Fashion is perhaps the most powerful industry among the retail sectors that touches every life. It’s an industry of three trillion dollar worth of annual sales, about 2% of world GDP. Historically, apparel manufacturing and retailing is a primary phase of industrialisation that brought economic freedom and progress to many countries, creating millions of employment from designing and manufacturing to retail. But have we ever thought how does this complex business run and how has it been evolving in recent times?
Fashion retailing has been a truly dynamic business model all through its journey. Until the sixties, it was mostly operated by boutique stores and the seventies marked the beginning of high street fashion retailing. Then it took a turn in to specialty stores and adopted a low cost low price model mainly through subcontracting.
At times, fashion retailing turned cities into tourist attractions, such a glorious footprint it left! Then gradually we saw the emergence of departmental stores, retail chains, supermarkets/mega malls, budget stores, and so on. In 2010s, the concept of lean retailing and fast fashion gave another blow into the retailing model.
Altogether fashion retailing has so far been overwhelmingly dependent on bricks and mortars stores for running this trillion dollar show. The world is changing fast blessed by technology and networks. With the intervention of internet packed in smart devices lives started radically changing, so does retailing.
Yes it is internet, being online is no more a luxury, it’s a necessity. It is now a habit. Now, what difference does it make for fashion retailing? Warren Buffet, the most respected investment guru betted that: “the brick-and-mortar real estate will hold up better than others in the age of Amazon.” Physical stores are bound to go more expensive over time due to rising cost.
Already, the number of mall goers is alarmingly going down in many cities. Many popular brands are closing down hundreds of stores (nothing to panic), which is being replaced by online sales. So, online is going to be the next big marketplace for fashion retailing in the near future and securing a space, there is the call of the hour.
Are we mindful enough for these changes, or do we even care? Being a major apparel producing country we must take this evolution seriously, not to defend any damage but to proactively pursue opportunities of online era in retailing. This may sound unrealistic or crazy to many, but the fact is Amazon, the giant e-commerce organisation and second largest retailer in the U.S. accordingly to Morgan Stanley, registered $22 billion worth of apparel and accessories retail sales last year and skyrocketed. Amazon has partnered with a number of private labels.
It has launched its own label and web platform “Prime Wardrobe,” that brings options like “fitting room” and “try before you buy,” and a lot of flexibility and independence to the consumers. So what more proof does it require!
How? I will try to explain this in the later part of this reading, but let me first share why should we take online sales seriously -
Fun: With ever increasing popularity of e-commerce, mobile transactions, price competitiveness, flexibility and most of all, convenience, people are radically getting attracted to online shopping. As smart phones are becoming an extremely important and engaging device in our daily life, lifestyle is changing astonishingly.
Consumers can now compare prices across stores, check product reviews and shop 24X7 free of hassle. Online retail giants like Amazon, Alibaba and Ebay are adopting exciting ways to make online shopping fun.
Next marketplace: Global retail sales is forecasted to grow, most of which will come from online sales. In the US, non-store based sales grew by almost twice than store based sales in 2016. So, we have a new universe of opportunities which can be as powerful as to change the entire business model from the producers’ end.
Direct-to-consumer: Online sales could open up opportunities to manufacturers to present their products directly to consumers. This is an opportunity to design own product and selling own label at full price, penetrate more markets especially, new and emerging and also to tap in the local market.
Conscious consumers: Consumers today are more conscious about the products they buy, especially the manufacturing process, working condition and environmental sustainability issues. Online shopping platforms put consumers in a better position to track the transparency of the products whether those are produced in socially and environmentally fair conditions.
Well, there are some downsides as well, given the feature of our industry, for example – the quantity would be small, payment modalities need to be worked out, importation of raw materials under bonded warehouse regime may be difficult, delivery of goods should be faster and product differentiation/innovation would be the key.
So what should the strategy be for Bangladesh to place itself in the online retail regime? What opportunities do we have in online sales domain? How could Bangladesh prepare for taking advantage of it?
There are many more questions like this which requires immediate attention of the policymakers and business leaders. Now, let us find an answer for how to sell your products online.
There are several options to bring the products into the online market. Web-based commerce is the basic platform for online sales. Online sales could be initiated through pre-hosted or self-hosted platforms, or through online marketplaces.
Pre-hosted (or cloud hosted) e-commerce sites like Shopify and Big Commerce are better option for beginners. They have strong customer support services through email, phone and live chat. These platforms are SEO optimised to help increase traffic to the store, ensure secured payment and customer data privacy. Most of such hosted platform offers mobile app and credit card reader.
On the other hand, the self-hosted e-commerce comes through own website showcasing all products and product information. Here, the business rules are set by the company like colouring the walls of one’s own home. However, this is more expensive and requires CMS skills. So, this is ideally not a suitable option for the beginners.
Selling through online marketplaces is also amazing as Amazon, E-Bay, Etsy, ASOS, and others are bringing more opportunities for sellers and emerging brands. They sell worldwide, endorses authenticity and credibility.
‘By the locals for the locals’ can be a great slogan for your products to retail locally. Online retail in Bangladesh has also generated significant momentum though mostly done through social media platforms. The local market is already equipped with massive internet penetration, use of smart devices and mobile transaction like BKash. Cash on Delivery (COD) is the most popular payment option in Bangladesh.
While Bangladesh is pursuing a robust growth vision, value addition and creating own brand identity is crucial. So it is the high time to make aggressive efforts to go beyond OEM (or commonly known as CMT - cut, make & trims) to ODM and the online retailing can be a modest start. Bangladesh has already taken a great leap forward in delivering fast fashion requirements. We have to either think differently or die.
It’s our turn, let’s take a call.