Fashion is the biggest product category in e-commerce. But it is, due to its selective nature, also highly vulnerable. And with a global pandemic, looming economic crises and brick-and-mortar stores on lockdown, Fashion is all the more exposed. It is no surprise that every industry professional wonders what the impact of the corona outbreak on Fashion really is. What are the drivers of growth? And how satisfied are consumers? What dimensions do Fashion merchants need to navigate in the new e-commerce landscape of today? AfterPay Insights decided to find out.
Since the corona outbreak, AfterPay Insights’ research has indicated that Fashion – while decreasing initially – has increased overall since end of March. Underlying this growth are two key developments. First, we see that online Fashion merchants have succeeded in attracting consumers who previously purchased Fashion offline. A result is that the socio-demographic profile of online Fashion Shoppers has broadened, now also encompassing relatively more males and families with kids, as well as consumers living in city suburbs and mid-sized towns.
Second, existing Fashion Shoppers have started shopping online more, leading to a slight increase in Fashion volume, although these numbers do fluctuate over time.
Our research also shows that Fashion Shoppers conduct twice as many online purchases compared to non-Fashion Shoppers (and half Fashion Shoppers’ purchases are within Fashion).
Fashion merchants are to a large extent responsible for shaping consumers’ expectations of the online e-commerce experience as a whole.
It is commonly known that Fashion is at the forefront of innovation when it comes to digitalization and creating a cutting-edge customer experience. Fashion sets the bar, and this means that consumers who shop in Fashion - specifically ‘heavy fashion shoppers’ - typically are more demanding, also when they shop in other categories than fashion. It is then no surprise that Fashion Shoppers are also less satisfied with Fashion merchants’ performance, in particular with delivery and customer service. And because online shoppers have not been able to use physical channels in their overall purchase journey, the inspirational phase for example has been restricted to online having put even higher demands on webshops to deliver on all aspects in the purchase journey.
The key driver for online Fashion growth is that consumers who previously purchased Fashion offline, have now shifted to also purchasing Fashion online. The share of online shoppers who have purchased in Fashion during a two-week period has grown steadily from 18% to 28% in The Netherlands, from 18% to 25% in Germany and from 14% to 20% in Norway.
However, the average number of Fashion purchases done by Fashion Shoppers has fluctuated more over time. Across all countries and measurement points, Fashion Shoppers have done between 1,3 and 2,2 Fashion purchases during a two-week period. This fluctuation is likely due to different timings, such as timing of summer Fashion sales across the different countries as well as the fact that different countries are easing corona restrictions.
Fashion is the single most important category driving e-commerce purchases as a whole. This is because Fashion Shoppers average about twice as many online purchases over time compared to non-Fashion Shoppers.
Online Fashion Shoppers conduct about 50% of all their online purchases within the Fashion category, and the remaining 50% in other categories. And this pattern is similar across all three countries. This also means that Fashion Shoppers to a large extent form their expectations and demands on merchants from their experiences in the Fashion category.
Looking at Heavy Fashion Shoppers specifically, these conduct around 70% of all their online purchases within Fashion. The corresponding figure among Medium Fashion Shoppers is around 50% and among Light Fashion Shoppers 37%.
Fashion Shoppers are slightly more demanding than non-Fashion Shoppers. A pattern that is consistent across The Netherlands, Germany and Norway is that Fashion shoppers have a significantly higher demand on merchants when it comes to flexible return options. Even though this is not the biggest need (only 15-20% of Fashion Shoppers express this as important), it is overall the 6th most important demand that these shoppers place on merchants.
Fashion shoppers in Germany really differentiate themselves regarding flexible return options, as the difference between ‘all shoppers’ and Fashion shoppers regarding this aspect is quite dramatic.
In Norway, Fashion shoppers do not only demand more flexible return options and more flexible payment options, but they also are more price sensitive looking for lowest price websites to a higher extent than the average online shopper.
Our earlier deep-dive regarding how online shoppers perceive the concept of ‘Security’, being a top demand that consumers place on online merchants, revealed that merchants’ return policy is important for consumers to perceive a website as secure. In light of this, Heavy Fashion Shoppers’ large demands on ‘flexible return options’ becomes an even more important area to focus.
Compared to the average online shopper, Fashion Shoppers are overall significantly more satisfied with the ‘return process’, even though this (as we concluded above) also is the one area where Fashion shoppers have higher expectations. But on the other hand, Fashion shoppers are generally less satisfied with Fashion merchants when it comes to shipping & delivery (incl. fast delivery time) as well as customer service.
In The Netherlands, Fashion shoppers are less satisfied with Fashion merchants ‘shipping & delivery (incl. fast delivery time) compared to the general online shopper satisfaction with this aspect (highlighted in red). But Dutch Fashion shoppers are significantly more satisfied with Fashion merchants’ return process and Heavy/Medium Fashion shoppers are significantly more satisfied with Fashion merchants’ having products in stock (highlighted in green).
German Fashion shoppers rate the satisfaction with their Fashion purchases in the basic same way as Dutch Fashion shoppers, i.e. lower scores compared to the average shopper on shipping and fast delivery (highlighted in red) and a relatively higher satisfaction with the return process (highlighted in green). The difference being that German Fashion shoppers are less satisfied with Fashion merchants’ having products in stock. Also, the general level of Fashion merchant satisfaction is lower among Fashion shoppers in Germany compared to in the Netherlands.
And what stands out in Norway is that Fashion shoppers are relatively more satisfied with the return process (highlighted in green) and at the same time relatively less satisfied with the customer service (highlighted in red). Also, the satisfaction gap between Heavy/medium Fashion shoppers and Light Fashion shoppers is large in Norway, i.e. Light Fashion shoppers in Norway are very satisfied in general – with the exception of the area of customer service.
Without a doubt, we can say that crises like the COVID-19 pandemic lay bare the need for change. Although Fashion is already a progressive industry that continuously evolves and innovates, the global pandemic accelerates digitalization and innovation even faster. But what everyone in the industry really wants to know, is what the longevity of the changes in consumer behavior are. Will growth persist? What will be the lasting impact? Is this really the ‘new normal’?
We see significant changes in consumers’ e-commerce behavior in Fashion over the past months and we can partly connect these to the global pandemic. Still there are other perspectives when looking ahead. First of all, seasonality is a hugely important factor when looking at Fashion. Second, as lockdowns are eased and society opens up, visits to and sales in brick-and-mortar Fashion stores are likely to pick up again. Another result of lighter restrictions will also result in increased travel, a factor that is likely to influence Fashion (e-commerce) as well. A looming economic crisis – and increasing unemployment rates - will potentially erode consumer confidence and lead to cuts on spending. And with Fashion’s discretionary nature, the industry is particularly vulnerable here. Finally, as some consumers change their lifestyle and shift priorities, consumers’ attitudes about their general consumption levels may change.
We will continue our research throughout the summer, so that we can connect the dots between the developments in Fashion over the past months, and abovementioned influential factors. Stay tuned as we will revisit the subject of Fashion in August.
Coming up over the next few weeks are a deep dive into the e-commerce category Groceries, followed closely by Media & Entertainment and Electronics & Telecom. Stay with us for more interesting e-commerce insights!