The state of E-commerce Fashion Industry : Statistics, Trends & strategy

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“When you’re finished changing,” said Benjamin Franklin, “you’re finished.”

Long revered for his fashion sense — seriously, Google it — was America’s most-stylish Founding Father talking about the state of ecommerce fashion?

Of course not … but his statement is frighteningly accurate.

Last year, more than 1,875 fashion retailers shut down, and “broader retail cuts are even more severe, up 53 percent from the number of doors that went dark amidst the Great Recession in 2008,” says WWD.

Digital innovation, rising globalization, and changes in consumer spending habits have catapulted the fashion industry into the midst of seismic shifts.

To explore where we are and where we’re heading, this article takes a detailed look at …

The Statistics, Trends, and Strategies Shaping the Ecommerce Fashion Industry in 2018 and Beyond:

  1. Industry-Wide Data
  2. Clothing and Apparel
  3. Shoes Segment
  4. Accessories and Bags
  5. Jewelry and Luxury
  6. Personalization
  7. Anywhere Ecommerce
  8. Flashes and Drops
  9. Going Global
  10. Technological Innovations

Ecommerce Fashion Industry: Statistics

1. Industry-Wide Data

Cumulative data paints a bright portrait, with worldwide revenue expected to rise from $481.2 billion in 2018 to $712.9 billion by 2022:

Driving this growth are four notable opportunities:

  • Expanding global markets outside the West
  • Increasing online access and smartphone penetration
  • Emerging worldwide middle-classes with disposable income
  • Innovating technologies to create experiential ecommerce

 

Fashion consumers will also have more buying power, as the number of potential customers is projected to grow to more than 1.2 billion by 2020. The good news for fashion is that the majority of these new consumers are within the 16 to 24 and 25 to 34 age groups.

The biggest threats to established brands include the:

  • Death of brand loyalty due to market fragmentation
  • Cost of combating return rates as high as 50%
  • Fast fashion’s ability to manufacture styles on-demand
  • Pressure from consumers to use ethically sourced and green manufacturing materials

 

We’ll get into strategies to combat these issues later. For now, let’s examine how these big numbers play out in industry sub-verticals.

2. Clothing and Apparel

Lower digital barriers to entry for all clothing merchants offer the opportunity to market, sell, and fulfill orders globally and automatically.

Western-market saturation is the most likely source of this trend. When growth rates are compared between the US, Europe, and China, that reality becomes even starker. Between 2017 and 2022, CAGR is expected to settle in at …

  • 8.8% in the US
  • 8.7% in Europe
  • 14.1% in China

 

3. Shoes Segment

As a segment of ecommerce fashion, shoes display a similar pattern of shrinking revenue expansion year-over-year. From double digits in 2017-2019 — 13.6% and 10.8% respectively — footwear is expected to grow a mere 6.6% in 2022.

In absolute market size, the shoes segment will increase from $96 billion in 2018 to $135 billion in 2022.

Ecommerce shoes segment worldwide revenue

4. Accessories and Bags

Not surprising, the bags and accessories segment — although still growing at a stronger rate — will likewise see its double-digit growth dip into the single digits by 2022:

  • 2017: 16.4%
  • 2018: 15.6%
  • 2019: 14.2%
  • 2020: 12.4%
  • 2021: 10.5%
  • 2022: 8.7%

Those projections actually make bags and accessories the healthiest segment of ecommerce fashion, despite its absolute numbers being the smallest.

Ecommerce bags and accessories segment worldwide revenue

5. Jewelry and Luxury

The global jewelry market is growing at 5-6% annually. China is the top spender on hobby (think Etsy) and luxury style items, followed by the U.S. at $2.7 billion.

Jewelry industry threats stem mainly from wholesalers selling direct-to-consumers, plus consumer pressure on jewelry manufacturers to be more transparent about pricing. Also, it is expected that by 2020, the jewelry market will be dominated by major global brands, stealing market share from local artisan shops.

While ecommerce currently comprises approximately 4-5% of total jewelry sales, that number will trend towards 10-15% by 2020.

Multi-brand boutiques can win market share by curating collections for specific segments – a strategy that works well for apparel retailers as well.

Increasing affluence in Asia-Pacific and in the Middle East are driving up the average revenue per luxury good consumer to $313 USD by 2020.

Despite luxury goods sales seeing sluggish growth at 3.4% annually, McKinseyforecasts indicate that ecommerce could triple in sales over the next decade:

The biggest threat is the affordable luxury market: Should the industry offer luxury goods at multiple price points to grow the market overall? Or, will affordable luxury dilute or erode the high-end luxury market – dampening consumer confidence that what they are buying is “true luxury?”

Ecommerce Fashion Industry: Trends and Strategies

The above data points offer a wealth of growth opportunities for fashion and apparel retailers. Below are some of the latest trends that you can work into your long-term ecommerce strategy.

6. Personalization

According to data presented by Nosto at a recent Growing Your Online Funnel Webinar, personalization is a leading factor in ecommerce at large:

  • 43% of purchases are influenced by personalized recommendations or promotions
  • 75% of consumers prefer brands to personalize messaging, offers, and experiences
  • 94% of companies see personalization as critical to current and future success

By tracking user behavior, either session-by-session or by account, fashion sellers can build Netflix-like personalization into the onsite experience.

Netflix personalizes the images of programs based on a user’s past viewing behavior. Storefronts can be personalized to reflect either onsite behavior or buying history

Moving into the future, shoppers will begin to expect the same kind of personalization in the ecommerce fashion industry. For instance, visitors who have either browsed or bought women’s clothing should experience a homepage experience catered to that history:

 

While those who have browsed or bought men’s clothing should be given an onsite experience that correlates:

Situational targeting, based on user data points like location and weather, is being promoted by ecommerce experts as a solution to the erosion of cookie tracking.

Still, nothing has yet to replace the identification and tracking power — not to mention the revenue possibilities — of an email address.

In regards to the leading threat to online fashion, learning more about your customers can help you identify people who are more or less likely to return an item.

First, ensuring your return policy and process are positive experiences can actually increase customer lifetime value.

Second, personalization can be used to segment serial returners and thereby avoid offering discounts and promotions like free shipping to those that take advantage of such options.

Third, offering virtual styling assistants to loyal customers as a value-add service (e.g. hiring real people to customize shoppers’ wardrobes online) has been proven to increase retention and margins.

7. Anywhere Ecommerce

It goes without saying that social media has been a driving force in the fashion market. Unfortunately, most brands are plagued by a single sin. Andy Crestodina describes the situation perfectly:

“Most branded content is advertising under a thin layer of information or entertainment. Scratch the paint, find an ad. It’s the brand putting itself first.”

Thankfully, fashion and social media are a match made in ecommerce heaven. Even when it comes to explicitly “branded” content … and especially on Instagram:

Particularly powerful on this front is mixing product-centric content, mainstream influencer marketing, and micro-influencers. As a model (pun intended), Fashion Nova excels on all three fronts.

With 10 million followers on Instagram, partnerships with celebrity accounts like Sarcasm Only, Cardi B, and Kylie Jenner, plus an army of over 3,000 micro-influencers, Fashion Nova pairs social-media dominance with a unique approach to fast fashion. CEO Richard Saghian’s claim that Fashion Nova is “the fastest-growing women’s apparel company” is no exaggeration.

And yet …

The real power for social comes from integrating multi-channel ecommerce to create anywhere commerce.

Beyond simply sharing or advertising on social, multi-channel ecommerceintegrates native selling off-site to build direct buying paths in the places your audience spends their time:

Shopping on Instagram, Facebook Shops, Buyable Pins, and more all take advantage of this strategy.

Just remember the words of Kevin Dao, co-founder and CEO/CCO at ORO LA:

“In everything we do, we’re helping the customer imagine. We want them to imagine being the man in every picture. To imagine us being their stylist. To imagine, ‘That could be me wearing those clothes.’”

“We’re not so much curating content as curating imagination.”

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