The State of Online Fashion Part I: How has online Fashion developed and what drives its growth in 2021?

This article is Part I of a three-part series 'The State of Online Fashion in 2021'.

Fashion is the biggest product category in e-commerce. Its shoppers buy far more than in any other product category. And as a result, Fashion’s growth sets the pace of e-commerce and often holds up overall development. But it is, due to its selective nature, also highly vulnerable. And the impact of seasonality leaves Fashion all the more exposed. Add to that a global pandemic and the vulnerability of Fashion’s immensely important position within e-commerce becomes even clearer – a relevance that we already describe in our analysis of online Fashion in June ’20.

And now, AfterPay Insights is back with new analyses on the biggest product category of all. In a brand-new three-part series 'The State of Online Fashion in 2021' we will not only discuss the effects of the pandemic on Fashion purchases in the Netherlands, Germany and Norway, but also look at the development of Fashion over the past eighteen months, sketch a profile of the Fashion Shopper as well as their demands and expectations of the online shopping experience.

In this first part of the series we will take a closer look at how Fashion has developed over the past eighteen months in the Netherlands, Germany and Norway. Which forces drive developments and sustainable growth? How does growth in 2021 compare to 2020? Does Fashion manage to attract new shoppers? And what does the shift to online look like? Read on to find out.

Online Fashion purchases are driven by a growing customer base and increased purchase frequency

A key force behind the growth and development of online Fashion in the past twelve months is that the online Fashion Shopper base has increased: more consumers buy Fashion online. But that is not the only growth driver, as consumers have also started buying Fashion more often. These two forces, i.e. increased market penetration and shopping frequency, are both likely direct results of the global pandemic. Both vary in level of impact throughout the year but have a similar effect on online purchase numbers. These developments are a continuation of the trends we saw developing in September ’20.

When identifying longer term trends, we currently see online Fashion penetration increasing while purchase frequency actually decreases. If this trend, that we will keep tracking, continues we can expect the expanding customer base to be a key driver for the stable growth of online Fashion in the years to come. With that also comes the expectation that the number of Fashion purchases will be less volatile and more predictable. We need to note that the impact of the push effects of the pandemic and the pull effects of online Fashion as such are not easily distinguished and monitoring is needed to validate our findings further.

The development of online Fashion in the Netherlands

Online Fashion purchases in the Netherlands were impacted dramatically in March ’20, decreasing by -15%. But Fashion then soared during spring as the number of purchases increased to +70-+80% (compared to pre-corona levels). We see the same development take place during the spring of 2021, indicating a clear seasonality effect, although Fashion volumes are slightly lower than in 2020. This difference may be interpreted as the ‘pandemic impact’ on online Fashion, although it always remains a possibility that the category was also impacted by other developments.



Zooming in to the impact of the pandemic on online Fashion purchases further in the Netherlands, we see two key forces that have impacted Dutch consumers’ online Fashion shopping behavior: increased market penetration and shopping frequency, as also mentioned before. The Dutch online Fashion Shopper base explosively increased from 18% of consumers to almost 30% of consumers in a matter of months. Existing Fashion Shoppers increased their purchase frequency significantly, effectively shifting more and more Fashion purchases from brick-and-mortar stores to online channels. Even though the impact of market penetration and purchase frequency each vary over time, the long-term trend is that an increased penetration of the market leads to more stable growth for online Fashion than an increase in purchase frequency.

The development of online Fashion in Germany

The development of online Fashion in Germany is similar to the development of the category in the Netherlands. The initial shockwaves of the global pandemic impacted consumers’ Fashion shopping behavior negatively in March ’20. But purchase volumes bounced back quickly, reaching new heights in April/May. After that, a seasonal summer dip sets in that transitions into the buildup to peak season and the yearly purchase high in December. Just like in the Netherlands, the effect of summer seasonality in Germany is stronger for Fashion than for other categories.

However, in Germany, online Fashion growth in ’21 is similar to the category’s growth in ’20 – a big difference to what we see happen in the Netherlands. Making online Fashion purchases is still extremely attractive to German consumers, regardless of pandemic restrictions. We can conclude that the (forced) shift to online has had a more lasting effect on German Fashion Shoppers’ behavior than on the Fashion shopping behavior of their Dutch counterparts.

And also, in Germany we see that increased market penetration and shopping frequency drive Fashion’s online growth and development over the past eighteen months. The German online Fashion Shopper base quickly increased from 18% to 25% of consumers. Existing Fashion Shoppers increased their purchase frequency significantly, effectively shifting more and more Fashion purchases from brick-and-mortar stores to online channels. But the long-term trend is that an increased penetration of the market leads to more stable growth for online Fashion than an increase in purchase frequency.

The development of online Fashion in Norway

In Norway, online Fashion has outpaced most other categories. In contrast to the Dutch and German markets, online Fashion was not hit as hard in the beginning of the pandemic. But we see the same similarities in terms of the summer seasonality effect. The growth of online Fashion in Norway is clearly visible during the spring of this year where online purchase volumes were up 75-100% compared to 50-60% in the spring of 2020. At the same time, overall online purchase volumes were at the same level both in the spring of 2020 and 2021.

The key driver for this growth of online Fashion in Norway is a gradual increase of online shopper penetration, which has grown from 14% of consumers in the beginning of the pandemic to 23% in July of this year. As in the Netherlands and Germany the online Fashion purchase frequency has simultaneously declined, but not to the extent to which it has offset purchase volume growth. In our continued monitoring of the Norwegian online market we will analyze the strength of this trend and its impact on future online Fashion volumes.

What is next?

Coming up next is ‘The State of Online Fashion | Part II: Who is the Fashion Shopper and what sets them apart?’. Stay tuned!