Showcasing the biggest opportunities and threats in 2020, the recently published Shopify Fashion Industry Report is a must-read for any online apparel brand with big ambitions. As the e-commerce platform of choice for thousands of online clothing brands, Shopify’s used its wealth of knowledge to deliver plenty of great insights and recommendations.
Here is a quick summary of the report:
4 Big Opportunities
Buying More than Ever Before
Shoppers just can’t get enough clothes and shoes. Experts are predicting that the e-commerce segment of fashion and apparel will grow at a compound rate of 10.6% and reach a whopping USD 713 billion in sales by 2022. The Asia-Pacific region will be especially good for online retailers as it will most likely make up 38% of market demand in 2020.
Retailers will increasingly drive growth with machine learning, AI and e-commerce automation tools. This strategy will allow online brands to offer highly relevant and personalized customer experiences.
“Fit” technology, virtual fitting rooms, and AI-powered virtual shopping assistants will become popular aspects of online websites. While in the offline world, voice-powered shopping, visual search and smart speakers will offer brands intimate touchpoints with customers throughout the store.
Shopping directly off the social media pages of influencers and celebrities will soon become the norm. This is a huge opportunity for online brands, particularly small to medium businesses who have limited budgets and resources.
Sustainability is Good
The landmark G7 Fashion Pact of August 2019 highlights fashion’s role in reducing climate change. Already, many brands like H&M and Levi’s have “take-back” programs, which are not only reducing their carbon footprint in an impactful way but also generating net-new customers and increasing retention.
3 Possible Threats
Declining barriers to entry and the death of brand loyalty are making the apparel industry ultra-competitive and very complicated to navigate. More than ever, brands must be agile and prioritize customer needs, like aligning with causes or collaborating with respected influencers or developing unique online/offline experiences.
Big Boys Keep Growing
Amazon and e-Bay will soon account for 50% of all e-commerce sales with nearly 55% of all product searches starting on Amazon alone. Online companies must therefore seriously consider using Amazon and e-Bay as highly discoverable entry points in an omnichannel e-commerce strategy.
Fashion and apparel brands must also contend with another threat that hurts margins: online return rates, which are as high as 50% in some sectors. Even if more conservative estimates are accurate—30% of all online purchases are returned—forward-thinking leaders must aggressively work to reverse this trend.
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