The internet is most famous for changing the way that we are entertained, and the way in which we communicate. What the internet has also done, is change the way in which we consume and do business. The rise of ecommerce has seen companies expand rapidly in sales and financial turnover. Amazon is a prime example. This leading ecommerce retailer is worth over $90 billion, trades stocks at over $420 per share, and has a market capitalization of over $197 billion. Although Amazon deals in fashion, they’re not primarily a fashion business. With such a successful example, how do the ecommerce leaders in the fashion world stack up?
Many don’t realize that ecommerce has its roots in the Electronic Data Exchange (EDI) and Value Added Network (VAN) technologies that were introduced almost half a century ago. Since that time, ecommerce has made leaps and bounds when it comes to innovation and technology. What many consider ecommerce today began in 1995 when Amazon first started as an online bookstore. Since then, hundreds of companies have introduced online store fronts where consumers can browse and purchase goods from their home, or anywhere that they have an internet connection.
ShoeDazzle, although a relative newcomer to ecommerce, quickly asserted itself as one of the leaders in online fashion retail. Unlike most online sites, ShoeDazzle attempted to recreate the high end shopping experience that shoppers would find in real boutiques. The site offered a VIP membership program which asked users for a $39.99 subscription fee. This fee gave users an expertly curated and reviewed selection of designer footwear. Even with the fee, the site was a huge success. By 2011 the startup had secured over $60 million in investment, and by 2012 the site had over 13 million members.
Farfetch is another leader in fashion ecommerce. Earlier this year the company became one of the newest fashion ‘Unicorns’, having exceeded a market valuation of over $1 billion. Like ShoeDazzle, Farfetch is a site that focusses on boutique fashion brands. They use their online store to sell products from over 300 partner boutiques. The New York Times reported in 2013 that the average Farfetch customer spends $680 per order, which is in stark difference to the majority of online retailers that deal in relatively small transactions. Farfetch is also a leader in the way that they choose unique fashion designers and brands to promote. They have helped grow brands from countries like Brazil, and even independent brands from established economies like the United Kingdom. The advantage for these small boutiques working with Farfetch is that they can reach a global network of customers that might otherwise have never engaged with their brands. Independent designers and fashion companies generate an average of 30% of their sales through Farfetch.
A 2013 report from eMarketer found that over 17% of all ecommerce sales are fashion related. This is the leading segment, followed closely by foods and beverages. There’s no doubt that there’s still room for businesses to disrupt the fashion industry by tapping new areas of the online market. As Farfetch and ShoeDazzle have shown, it only takes a unique approach and a compelling service to bring tens of millions of consumers on board. With ecommerce being the fastest growing area of retail, it’s likely that we will see new names and innovative services become commonplace over the next decade.
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