If you’re an apparel brand these days, you’ve got Amazon to the left of you, demanding consumers to the right, and here you are: stuck in the middle with merch.
But frustrated online sellers shouldn’t feel like they have to partner only with the industry giant or get lost in the shuffle. Savvy fashion brands can take advantage of some other digital marketplaces that are gaining ground.
ChannelAdviser, an e-commerce software solution company based in Morrisville, N.C., sponsored the webinar, “Expand & Grow on Marketplaces: Where Should You Sell Next?” Lauren Herourad, client services manager, explained that the online marketplace landscape extends beyond simply Amazon and eBay.
“In 2017, the top 75 global marketplaces drove $1.55 trillion in revenue,” she stated. “ChannelAdviser supports over 100. So, if you’re only on two, you’re truly leaving money on the table. Additionally, marketplaces are responsible for half of online sales. And now they’re growing at a rate of 35 percent year on year, which is much higher than the rate of e-commerce as a whole.”
E-commerce sales grew 15 percent in 2018, according to Internet Retailer. ChannelAdviser suggests clothing brands consider Google Shopping, Rakuten, and MassGenie for U.S. market expansion, and Fruugo and Mercado Libre for the international markets.
Herourad explained that brands aren’t just competing amongst themselves, but also the private labels offered by the major online players. Amazon, for example, has a whole host of private-label apparel brands for men, women and children, such as Amazon Essentials, Goodthreads, and Cable Stitch. So, too, do Target, Walmart and the major department stores. ChannelAdviser recommends sticking with the major marketplaces, but exploring opportunities on other channels, as well.
The majority of consumers say they shop for clothing online at Amazon (52 percent), followed by mass merchants like Walmart and Target (38 percent), chain stores (36 percent), department stores (29 percent), and specialty stores (23 percent), according to the Cotton Incorporated Lifestyle Monitor™ Survey.
StyleSage’s Elizabeth Shobert, vice president of marketing and digital strategy, says brands have a lot to consider before joining new platforms.
“Rakuten plays on loyalty and rewards,” she says. “I view this less as a marketplace than a loyalty network. Fruugo is more of a classic marketplace and includes an element of discovery since products come from sellers all over the world. I think Rakuten has a major benefit of being more of a gateway than a marketplace in and of itself. You register and then you start accumulating awards—cash back—immediately. If I’m a shopper and I am debating between Amazon and Rakuten for something, I may very well shop through the Rakuten portal because I know that will mean cash in my pocket.
“On the other side, if you’re already paying for a Prime membership, you may just default to buying things on Amazon since you’re already roped in. Keep in mind, people choose Amazon not only for price but super fast fulfillment. If a brand selling through Rakuten or Fruugo wants to effectively compete, they really need to be able to keep up with Amazon’s fulfillment guarantees.”
ChannelAdviser’s Cathy Hinek, North American manager of marketplaces and client services, said in the webinar that any brands looking to expand beyond Amazon or eBay need to be strategic.
“Do you want to reach a wider audience that you’ve not had access to before, producing more revenue? Or are you looking to liquidate older items?” she hypothesized. “Defining this strategy will help you to determine the best marketplace to execute. For example, if you need to liquidate quickly and are planning to offer deep discounts, look for a marketplace with demographics that tend towards discount shopping. Most marketplaces will be happy to share demographic information with you.”
Almost half of all consumers (47 percent) say the ability to shop or browse for apparel online has changed the way they buy clothes, according to Monitor™ research. This figure jumps to 59 percent among Gen Z shoppers.
When browsing online for apparel ideas, two in five consumers typically start with retailer or brand websites (40 percent), followed by search engines (32 percent, up significantly from 28 percent in 2017), brand apps (24 percent) e-commerce apps (18 percent), and Instagram (17 percent, up from 14 percent in 2017), according to Monitor™ research.
While women are significantly more likely than men to start browsing for clothing ideas online on Pinterest (20 percent versus 6 percent), the Monitor™ research found men are more likely to use search engines (36 percent versus 29 percent) and e-commerce-only sites (23 percent versus 14 percent).
Of course, the apparel industry is already running on tight margins, which makes it all the more important that brands choose new digital marketplaces carefully because each platform charges membership, commission, and per-item fees.
“I think it’s important to consider the value of a repeat customer versus someone who’s shopping your site on a one-off basis,” StyleSage’s Shobert says. “If, for example, Rakuten gives you access to a stream of loyal shoppers who keep coming back to your site because they get these rewards, the lifetime value of this shopper is going to be significantly higher than someone who just shops once or twice when they need product X or Y. Also, I think most brands are already cognizant that they need to make sure there’s exclusive and unique product available by channel and marketplace so that they’re not cannibalizing their own sales.”
Shobert adds that brands should consider the value of the data about the shopper when they’re determining partners.
“That data can inform so many different things, including new product development, shifts in customer demographics, and even competitive intel,” she says. “While I am not saying don’t partner with as many marketplaces as possible…choose channels where you’re a true partner in the business and where there’s a loyal customer there to serve.”