Internet retailing has arguably become a do-or-die strategy for apparel and footwear companies across the world. The world’s largest apparel and footwear markets of China and the US both lead in terms of online fashion consumption. While the US maintained its lead, generating a grand total of 37 billion dollars in 2013, China has scaled the rankings at a striking pace, leapfrogging from being the 19th largest online market in 2008 to the second in 2013. China plays catch up with the US in online fashion retailing. But, while China is closing the gap in terms of internet retailing penetration, consumer motivations and expectations of the online channel remain significantly different to in the US, throwing up differing opportunities and challenges for international brands and retailers.
Bargain hunting as the key factor in China
In China, price savings remain a big pull factor for the online channel, with many e-tailers offering discounts and other promotions. Consumers typically expect prices online to be lower than in stores. Sluggish domestic economic conditions and subsequent heightened price-sensitivity towards apparel purchasing have reinforced the value proposition of the online channel. China’s annual “Single’s Day” has become an online discounting bonanza. In 2013, Alibaba Group Holding Ltd, which operates China’s largest online platforms, Taobao and Tmall, achieved sales of 5.8 dollars billion on this one day as both local and international brands offered heavy promotions.
Omni-channel takes precedence in the US
Bargain hunting is still an attractive part of online shopping for US consumers. This is highlighted by the huge popularity of Cyber Monday, the Monday after Thanksgiving, which has become a phenomenon with retailers offering heavy discounts and promotions. According to Adobe Digital, Cyber Monday sales hit a new high in 2013, growing by 16 on 2012 to reach 2.3 billion dollars. However, the obsession with bargain hunting is not as pronounced as in emerging markets like China, with the convenience factor taking precedence. As such, the key strategy has not been to be online for the sake of it, but to rather target the omni-channel consumer, who uses a mix of store-based, mobile and desktop channels to make purchases. This explains why even pure-play online retailers like Bonobos and Nasty Gal are expanding into the physical realm.
Social media is integral
An important aspect that unites both Chinese and American online shoppers is their social media fixation. In China, leading local sites like microblogging platform Sina Weibo and WeChat have become important tools for international brands and retailers to test their market potential and build brand awareness. According to the 2013 Euromonitor International Global Trends Survey, 40 percent of Chinese respondents participated in microblogging almost every day, compared to just 12 percent of US respondents. In the US, Instagram has become a fashion industry favourite due to its inherently visual nature. Brands are now trying to monetise the platform. Affordable luxury label Michael Kors released the first Instagram advertisement in late 2013, while apps like LIKEtoKNOW.IT let users purchase products featured on Instagram images from key influencers.
The online revolution continues
Both China and the US are also set to be the greatest beneficiaries of apparel and footwear internet retailing over 2013-2018, reinforcing their lead over other countries. In both these markets, the channel will be creating new sales rather than cannibalising sales from other channels. More importantly, while China is set to overtake the US to become the world’s largest apparel and footwear market in 2017, the US will continue to lead in terms of sales from the online channel. This highlights the fact that internet retailing is still an area of exploration and innovation, providing a strong avenue for growth in mature markets as much as developing ones.