstly, they must consistently create “Last year, the Tmall Double Eleven a sense of freshness, introducing new opening, the mobile side of the designs frequently. It is important transaction surpassed desktop, to innovate and adapt to consumer accounting for nearly 70% of the total trends. This is particularly important transaction. There is no denying that for the younger demographic who are more and more buyers are using mobile increasingly spending more on unique apps to search and purchase, due to pieces that they can use to express its ease and convenience. However, their individuality. By launching more traditional search engines such as Baidu products, emphasising originality and still play an important role in the buying creatively celebrating occasions such as cycle. New Year with limited and rare releases, they can captivate and excite the very Consumers will use search engines to spontaneous Chinese fashion consumer. get more information about brands, products, price, reviews, services, Secondly, they need to embrace digital shopping experience, reputation, online wholeheartedly. Fashion consumers channels, to compare and reflect, before are increasingly using mobile, video, making any decision. Even though online content and KOL (key opinion mobile apps are playing an increasingly leaders) to get inspired and discover important role in driving sales, desktop new collections. A key ingredient here and mobile search engines cannot should be WeChat, which can take up as be ignored. They present a great much as 50% of fashion brands’ digital opportunity to deepen the engagement marketing spend. Successful brands are of the user and build brand equity.” already investing a large part of their marketing budget online, and this is a trend that we think will continue. “THERE IS NO DENYING THAT MORE AND MORE BUYERS Lastly, they should strengthen the experience in traditional retail ARE USING MOBILE APPS TO environments, by integrating with SEARCH AND PURCHASE, online interactions and providing DUE TO ITS EASE AND immersive experiences. New stores are getting bigger and bigger, dedicated to CONVENIENCE.” providing consumers with a one-stop experience for shopping, entertainment and leisure. Stores are after all great places for consumers to really get to know a brand and experience the product, so a balance between offline and online is still necessary.” Credit: Freer / Shutterstock.com

28 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

Key Opinion Leaders in China – should we believe the hype? What would be your advice for brands who are considering engaging influencers in your country?

“I think you can believe the hype. However, be careful and don’t be fooled with their amazing following figures, and Consider WeChat. The dominant don’t necessarily believe all the claims position of WeChat in people’s lives from their agents. Do your own research is beyond the reach of other social and make sure the KOL is not working platforms, with one billion daily active with too many brands already as that users. WeChat allows users to have decreases their authenticity. more personal connections with the people they care about and therefore One last piece of advice would be to its users have a higher level of trust in its look for long-term collaborations. To content. Since WeChat is the most used choose an influencer carefully that social media platform, collaborating truly embodies the brand and can be with KOLs to promote products is a very associated over time to create a long- good way to increase brand exposure. term halo effect.” 29 A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE

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