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eCommerce is the future of fashion

By Giuseppe Di Rosalia
5 min read

I know it’s bad to say, but in my opinion, if it wasn’t for the pandemic that revealed the importance of eCommerce in fashion, today we would probably still be pretending that the online shopping experience is not for everyone but only for a circle of experts. Well, wake up, eCommerce is the future of fashion.

Unlike music, which has Spotify, or tourism with its Airbnb or booking.com, the fashion industry doesn’t have a single dominant online player. The war has been going on between East and West for some time and it is not the designers who are fighting, but the financiers of listed companies. In America, there is Amazon; in China, Alibaba. Then there are the three most powerful luxury groups in the world.

eCommerce and Fashion

In recent months, Richemont, which includes Cartier and Van Cleef & Arpels, amongst many others, and Alibaba have announced that they intend to invest $ 1.1 billion in Farfetch. A small fortune!

Kering, which includes Gucci, Saint Laurent, and Alexander McQueen, among others, has also increased its stake in Farfetch with an additional $50 million.

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In this way, two of the biggest luxury groups have boosted two of the most powerful e-commerce platforms: Farfetch and Yoox/Net-a-Porter, also owned by Richemont.

So far, so good, except that luxury brands were late to embrace e-commerce, but they eventually made it because when the pandemic forced many stores to close, they had no other choice. That’s how online shopping reached $58 billion in 2020, up from $39 billion in 2019: 12 to 23 percent of global sales in this industry in less than twelve months.

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Last year, Amazon undertook two initiatives: opening specific virtual storefronts in America and Europe between May and October. Second, it introduced the Luxury Stores app dedicated to its 150 million Prime subscribers.

Here, the brands have direct control of how their products are presented, unraveling the knots about the lack of selectivity of the products offered.

On the other side, the Richemont-Alibaba alliance in Farfetch highlights how the Chinese high-tech giant has been able to circumvent some of the problems luxury brands have with Amazon.

eCommerce

Its Tmall Luxury Pavilion has successfully attracted nearly 200 high-end names. Due to recent restrictions on international travel, Chinese consumers, who will account for $178 billion in luxury spending by 2025, and who previously enjoyed the luxury of shopping abroad, now do so from home.

Since Richemont and Kering have teamed up with Alibaba, the possibility of creating a luxury e-commerce group of enormous critical mass that ties these conglomerates together with Asia becomes more real.

Still, the excitement continues

Amazon, step by step, is sharpening its weapons, plus Richemont’s alliance with Alibaba could cannibalize Farfetch’s revenues. And still, many luxury brands want to control the digital channels that connect them to consumers wherever they are in the world, without third parties being involved.  For example, as does LVMH, which includes Louis Vuitton, Dior, Celine, among others. The world’s largest luxury group for which e-commerce accounts for more than 10% of its €53.7 billion in revenue by 2020.

Its president, Bernard Arnault, preferred to invest in the wholesale platform 24 Sèvres, created in 2017, which continues to lose money.

The game for the billion-dollar domination of online shopping is therefore played on both sides of the Pacific. But an extremely dynamic sector like this one does not exclude that other competitors may emerge in the future.
eCommerce

For instance, the German company Mytheresa has recorded consolidated net turnover of 450 million euros for 2020, up 19%.

While Farfetch offers more than 3,500 brands, Mytheresa has only 250. The small number gives it a comfortable position: Mytheresa isn’t the largest of competitors, but it is certainly among the most influential.

Another player with small numbers is MatchesFashion, which is comparable in size to Mytheresa: three years ago, its valuation was around $1billion.

To the same category belong apps like The Yes and Lyst, the fashion search engine, also German. And I thought that Germans, like Poles, had nothing to do with fashion, but that’s another matter.

But luckily, there’s more

However, Generation Z and Millennials have developed a different way of looking at fashion bling-bling since the late 2000s. As a result initiatives are happening everywhere that are hard to control, even by Chinese billionaires, investment funds or private equity.

As happened with Menage Modern Vintage. It’s actually a funny story: ever since the fourth season of The Crown bowed on Netflix, social media have been filled with declarations of desire for the pie-crust collars, puffed-sleeve floral frocks, 1980s power jackets, and Barbour worn by Princess Diana.

eCommerce

The series costume designer, Amy Roberts, found them in a house in London’s Fitzroy Square. There, Chiara Menage, a stylish 54-year-old former film producer, runs a vintage clothing shop online from her equally stylish bathroom.

The cool thing is that 100% of the profits from some of the items are donated to support people suffering from domestic abuse.

It certainly may seem like a niche, but the resale business has quickly become much more than a niche. It was approached by the luxury industry only through peer-to-peer, as is done on The RealReal, which I recommend because you can find fashion milestones. Still, the growth, especially among young consumers, is very fast. There are new eCommerce initiatives such as the English Depop, which has a very bad customer service, the French Vestiaire Collective, (which I haven’t tried) which makes the resale increasingly cool.

eCommerce

This means that 2021 may be characterized as a moment of transition between pre-pandemic reality and a potentially prolonged recovery period for the global fashion industry, (thanks to eCommerce). The pace of recovery will vary across categories, segments and regions. In short, we’ll see, but in the meantime, check out our marketplace, maybe you’ll find something really interesting to buy.

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Written by
Giuseppe Di Rosalia
5 min read

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