There has been a proliferation of online business dealing with different products. Ranging from online books to items like vehicles, the online business is gaining pace over time. This is fuelled by the need for convenience by consumers. The ability to purchase something from the comfort of one’s home is very alluring. As such, it is important to unearth the place of online retail in various sectors around the globe. More precisely, the knowledge of the online fashion retail business in the United Kingdom is of importance. Therefore, this paper will highlight the place of online fashion retail in the world and more precisely the United Kingdom, and how online fashion retail compares to retail stores.
The Internet has created a new way for British consumers to shop and therefore (SMEFE) Small/Medium sized fashion e-retailers have had to adapt in order to stay competitive. In the article Web Weaving (Ngai, 2003 cited in Catherine J. Ashworth et al 2006) it states that only 7% of published internet-marketing research papers cover retail, none related directly to SMEFE (Small to medium enterprise fashion e-retail. Statistics show that online retail is growing rapidly, and looks set to almost double between 2009 and 2013. The graph below shows a comparison of the total online retail sales of different countries in two years.
(Economist Print Edition, March 23rd – March 29th 2013. Retail report, ‘Mixing bricks with clicks’.)
In October 2010, penetration of clothing and footwear purchasing online reached 34%, a year- on-year increase of 8 percentage points since November 2009, according to Mintel’s Digital Trends Winter – UK, December 2010. While interest in online fashion remained stable throughout 2010, it has increased since 2009 and outperformed most other sectors, suggesting rising demand. There has been a steady growth in the volume of footwear and clothes sold through the internet. Online revenues generated from the sale of fashion goods have also grown between 25-30% between 2000 and 2001 (IMRG, 2006).
It is projected that by 2011, the online fashion market will increase its sales by 12% to 4.8 billion pounds. The growth rate of the online fashion market has been adversely affected by increase in internet penetration. The growth of the sector is dependent in increasing sales. As such, retailers ought to address the barriers to shopping online as perceived by consumers. To this end, a market survey would be in order so as to ascertain and establish the perceptions of consumers to online shopping.
Different people are cautious about online shopping because of increased cases of credit card fraud. The fact that one makes payments for products before they are delivered is also a source of concern for many consumers. Reassuring the clients of the safety of their money is therefore of paramount importance. This can be done through consistent timely deliveries and legitimate transactions. In return, the word of mouth of satisfied online shoppers will bring in new customers thereby increasing their sales.
The fashion industry has been slower than other sectors to come online, but the sector received a boost in 2010 as several high street fashion retailers developed their online channels, with women’s fashion retailers Gap, Zara and H&M all launching websites. Statistics from GSI Commerce Survey show that more customers are switching in between different channels when looking for fashion, and use websites as virtual shop window. They show that 64% of consumers research a product online before purchasing the object offline. The websites help the consumers filter between colour and size thereby making it easy to buy a product. 55% of the respondents agreed with this.
The way the fashion industry uses online retail can be broken up into three categories:
- Bricks and motor Store-retail
- Pure play online retail
- Multi Channel retailing
Although there exists no general consensus on these categories, continued research shows the three as distinct ways of online retailing. Some retailers now offer both e-retail and conventional store shopping and they are able to take advantage of their multi-channel retailing. “Pure play” online retailers only have an online presence, which accounts for 40% of online fashion e-retailers (Marciniak and Bruce, 2004), while store retailers, though they may have websites, conduct all sales in-store. There has been a drop in the threshold for national coverage in the United Kingdom. Previously, a retail chain required over 200 outlets to have national coverage. At present, an outlet only requires between 50 to 80 outlets. This has led many retailers to limit expansion of shops, and focus on web-driven growth instead. House of Fraser, a retail outlet in the United Kingdom is trying out shops that are more interactive than your ordinary changing rooms and screens for clients to place their orders. In a completely different approach, Hointer provides displays of every type of jeans. When a client places an order, robots fetch the appropriate size from the stockroom (Davidson, 2007, pp.120)
While many traditional shop-based retailers are moving to the web, the opposite is also happening, with pure-play online retailers opening shops. Kiddicare, which sells accessories for babies and their parents, took over 10 “superstores” from Best Buy as they wanted to give customers “a true multi-channel experience”, and is not by any means the only retailer to shed its online purity. This shows that even in the face of growing sales in online retailing, owners of fashion businesses are careful enough to diversify their approaches in order to be risk averse and also maximize on the opportunities provided by the different approaches.
Screwfix, a British supplier to electricians and plumbers has opened 270 shops since 2005. Another dealer, Bonobos which sells men’s clothing online has opened several “guide shops” in America. In the same spirit, Zalando, an online fashion store in Germany opened another outlet in Berlin. In order to exploit other channels, Amazon installed assorted lockers in different shopping malls so that customers can pick their deliveries. This is attributable to the stronger growth experienced by multichannel retailers in 2010 compared to pure play operators. This benefits the companies by having both physical store and online presence. Every self-respecting retailer desires to exploit the benefits of multichannel retailing. This allows consumers to shop from laptops, Smartphone’s, and tablets (Jain, 2008, pp. 89).
Through multichannel retailing, the client is offered alternatives in terms of ways of purchasing a product. Multichannel retailing maximizes of customer loyalty and revenue by providing the customer with convenience and choice. Multichannel retailing involves the use of telephone ordering, interactive television, mail orders, purchase from websites, purchase from stores, comparison shopping sites and catalog ordering.
It is hard to beat online retailers when dealing with products that do not require display in showrooms. Borders, Britain’s Comet and American Book Store chain all went out business because of online retailing. But it is easier to judge a shoe’s fit or an apple’s crispness in a real store (Hines & Bruce, 2001, pp. 156). Even though pure online retailers have the advantage of not paying rent, their variable costs level the advantage. Without store-fronts to lure in customers they are, for instance, forced out to buy ads linked to Google search results. Delivery, especially of bulky goods, can be costly. Couriers show up at empty houses. The fees levied are not enough to meet the costs incurred. In addition, more than a quarter of the purchased clothing is returned by shoppers, which is another big expense. The remedy for this is to invest in real shops where customers can conveniently pick their orders even if placed online.
The question for ambitious e-retailers is how to reap the benefits of physical stores devoid of incurred costs. As such, most e-retailers employ high technology strategies and equipment. Since most of the ventures are not informed by research, they close up after a few days as seen with EBay. Although the street presence by Amazon helps make cheaper and convenient deliveries, it has nothing more to offer past that. Barsh et al (2000) state that despite knowledge that e-retail should offer better economics for selling clothing than traditional storefronts many SME’s have avoided e-commerce due to reports of initial poor achievement, which renders them uncompetitive in the medium-term and leads to long-term failure (Marshall and Mackay, 2002; Jeffcoate et al,2002).
Rowley, (2009) adds that online presence coupled with multichannel strategies is very important. This shows that the development of online retailing to an equal status with other channels like purchase from stores is a matter of when and not if. Web-weaving is a multiple-niche portfolio strategy for e-retailing where risk can be spread across the e-portfolio and allows the firm to recognize and take advantage of new trends and emerging opportunities. Perceived benefits make the “web-weaving” strategy an attractive proposition: not only does it provide additional revenue but it also acts as a protective buffer between active cyberstores in the portfolio and generates multiple revenue streams, which effectively shelters the firm and spreads risk (Mathur, 2010, pp. 203)
In the article Web-Weaving (Catherine J, Ashworth et al 2006) they look into a cyberstore-portfolio to evaluate the success of Web-weaving and see if the company can benefit through grouping websites together to save money and benefit from prior experience, learning and knowledge (ELK). Web-weaving allows financial consolidation – a key issue for small firms, since it is far more cost-effective to integrate operations across multiple-cyber stores. Utilizing the “web-weaving” strategy, benefits are gleaned from: integrating technology/back-office systems, co-staffing, and expenditure, rolling strategy and engaging multiple revenue streams.
The company directors explain how their websites are focusing on niche markets such as transvestites and big beautiful women. They focused on several aspects to drive their success such as focusing on niche customers that the high-street do not provide for, creating a personal relationship with the customers ‘corner-shop’ philosophy as the corner shop knows its customers what they want to buy and how often. They are able to globally segment the market making several niches more accessible. This will only fuel the development of online retailing and shopping as a viable and reliable channel for consumers therefore cementing the place of online retail as far as shopping is concerned (Fernie, Moore & Fernie, 2003, Pp. 163).
They also look at promoting their websites through affiliate marketing offering commission for referrals to their websites and having reciprocal links to other websites and pages.As the journal was written in 2006 I have found that the websites mentioned above are no longer active. It could be that they have been rebranded and changed to another companies name or simply that they are no longer operating. Those businesses may seize to exist out of failure however I still believe the article makes some valid points.
Web-weaving and creating multiple websites can be beneficial and spread risk as seen by TheHutGroup.com. The outlet has sixteen websites, all focusing on specialist products. This gives them benefits from web-weaving. Nonetheless, the outlet sells high end brands compared to other pure play websites that sold manufactured products. Experience is that many ‘non-value’ fashion retailers, through their websites offer other opportunities like experience and brand management (Rowley 2009). Engagement with online channels is affected by brand familiarity (Siddiqui et al., 2003). Various aspects of website design have been found of concern by customers. These include level of interactivity, web page design, absence of information on fashion trends, and inconsistent websites.
In a extensive research to establish the relationship between fashion retailer type and levels on online involvement, Marchiniak & Bruce (2004) found that fashion designers and retailers who use their websites predominantly as informational tools had more sales. This explained growth in online sales for retailers with websites. The need to try-on clothes before purchasing them and the sentimental value and social experience women attach to shopping for clothes affected the success of online fashion retailing when e-commerce started. Individuals shopping for fashion are enthused by their senses (Yang and Young, 2009). A large number of apparel consumers still insist that nothing can replace shopping in a physical store (Mintel, 2009). Nonetheless, the sales posted in various countries, and more precisely the United Kingdom will disprove this supposition in due time. On the other end of the scale, some retailers have actively chosen to forego an online retail arm. Primark, for example, has ruled out selling its budget clothing online, saying stores offer so much growth it does not need the Web. The 257-store chain saw its sales jump 15% to 3.5 billion pounds last year. (Shannon, S Bloomberg 2013)
Primark’s Web weakness seems not to be hurting profits, which societe Generale estimates will increase 35% to 480 million pounds this year. That compares to the 26% growth posted by Inditex, the owner of Zara brand, and the 9.5% lift for H&M, according to data reported by Bloomberg. Sales of Associated British Foods Plc (ABF), Primark’s owner have surged 16% this year, besting H&M’s 4.3% gain and a decline of 1.7% at inditex.
It is clear that when it comes to the fashion retail industry, two schools of thought dominate. On one hand some worry that e-retail creates customer confusion threatening loyalty as consumers browse/compare prices more readily online (Strauss and Frost, 2001). Alternatively, e-retail represents an ideal opportunity to cut costs, improve “channels-to-market” and grow an increasingly loyal customer base. The evidence on either side of the divide is very apparent. However, one can adduce that even in the face of exponential growth in online retail sales, many corporations are not ready to commit to the online channel. As such, most corporations are adopting the multichannel retailing in order to maximise on revenue and at the same time.
There is also evidence that even those retailers that purely carried out their trade online are migrating to the middle ground that multichannel retailing presents. All this shows that traditional and online retailers are ‘migrating to a middle ground’. Owing to all this, one can conclude that online retailing is a promising prospect when it comes to shopping for fashion. Yet, the alternative has nit matured enough to inspire trust from consumers and retailers. Consequently, traders have employed the blend of online retailing and purchases from stores in order to benefit from both the primary choice and the opportunity cost.
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