Why E-Commerce Is Important For Your Business
The past several years has been a disruptive, yet exciting time for industries everywhere. This has been particularly true for the fashion industry.
From digital innovations, technological advancements, and rising globalization, the fashion industry has witnessed quite a dramatic change amongst the many industries affected. Furthermore, with the mass adoption of the Internet in the past decade, one thing that has truly revolutionized the way companies and consumers are doing business has been e-commerce.
Consumers have never had as much purchasing power as now. We live in an era where people can buy almost anything at the tap of a finger, 24 hours a day, and receive their products quickly.
In this change, countless businesses have had to adapt accordingly, shifting the old way of doing things and keep up with the new speed. The more retail continues to evolve, the more ‘spoiled’ the demand of consumers become and the deeper they seek to connect with the brands they buy from.
Now, more than ever, it is less about the product alone, but more about the relationship built between the consumer and the company.
Looking into the stats of the e-commerce fashion industry
Regardless of how you want to look at it, there is no denying how much the e-commerce fashion industry has grown. Looking at the industry-wide data alone, we see that there are expectations for the worldwide revenue to rise from $481.2 billion in 2018 to $712.9 billion by 2022. With a low barrier of entry to start a business, from platforms like Shopify and WooCommerce, it is easier than ever before to create your own business. For this reason, total worldwide e-commerce sales are expected to reach $3.3 trillion in 2019 alone.
- Clothing and Apparel – Overall, e-commerce clothing and apparel has been on the rise, going from $317 billion USD in worldwide revenue in 2018, an forecasted to reach $475 billion USD. However, unlike the other segments of e-commerce fashion, the annual growth rate is slowing, going from 15.3% in 2018 to an expected 7.6% by 2022.
- Shoes – According to data from Statista, shoes show an even smaller revenue expansion year-over-year. Although the segment is expected to increase from $96 billion in 2018 to $135 billion in 2022, it is forecasted to only grow by 6.6% in 2022.
- Accessories and Bags – Seeing the growth of 15.6% in 2018, this segment is expected to drop to 8.7% by 2022. However, even though accessories and bags contain numbers compared to the other segments, it is considered to be one of the healthiest in terms of e-commerce fashion.
- Jewelry and Luxury – This segment is expected to see a huge increase due to the rising wealth of Asia-Pacific, the Middle East, and Africa. Although 4-5% of total jewelry sales make up e-commerce space, this is likely to change to 10-15% by 2020.
Drivers of growth
There are plenty of reasons why e-commerce has continued to grow and brought about change in the fashion industry. There has been a definite shift in consumer spending habits, and in this way, established brands are forced to find ways to innovate and keep up. Among some of the drivers of growth for e-commerce, the following are just some of the major ones to take note of:
- A rise in technology – From artificial intelligence to AR/VR, there are so many ways technology is affecting how we shop. There are already several retailers hopping onto augmented reality to change the way consumers can find, purchase, and talk about their product. Moreover, many fashion retailers are realizing that their old methods are not improving sales. Thus, to stay ahead of the competition, more and more fashion retailers are looking to artificial intelligence to help predict demand.
- The expansion of global markets – From the economic boom of China to the cultural prevalence of Korean pop, there is no denying that Asia has been on the rise. Currently, South East Asia continue to bloom and every year, there are more opportunities than ever before to build and create something. On top of that, Africa has begun to show a lot of promise, with its collective GDP now being on par with Russia or Brasil.
- The emergence of worldwide middle-classes – Due to the rising political and economic power of emerging markets, the overall worldwide middle-class has also grown. As an OECD report states, “A number of developing countries have become centers of strong growth, raising their shares of global income significantly, which has made them major players in regional and global affairs.”
- Increasing smartphone penetration – The cost of smartphones has drastically decreased compared to ten years ago. And with the aforementioned rise of the middle-class, as well as expanding global markets, the number of consumers that can shop online is continuously growing. According to reports, there are currently 5.11 billion unique mobile users in the world today, a 2% increase from the past year. On top of that, there are now 4.39 billion internet users in 2019, a 9 percent increase from January 2018. This number will only continue to increase, leaving room for more opportunity.
The trends and strategies
As e-commerce sees no sign of stopping and technology continues to develop, there are several key changes that may further affect the way e-commerce evolves. Some of the below trends can help you get a better idea of what to expect.
- Personalization – The more data companies are able to get on their consumers, the closer they can get to personalizing what is right for you. Product recommendations are already something that has grown big since Amazon entered the e-commerce space. However, as technology democratizes more and more, plus AI becomes normalized, personalization in e-commerce is a thing of the near future.
- Social media commerce – Social media governs a lot of the way we shop. Unlike previous generations, we don’t aimlessly buy whatever is out there, but instead, go on many platforms to see whether that product has social proof (testimonials or star-reviews). Furthermore, social media determines the way things trend, thus being a large driving force to the fashion market.
- Omni-channel approach – One of the ways social is truly changing the way every fashion industry and business is moving forward is the integration of multi-channels. Retailers cannot rely on simply selling from physical stores anymore. It is because of this, a lot of big brands have fallen prey to the retail apocalypse. Now, a brand must expand its reach in a multitude of channels.
- Technological takeover – As previously mentioned, technology has a huge effect on the way e-commerce is being shaped. Although it has already affected a lot, we are only at the start of the vast changes to come. We will begin to see the normalization of chatbots all across e-commerce stores, and any shop that isn’t implementing will seriously lag behind. In addition, we will be able to take virtual tours of stores and try on our own clothes with the use of AR before purchase.
- Wearables – While a lot of the clothes we wear may not do much, that is going to change quite a lot in the oncoming years, as wearables become mainstream. Even now, we see smartwatches steadily seen on the wrists of more and more people. Soon enough, there will be earrings that can monitor your heart rate and with the Internet of Things, everything we wear will be connected somehow, someway.
Why e-commerce is so advantageous
The sheer ease and convenience that e-commerce offers make it a no-brainer for why it has taken over the way consumers buy and sell. Not only that, it helps in increasing sales and learning more about the customers from a business standpoint. E-commerce offers an array of data right at your fingertips, which ultimately help both the customer and business thrive.
For the customer
- Convenience – Purchasing options are quick and convenient. You can pay for almost anything with a credit card these days, and if not use services like Paypal to make a swift transaction. Consumers save time and money by purchasing online, rather than going out into a physical store.
- Better information – There is a treasure trove of information out there these days. From other people’s reviews to videos on people trying ou the product, consumers can now do their own research to find all the details of their desired item before buying.
- Competitive pricing – Since a business owner does not have to maintain a physical store, there are a lot of costs saved on the business end. For that reason, an e-commerce store offers lowered costs compared to what you may get at a physical retailer.
For the business
- Global reach – Since the Internet can be accessed anywhere and everywhere, this gives businesses the opportunity to reach customers from all over. With the right amount of market research and data analytics, brands can grab markets that they would’ve never imagined they could get. There are no more barriers.
- Better customer service – Chatbots and instant messaging have allowed businesses to respond to their customer inquiries immediately. This allows for better communication, and in turn satisfaction. It also provides faster insight into the pain points a consumer may be experiencing.
- Targeted marketing – With the right data-driven approach, you can now understand your consumers in every way, from how they found your website to what pages/products were viewed the most. This helps to target advertisements and promotions much more effectively. Furthermore, predictive solutions help to give businesses faster insights into when to replenish what product.