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A Guide to Selling Fashion Around the World Online

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A Guide to Selling Fashion Around the World Online CheckOut 4 FASHION A guide to selling fashion around the world online The CheckOut2TheWorld alliance is brought to you by: INFINITYBLUE driving marketplace performance A GUIDE TO SELLING FASHION AROUND THE WORLD ONLINE 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.
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