The Fashionable Web
It started with underwear and belts, now apparel buying is becoming one of the hottest e-retailing categories
By Mary Wagner
Chanel suits or boxer shorts? Embroidered satin evening slippers or kids’ canvas sneakers? Party dresses or polo shirts? After a slow start that left sales languishing far behind those of standard-issue goods such as books and CDs, the needle is finally moving on online apparel sales.
According to Ernst & Young, apparel ranked fourth among products purchased online last year, outstripping sales of consumer electronics, toys and videos. Several sites in the top 3% of favorite shopping destinations in 2000 didn’t even register in Ernst & Young’s survey the previous year. “Consumers express quite a significant potential demand when you ask them about purchase intention and their desire to buy clothing online,” says Peter Stanger, vice president and head of Boston Consulting Group’s b2c topic area, North America.
Though growing, apparel sales online today still are but a fraction of what they could be. Of the estimated $301 billion in clothing sold across all channels in North America, online sales represent only about 0.7%, according to the Boston Consulting Group. Jupiter/MediaMetrix estimates 3% of clothing sales will be online by 2005. “It’s a slow channel shift,” says Jupiter Analyst Heather Dougherty. Nonetheless, even sales that sound as small as 3% would amount to
$9 billion of today’s clothing sales—and that’s as much as consumers spent during the last holiday shopping season.
But there’s apparel, and then there’s fashion. While one is obviously influenced by the other, they’re not one and the same. Specialty boutiques can do a brisk business in hard-to-find goods or niche markets, but scalability is key to racking up big sales online. Web retailers looking for big numbers aren’t going to achieve them by selling the occasional Chanel suit. Collectively speaking, shoppers offline buy a lot more khaki pants than they do Armani jackets, so it’s no surprise that as apparel sales rise online, buying patterns mirror those in the offline world.
That underscores the biggest opportunity for apparel sales online, at least for now: mainstream basics with non-fussy fits. “With all due respect, the money to be made is not in Calvin Klein’s collection,” says Carolyn Topp, an associate director in business strategies in the consumer industries group at Ernst & Young.
Basics lead the way
Just look at the favorite apparel-focused sites of frequent apparel buyers—defined by Ernst & Young as online shoppers who spent upwards of $600 on apparel online last year. JCPenney.com was tops in that group, with more than 20% of frequent apparel buyers naming it as one of their three favorite destinations for shopping on the web across all product categories. Spiegel was next, named as a favorite by 11% of shoppers, followed by QVC.com at 8%; and Gap.com, EddieBauer.com, LandsEnd.com and Sears.com, which all came in at around 7%. “This isn’t high fashion,” Topp points out. “It takes trend, buzz and a very sophisticated level of customer service to sell high fashion, including a point of view that’s more than saying ‘I’m a funky customer.’ The technology online hasn’t caught up to that yet. In my view, profiling (of customer preferences) online isn’t where it needs to be to sell that kind of fashion—but it will be.”
Lands’ End is already there. It doesn’t sell high fashion, and it’s finding that personalization tools work just fine in boosting sales of the casual, sports and business wear it features. In November, Landsend.com added a My Personal Shopper feature, a search engine that uses a shopper’s preferences to build a profile that can be used in future visits. Within two months, the average online order value was 10% higher for site visitors using the personal shopper feature than for those who didn’t. And the conversion rate was 80% higher on personalized recommendations issued through the shopper than it was for other, more generalized recommendations, such as those in the site’s e-mail newsletter.
Industry watchers cite a basketful of reasons for the recent upward trend in online apparel sales. One is the spillover effect: shoppers who have become comfortable purchasing books, CDs and other commodity items online are extending their wallets to other products. In addition, 60% of online shoppers are now women, and 59% of that group are married, often making apparel-buying decisions for the household. That group brings its brand and store loyalty from the offline world when it shops online. “Brand is king,” Topp says. “A lot of the pure-plays fell out last year, giving way to the multi-channels. That means the brands that shoppers already know and trust are online in a more prominent way.”
But until web retailers really crack the nut on the issues of remote sizing, color and texture depiction—and deal with the shipping and returns issues that put customers off—shoppers venturing into apparel buying online are embracing less expensive and less differentiated items of apparel. That’s one reason kids’ clothing is moving online, says Joel Barnett, director of category management at Los Angeles-based BizRate. “Kids’ sizes are more approximate—they’ve got to fit in fewer places than adult sizes,” he says. A number of web merchants have expanded into children’s clothes in the past 12 months. Among them is EddieBauer.com whose Eddie Bauer Kids line launched last October as an online only business, the first time the company has launched an online exclusive. “Our customers have been clamoring for kids’ clothes for years,” says an Eddie Bauer spokeswoman. She won’t reveal sales figures, but the line has already generated a response that has the company considering spreading kids’ apparel to its other channels.
The march of shoes
Because they’re low-risk purchases for consumers, re-orders of items of apparel also are helping to fuel the increase in online clothing sales. “Shoe sales have been increasing in the past 12 months, but it’s in certain categories, like re-order of men’s athletic shoes,” Barnett says. “And if you look at categories like men’s underwear, that’s a re-order business. Shoppers know the product because they already have it.” Ditto for women’s underwear. “Victoria’s Secret does well online partly because most people know their size and what they already have,” Dougherty says.
At Atlanta-based Underneath.com, repeat customers constitute “a healthy volume,” says Mike Waters, vice president of accounting and operations. Underneath.com gathers such information from customers at check-out. Like many web retailers, the site encourages repeat business with an e-mail list customers can join to receive a monthly newsletter alerting them to sales and promotions.
The company hopes to offer automated replenishment this year. “It’s our goal to be more automated on the backend so we can say by e-mail, ‘You ordered a three-pack of briefs on June 23rd, do you need more now?’” Waters says. Kenosha, Wis.-based underwear manufacturer Jockey International already offers automated order replenishment direct to consumers through its Here’s Jockey program on Jockey.com. Registered online shoppers can request automatic shipment of favorite items on a three-month or six-month schedule; shipping, credit card and preference information is securely stored so shoppers don’t have to re-register or even go through the re-order process. An automated replenishment feature is also on the radar screen of competitors including OneHanesPlace.com, the outlet web site of hosiery, athletic clothes and underwear manufacturer Hanes, as well as Undergear.com.
Replenishment of staples also helps drive sales of menswear at LandsEnd.com. The ongoing demand for basic men’s dress shirts, socks, underwear and jeans online is about 40% higher than for other apparel on the site. There’s no similar pattern of higher demand online for any items of women’s apparel—yet. Lands’ End has just started selling women’s intimate apparel on its web site and believes that could become a popular replenishment item for women.
The tech issue
As is the case with other product categories on the web, success with apparel sales will depend increasingly on how effective retailers can be in stratifying their customer bases and coming up with marketing approaches that are on target. Apparel, however, carries some singular challenges in the form of data-dense image files that can be slow to download and color depiction that may be off the mark. Then there’s the remote sizing issue—the standard sizing options offered online may be hit or miss. And so many are wondering to what extent web site performance issues are impeding the growth of apparel shopping online, and whether technology can solve those issues.
The answer depends on whom you ask. Several technology developers have become ASPs, with branded offerings for web sites that tackle the issues they see as major impediments to buying apparel online. “The average return rate for women’s apparel purchased online is about 35%—more for some high-fashion items,” says Ernesto Aguirre, CEO at technology vendor The Right Size. “About 50% of the returns are attributed to size. That represents an incredible financial burden to a web retailers.” Not only does it cost the e-retailer from $10 to $15 to ship, reverse ship, receive and restock each returned item, but the process puts the product out of circulation for two to four weeks—a heavy burden when the seasonal shelf life of an apparel item may be only 12 weeks.
The Burlingame, Calif.-based company offers search engine technology that makes apparel selection recommendations which go beyond size and style guidance to incorporate fit preference. How? It’s actually two search engines—one that generates style and fashion recommendations the shopper might enjoy based on preference information he supplies, and another that sizes the clothing item based on the user’s fit preference.
“If the shopper is 18 years old, 150 pounds, has a 28 inch waist but wears his pants around his hips, a normal search engine is going to recommend size 28 pants. But they won’t fit him in the way he likes,” Aguirre explains. “But if he tells me he owns a pair of Tommy Hilfiger jeans in size 32 and he likes the way they fit, we’d recommend something that fits similarly.”
Aguirre’s patent-pending search engine contains data on the fits of 4,500 apparel brands and some 13,000 styles, gathered from the reports of real-life models hired by the company to try on clothing, as well as input from its industry expert advisory board. “We’ve trained our database with specific information from multiple sizes, cuts and fits. We then use the data to map product recommendation tools,” Aguirre says. “If we just have the shoppers’ dimensions, we can’t determine how they like their clothes to fit, just what size they are. We take it a step further.”
Recommendations using the database are currently available at the company’s own web site. Aguirre is hoping to license the technology for use by e-retailers as well as by manufacturers who don’t transact consumer sales on their own sites but want to link visitors to their products at web stores.
Over the rainbow
Color correction technology vendors have marshaled myriad data to support the notion that color depiction is a major barrier to apparel buying online. A commissioned study by InfoTrends, for example, revealed that 81% of consumers have concerns about inaccurate color depiction, affecting their decisions to purchase color-dependent items via the web. A total of 60% of online consumers in a CyberDialogue study don’t trust the colors viewed on their monitors, while 30% have abandoned shopping carts due to uncertainty about an item’s color.
Pantone, the provider of color services, is developing a set of standards for e-retailers to use on web products to ensure that the consumer knows the exact color of a product. Under the Pantone plan, retailers can call a color any name they want, but the consumer will have the option of checking on the Pantone number, then comparing that number to a book of color samples that retailers will distribute to consumers. In that way, consumers will know exactly which color they are viewing.
Color-correction technology provider E-color this year came up with data that tie server-side color correction to e-retailers’ ROI. Visitors to Bloomingdales.com, an E-color’s client, were more than five times more likely to purchase items if their display was e-color corrected. E-color, which also counts apparel seller Joseph A. Banks’ josbanks.com web site and Cornerstone Brands web stores such as GarnetHill.com among its clients, guarantees that e-retailers using its color-correction technology will gain at least a 25% increase in conversions—or they don’t pay the vendor. “We’ve built in ROI calculations that measure conversion rates for the customer and they can get them on the web in real time,” says Peter Bernard, vice president of products and marketing at the San Francisco-based company.
“Admittedly, our technology affects one element of the site and not others. We realize that e-retailers have a lot on their plates and have to balance cost with investment,” says Bernard, who adds that the technology is built so it doesn’t require clients to buy new hardware to support it. Indeed, technology bells and whistles without data to support return on investment may be nothing more than sideshows that distract from what e-retailers really must deliver to win consumers online, Stanger says.
And what’s that?
“There’s a supply side to this equation,” he says. “While it’s fine to say that consumers want to do these things online, can retailers actually satisfy that demand in a way that’s economical? That’s a barrier that needs to be overcome in order to take advantage of the demand potential that we believe is out there in many categories—including apparel.” l
mary@verticalwebmedia.com
Leading online apparel purchases
1. Women’s accessories such as belts, bags, scarves and jewelry
2. Men’s underwear, sunglasses and men’s sportswear
3. Men’s accessories
4. Kids’ apparel
5. Men’s shoes
6. Baby and toddler clothing
7. Plus-sizes
8. Men’s clothing
Source: BizRate
