6 tips for online fashion retailers

18,535,000,000 – 18,535 million – 18.5 billion euros is the projected turnover for 2019 of online fashion retailers in Germany alone, according to statista. In a global comparison, this puts Germany in fourth place. The highest turnover is expected in China, with more than 248 billion euros.
The trend of annual sales growth continues. But even if the expected turnover increases by another eight percent compared to the previous year, there is a crisis in the fashion industry.

More customers, declining order value

The problem using the example of the largest online fashion retailer in Germany: Zalando. Although the number of active customers is increasing from quarter to quarter, the purchase value per customer is declining. In the last quarter of 2018, the average order value per shopping cart was 60.30 euros, in the first quarter of 2019 a new low was reached with a shopping basket value of €58.10. This is also accompanied by lower contribution margins, as the costs per order for picking, picking, packaging, shipping and returns naturally remain unchanged. How can fashion retailers remain competitive?

The customer wants to shop on all channels

For decades, the customer was lured to the shop, to the shopping streets, to huge shopping centres and even to outlet centres. However, shopping behaviour has changed. The customer no longer makes a pilgrimage to the shops, but is free to decide how he informs himself, where and when he shops. Online retailing supports them in this flexibility. Those who offer a good shopping experience on several channels profit. With such measures, Zalando has succeeded in generating sales growth significantly above the market average. While the industry grew by eight percent in 2018 compared to the previous year, Zalando sales increased by 20 percent.

Case study Zalando

In addition to the classic online shop, well-programmed apps offer customers a special shopping experience: With the Zalando app, not only is the mobile shopping experience significantly improved, but the user also benefits from advantages such as:

– personal recommendations based on the products purchased
– Photo search – find similar products based on photos
– price comparison with the help of a barcode scanner
– always the current shopping cart, no matter if mobile or web
– Status updates and tracking of orders

The fact that the app is well received by customers is proven by the published sales figuresFrom 2016 to 2018, orders placed via the app more than doubled. Users who use the app visit Zalando more often and for longer, buy more and are overall more satisfied customers compared to desktop users.

In addition to the online channels mentioned, Zalando also uses many others, including social networks, webinars and combines these with offline activities for optimal brand awareness. Because even though Zalando started as a classic online shop in 2008, the German fashion company has long since made its way into the pedestrian zone: In Berlin, Frankfurt, Cologne, Leipzig and Stuttgart, those interested in fashion can browse for bargains in the outlet stores and take the goods home with them. In addition, there are regional events every now and then that highlight the company’s portfolio. The most recent one was the Zalando Beauty Pop-up in Munich, which focused on the fashion company’s expansion into beauty products with workshops and much more.

More than just an online shop

If you want to be successful in selling fashion online, you have to realise that there is much more to it than just putting an online shop on the web.

1. selection of the collection

If you offer your own collections, you have to bring them to market faster than a few years ago in order to keep up with competitors. In addition, the customer’s taste must be met exactly. After all, the fashion market has Industry estimates about 30 percent too much merchandise on the market. If you don’t appeal to customers with your collection, you’ll be left behind as a slow seller.
Establishing one’s own brand identity is a major hurdle for many competitors, especially in the mid-price segment: On the one hand, the clothes have to be extravagant for recognition value, on the other hand, they must not be too extravagant to appeal to the mass market. Online shops that have more than just their own brand in their assortment therefore enjoy greater popularity: multiple brand identities and large selection options appeal to a diverse target group.

2. stocking method

The choice of right storage method is a decisive factor for costing: the faster the picking process can be implemented, the lower the costs. Modern techniques such as the on Augmented reality based pick-by-vision offer many possibilities to simplify the picking process. Last but not least, stock levels must be optimised: There must be enough items in stock to be able to ship all orders reliably and quickly. At the same time, not too many goods should be in stock to avoid unnecessary storage costs.

3. payment methods

If there are not enough payment methods available, the customer may well abandon the purchase process. Common payment methods such as credit card, direct debit and Paypal should be available in any case. Online shops can use payment systems such as Klarna or Sofortüberweisung. This has the advantage that the payment is guaranteed and the shipment can be made immediately and not only after receipt of payment. The faster the customer receives the goods, the better!

4. shipping and delivery service

The Selection of parcel service delivery service is another success factor for the online shop. Because delivery times can only be met with a reliable partner. No delivery despite notice, long delivery times and the loss of the shipment are the biggest annoyances in online shopping. But wastefully large packaging is also not compatible with the sustainability trend. It applies: Saving packaging! Different box sizes should be used depending on the order quantity and item. Similar to the selection of the right storage method, it is important here to make a good calculation in order to determine exactly the right order quantity of shipping cartons and packaging materials. The better, more individual and environmentally friendly the packaging and the more reliable the delivery, the higher the customer satisfaction and customer loyalty. While improvements can still be made in warehousing, there is only a first impression when it comes to delivery to the customer. It is therefore worthwhile to place a test order in your own shop every now and then to see what the customer experience is like.

5 Returns processing

Returns are not uncommon in online retail, but they are commonplace in the fashion business. After all, shoppers order as if they were trying something on in the fitting room. A new outfit for a certain event? Three or four end up in the shopping basket! Which size is the right one? Simply order the garments in two different sizes and see which fits better!
So that customers can better estimate the fit, it helps to indicate the corresponding measurements in the online shop. Another idea is to ask customers who have ordered about the fit: Was the garment as expected? Rather smaller or rather larger? This uses the community to improve the ordering process for everyone.
In general, it should be possible to process returns quickly: It should be possible to create the return slip quickly or it should be enclosed with the delivery. It is helpful to offer several options. Then the customer can decide for himself whether the package should be picked up or sent to the parcel service.

6 Communication

Once the range of goods and the target group have been determined, it is important to find out where the potential buyers can be reached. Especially if the own brand is still unknown. Do you communicate on social media channels? Does Instagram shopping make sense? Is it worth developing an app? Is the target group reached with online magazines? On your own blog? Or rather in print products?
With the right communication strategy and appropriate (online) marketing measures, your fashion store will reach the target group and boost sales.

Selling fashion online – planning is everything!

In order to run your own online shop for fashion items, planning in advance is crucial. In addition to online solutions used, it must be clearly worked out which fashion is available online for which target group. The strategy, along with the storage method and the shipping method, is crucial to the success of the business. This is because storage and delivery are major cost factors in online retailing that determine profit.