Global market review of online apparel retailing â€“ forecasts to

Global market review of onlineapparel retailing – forecasts to 2014

2008 edition

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Global market review of online apparel retailing – forecasts to 2014 2008 edition

July 2008

By Frank Pendle and Renata Stiles

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Page iv Contents

Contents

Single-user licence edition ............................................................................................................ ii Copyright statement.................................................................................................................. ii Incredible ROI for your budget – single and multi-user licences .............................................. ii just-style.com membership .......................................................................................................iii

Contents.......................................................................................................................................... iv

List of figures ................................................................................................................................ vii

List of tables................................................................................................................................. viii

Executive summary ........................................................................................................................ 1 The global landscape of retail ................................................................................................... 4

The US ............................................................................................................................. 4 Europe.............................................................................................................................. 5 The UK ............................................................................................................................. 5

Chapter 1 Main players................................................................................................................... 7 Selected US players ................................................................................................................. 7

Gap................................................................................................................................... 7 Victoria’s Secret................................................................................................................ 9 Abercrombie & Fitch......................................................................................................... 9 AE.com........................................................................................................................... 10 Guess ............................................................................................................................. 10

UK and European players....................................................................................................... 12 Next ................................................................................................................................ 12 Dorothy Perkins .............................................................................................................. 12

Case studies ........................................................................................................................... 13 Success Apparel............................................................................................................. 13

Small business retail success online ...................................................................................... 13 Realityplus Clothing: an online success story......................................................................... 14

Chapter 2 How the retail market fits with an online strategy.................................................... 16

Chapter 3 Advantages of online selling...................................................................................... 19 Switched online approach....................................................................................................... 20 Creating a virtual atmosphere................................................................................................. 21 Complimentary add-ons.......................................................................................................... 21 Privacy .................................................................................................................................... 21 Minimal set-up costs ............................................................................................................... 22 Niche markets ......................................................................................................................... 22

Chapter 4 The difficulties and considerations of online selling............................................... 23 Personal information exchange .............................................................................................. 24


Page iv Contents

Consumer loyalty .................................................................................................................... 24 Customer acquisition costs ..................................................................................................... 25 Small purchases ..................................................................................................................... 25 Online returns policies ............................................................................................................ 25 Possible solutions to improving online difficulties ................................................................... 25

Chapter 5 Market trends, 2006-2014............................................................................................ 28 Online apparel sales in the US ............................................................................................... 29 Online apparel sales in Europe............................................................................................... 30 Online apparel sales in the UK ............................................................................................... 30 Overall consumption trends .................................................................................................... 31 Overall selling trends .............................................................................................................. 31 Women’s wear ........................................................................................................................ 32

Women’s wear: accessories........................................................................................... 32 Women’s wear: jeans ..................................................................................................... 32 Women’s wear: general apparel..................................................................................... 33 Women’s wear: sub-segments ....................................................................................... 33 Women’s wear: T-shirts.................................................................................................. 34 Women’s wear: dresses ................................................................................................. 35 Women’s wear: plus-size apparel .................................................................................. 35 Women’s wear: uniforms................................................................................................ 36 Women’s wear: the UK................................................................................................... 37 Women’s wear: niche markets ....................................................................................... 37 Women’s wear: intimate apparel .................................................................................... 37 Women’s wear: specialty................................................................................................ 38

Men’s wear.............................................................................................................................. 39 Men’s wear: market ........................................................................................................ 39 Men’s wear: formal wear ................................................................................................ 40 Men’s wear: T-shirts ....................................................................................................... 40 Men’s wear: jeans and pants.......................................................................................... 41 Men’s wear: underwear .................................................................................................. 41

Children’s wear ....................................................................................................................... 41 Children’s wear: infants and toddlers ............................................................................. 43 Children’s wear: teens.................................................................................................... 43 Children’s wear: market.................................................................................................. 44 Children’s wear: segments ............................................................................................. 44 Children’s wear: luxury ................................................................................................... 45 Children’s wear: the UK.................................................................................................. 45

Chapter 6 Considerations for retailing apparel online .............................................................. 47 Repeat buyer versus new buyer ............................................................................................. 47 Consumer restrictions ............................................................................................................. 48 Shopping longevity.................................................................................................................. 48 Time of visit............................................................................................................................. 49

Chapter 7 Online apparel sales challenges................................................................................ 50 Fulfilment returns .................................................................................................................... 50 The integration of systems...................................................................................................... 51 Consumer control.................................................................................................................... 51


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Diversifying operations............................................................................................................ 51 Customer service .................................................................................................................... 52 Outsourcing............................................................................................................................. 52 Poor fulfilment costs................................................................................................................ 52 E-fulfilment .............................................................................................................................. 53 Sizing issues ........................................................................................................................... 53 Technology ............................................................................................................................. 54 Customer sizing – measurements .......................................................................................... 54 Customer sizing – body scanning ........................................................................................... 54 Customer sizing – the virtual consumer.................................................................................. 54 Large number of stock-keeping units (SKUs) ......................................................................... 55 Outsourcing inventory management ....................................................................................... 56

Chapter 8 Legislation ................................................................................................................... 57 Trade advantages ................................................................................................................... 58

Chapter 9 The future..................................................................................................................... 60

Chapter 10 Conclusion................................................................................................................. 62


Page vii List of figures

List of figures

Figure 1: US internet usage profile 2007 (% reporting type of use)................................................ 19

Figure 2: Barriers to online apparel shopping in 2007 (%).............................................................. 24


Page viii List of tables

List of tables

Table 1: Top online apparel destinations, week ending 28 June 2008 ........................................... 17

Table 2: Global conversion rate 2007 (% per sector) ..................................................................... 18

Table 3: US online apparel sales 2006-2014 (US$bn) ................................................................... 30

Table 4: European Union apparel sales (online and total) 2006-2014 (US$bn and %) .................. 30

Table 5: Global women's apparel sales (online and total) 2006-2014 (US$bn and %) .................. 33

Table 6: Global women's apparel 2007 online sales by segment (US$bn and % change) ............ 34

Table 7: Year-on-year change in dress sales by wearer size (%) .................................................. 35

Table 8: European Union men’s apparel sales (online and total) 2006-2014 (US$bn and %) ....... 39

Table 9: Hot global online apparel sales by category, year over year change, 2005-2007 (%) ..... 40

Table 10: US online men's jeans and pants sales 2006-2014 (US$m) .......................................... 41

Table 11: US online children’s apparel sales 2006-2014 (m’s units and %)................................... 43

Table 12: Global children’s apparel sales (online and total) 2006-2014 (US$bn)........................... 43


Executive summary

Executive summary

Worldwide, the internet is having a huge impact on consumers and business

alike, in terms of interaction, ease of use and increased profitability. E-

commerce, or e-retailing, is steadily growing along with consumer internet

usage. As more people begin to gain broadband access and technology

advances, customer and business interactions expand and flourish to

unforeseen heights.

While the internet as we know it began to be established in the 1960s, it was

not until the late 1990s that business to consumer e-commerce began, right

around the time that the dotcom boom occurred. As the internet evolved and

more applications became available with the advancement of Web 2.0

technology, so did business and consumer knowledge. This saw personal

internet use grow to XXXbn people during 2008, according to Internet World

Statistics’ 2008 report Internet Usage Statistics: The Internet Big Picture.

Gone are the days when consumers had to spend hours pounding the

pavement or ducking in and out of stores in malls, using vast amounts of

energy and feeling exhausted without much success. For shoppers globally,

shopping has become that much easier. Not only are consumers able to find

what they are wishing to buy quicker; they also are looking to shop with their

fingers poised over the mouse of their computer rather than wasting expensive

fuel travelling long distances and tiring themselves out.

Businesses are becoming all too well aware of this growing trend among

consumers and looking to take their business initiatives and profits to all new

levels. Besides offering significant advantages to consumers, cyberspace has

commercial advantages as well: it allows much larger inventory breadth

through the ‘long-tail’ consumer theory; it offers cost savings in physical

infrastructure and overhead; and perhaps most importantly, it potentially offers

a global consumer base to almost any size of business.

In 2007, total online sales were estimated to be US$XXXbn and have a growth

rate of approximately XX%, with apparel accounting for US$XXXXbn of sales. In

fact, during the third quarter of 2006, online apparel sales grew by XX%

compared with the same quarter in 2005. At this time, department stores


Executive summary

accounted for XX% of the online apparel market and speciality stores XX%,

with other merchandise online retailers, such as Amazon.com and eBay

accounting for the remainder.

According to Shop.org’s 11th annual study (published 2007) on the state of

online retailing, online apparel sales in the US had grown to US$XXXXbn and

online sales overall had risen by XX%. In previous years where computers had

been the highest selling item, apparel stepped in. Apparel sales in 2008 are

estimated to be US$XXXbn more than computer sales, with these sales

reaching US$XXXXbn, and vehicles coming in third place with US$XXXXbn in

sales. Shop.org also reports that overall online sales are expected to escalate

beyond US$XXXbn by the year 2014.

The apparel industry worldwide has three distinct divisions, these being:

○

○

○

designers – also known as jobbers because they are at the forefront of

apparel conceptual development, and often purchase fabrics and other

materials before sourcing out to a manufacturer for their products;

manufacturers – these are companies employed by designers to

mass-produce the prototypes they have developed, using the

designers’ fabrics and samples; and

retailers – retail outlets such as shops and factory outlets, online sales

merchants or mail-order catalogue marketers that sell the designer’s

products to consumers.

Past internet sales and rapid growth have been attributed to the overall

escalation in the number of internet users globally, and strong internet-based

selling mechanisms that utilise multi-channel marketing.

Online apparel retailers and speciality stores have seen a marked growth in

business over the last couple of years. In a study conducted by Wilkes

University in 2007, it was revealed that specialty store sites, in particular, have

fared well and their market share has increased by over three points, while,

comparatively, department stores have only risen a single point. Discount

stores, on the other hand, have fallen a point, and catalogue sites lost

approximately two share points. However, 2007 sales were reportedly

‘sluggish’ and this is thought to be attributed to price rises and what many refer

to as a ‘tough winter’. 2008 is expected to fare no better, with generally

sluggish economies in the United States and EU.


Executive summary

Melissa Payner, president and CEO of Bluefly.com, an online speciality store

that sells designer wear and accessories says: “They [physical stores]

recognised that traditional outlet stores selling off-price designer apparel were

not offering the type of shopping experience consumers have come to expect.

The solution was clearly the internet, a significant untapped source for retailing

off-price merchandise apparel and home furnishings. We’ve been extremely

successful, with revenues growing significantly every year, as new customers

discover the site.”

Furthermore, when Payner was asked about whether or not she was confident

using the internet to expand Bluefly’s business, she says: “Absolutely. We

have seen the growth and potential and feel confident that online retail is the

best source for shopping. The bottom line is it expands your options. You have

at your fingertips an unlimited amount of choices so you can find your style at

competitive prices.”

The reasoning behind this growth is attributed to a number of factors:

○

○

New buyers driving sales: Research data suggests that sales growth

in the online apparel sector has been driven by an increase in the

number of buyers over the last 12 months, with XX% of all apparel

sites displaying double-digit percentage increases in their buyer

bases.

Consumer loyalty online: Without a doubt consumers prefer to buy

from brands they know and trust rather than test out unknown

quantities and qualities. However, discount stores and other

competitively priced outlets and the fact that the internet allows

shoppers to research before buying means that this loyalty is often

tested. Internet Retailer reports that consumers displayed loyalty to

online specialty stores in the third quarter of 2007, with XX%

purchasing from only this category. This suggests that online discount

stores are eroding sales, as the value of orders is decreasing by XX

XX%.

This emerging trend highlights the fact that consumers are looking beyond the

speciality retailer and purchasing from more than one online category. It is also

apparent that the specialty market is witnessing the lowest decrease in

customer loyalty, compared to other categories. For example, discount

retailers’ loyalty rates decreased from XX% in the third quarter of 2005 to XX%


Executive summary

in the third quarter of 2006. Therefore, out of all online retailing categories,

specialty is displaying the highest rate of consumer loyalty.

Payner is all too well aware that her company competes with other markets.

She also knows the value of her market segment, as she said in an interview

with just-style.com: “It’s always a fight for market share. But again, very few, if

any, retailers offer the value proposition we’re able to offer. Our merchandise

is in-season, on-trend and offered at a significant value. Our customers are

extremely savvy and have done their homework – they know what sets us

apart and seek us out accordingly. They’re also fiercely loyal because we

prove ourselves to them over and over again.”

In order of consumer preference, the main growth drivers online in the apparel

industry are said to be specialty, manufacturer, and catalogue and pure play

sites.

The global landscape of retail

The US The US has witnessed major changes over the last ten years. Sources such as

the Clothing & Textiles Research Journal attribute this to consumer spending

and a saturated market, along with angst amongst businesses and consumers

alike. In an effort to improve marketing competence the apparel industry

sought to use the internet in the year 2000 so as to provide consumers with

easily-accessed product information. It would also provide an opportune

purchasing platform, as well as build brand awareness and value.

Realityplus, a plus-size clothing company owned by Beth Ann Herrin, is at the

forefront of online retail sales in the US. Herrin says: “The company was

originally set up to be internet-only. My focus was to reach the plus-size

customer in more remote geographic locations that did not have easy access

to large malls and specialty stores. It seems like the further you get from a

large city, the fewer choices you have (especially in professional apparel). In

the process, I was encouraged to open a local store, and found an ideal

situation a few miles from home with fair lease term. After about four months

with both, I find that the internet ‘trumps’ the store. We are reaching customers

from all over the country on the internet. Literally from California to Vermont

and all points in between! While the store (which doubles as a design studio) is


Executive summary

nice to have, I am not sure we will maintain it. It’s what I mentioned above, in

start-up you strategise, execute and review. In review, the store just doesn’t

generate the potential of the web.”

Several industry sources agree that internet clothing purchases significantly

increased from 2003 to 2008, and that apparel had become the most sought-

after item on the internet during this period. Furthermore, niche markets such

as petite and big and tall sizes were thought to add to this market segment’s

increased popularity because these markets were often not available in

mainstream clothing stores offline.

Europe Most European countries have been witnessing a decline in apparel

purchasing relative to total disposable income since the 1980s, as information

technology and recreational pursuits vie for consumer dollars. Despite this, the

European apparel industry is still viewed as an innovative and creative leader

in a fiercely competitive global market, and is one of the region’s largest

industrial divisions, which had an estimated value of EURXXbn in 2007, and

over XXXm employees.

The CBI Market Information Database confirms that outerwear purchases in

Europe grew by XXX% over 2002-2006, and it is estimated that XXX% of this

growth occurred during 2005-2006. Overall, the outerwear market totalled

EURXXXbn in 2006 and is said to make up XX% of all clothing purchases

made. This figure is expected to reach EURXXXbn in 2008 and EURXXXXXbn

by 2010.

The UK The UK represents the second-largest apparel market in Europe with

consumers in this region spending approximately EUR800 per capita, with

outerwear sales growing by XXX% in 2005 and XXX% in 2006 to EURXXXXbn.

Textrends, in its 2008 Outlook for Supply and Demand, states that outerwear

volume also grew by as much as XXX% in 2005 and XXX% in 2006. This can be

attributed to a decrease in prices by as much as XXXX% in 2005 and XXXX% in

2006. 2008’s outerwear demand is estimated to increase XXXX% compared to

2007.

Overall, consumer spending in the UK is said to be driven by strong fashion

trends, an appeal for designer labels and the vast range available in different


Executive summary

sizes and fittings. It is also thought that declining national production has been

replaced by more affordable imported goods and this competitive pricing

structure in turn has increased the market dominance of discount retailers and

chain store outlets.


Chapter 1 Main players

Chapter 1 Main players

Specialty stores and brand name manufacturers lead the online apparel

market with discount and other stores having a good share of the consumer

demographic. The most sought after apparel are produced by companies like

Viz, Ralph Lauren Polo, Gildan Active Wear, Hanes for adults, and the Disney

Group, Wal-Mart and Asda for children.

Selected US players

Gap The first Gap store opened in San Francisco in 1969, with customer service

and an easy-to-find, wide range of apparel being the company’s main focuses;

this approach remains with the business today. On the Gap website, Don

Fisher, founder and chairman of the company, is quoted as saying: “I created

Gap with a simple idea: to make it easier to find a pair of jeans. We remain

committed to this basic principle.”

By the 1970s Gap sales had reached US$xm and this prompted the opening

of the company’s second store in San Jose, California.

The 1980s were informative years in the company’s development, with Gap

purchasing Banana Republic in 1983, and also opening the first Gap Kids

store in San Mateo, California in 1986. By 1988, the company had started its

global expansion with its first international store opening in London, UK, which

took the company’s annual apparel sales revenue to US$xbn. By 1992, Gap

was arguably, as it touted itself to be, the second-largest selling apparel brand

in the world.

Both the BabyGap and Old Navy brands were launched in the 1990s, and the

Banana Republic and Old Navy brands each reached sales of over US$xbn

late in that decade, with Old Navy breaking retail sales records due to its short

history and rapidly-growing revenue base.

1997 saw Gap become net savvy with the launch of its first website, gap.com,

which was followed by BananaRepublic.com in 1999. By the year 2000, Old


Chapter 2 How the retail market fits with an online strategy

Chapter 2 How the retail market fits with an online strategy

The Retail Bulletin, which holds regular retail marketing conferences led by

industry experts in the UK, feels that the current economic climate represents

many challenges for bricks-and-mortar retailers, especially with an increase in

competition, rising rents and the rise of online consumer spending. Hence,

offline retail outlets need to find innovative ways to build consumer brand

awareness and loyalty, add value to any shopping experience, and really

connect with their customers on their level. Overall, The Retail Bulletin

suggests that retailers be vigilant in their efforts on- and offline and continually

change and incorporate their strategies to suit the current market; this means

being up-to-date with technology and innovative in its use, so that retailers

build strong brand credibility and recognition.

According to an annual survey conducted by Shop.org in conjunction with

Forrester Research in 2007, US consumers’ online purchases grew by xx% in

2006 and of the overall sales figure, apparel purchases were said to have

escalated by xx%. But in comparison, the second half of 2007 proved to be

‘sluggish’, with a much lower but still respectable xx% growth. This then

highlights the need for retailers to adopt varied marketing techniques and

tactics. If they hope to capture consumer interest and have high conversion

rates, online apparel vendors must constantly evolve to continually increase

profits both on-and-offline.

Nielsen//NetRatings data suggest that woman gravitate to online shopping

sites, particularly apparel. For example, heavy traffic was noted at websites for

retailers such as Coldwater Creek, Blair and Lane Bryant, all women’s

specialty apparel retailers. Furthermore, it was noted that top apparel sites

recorded over xxxxxxx hits in 2007 and Old Navy, Gap and Victoria’s Secret

were registered as the most popular.


Chapter 3 Advantages of online selling

Chapter 3 Advantages of online selling

With the internet continuing to be one of the most used resources worldwide,

with over xxxbn users, according to the Internet World Stats website, retailers

are continuing to use it as an additional market for their brands where they can

increase consumer awareness, develop an interactive feel and make the

online shopping experience a personal and enjoyable one, while developing

their brand name and business integrity further.

According to Pew Internet & American Life Project Surveys, xx% of US

citizens have bought a product online; xx% said that they used the internet to

do product-related research in 2000, and by 2007 this number had grown to

over xx%.

Figure 1: US internet usage profile 2007 (% reporting type of use)

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

x%

x% xx% xx% xx% xx% xxx%

E-mail

General information

Internet surf ing

Reading

Hobbies

Product information

Travel information

Work/business

Entertainment/games

Buying

Stock quotes

Job search

Chat rooms

Homew ork

Auctions

Banking

Trading stocks

Source: Stanford University


Chapter 4 The difficulties and considerations of online selling

Chapter 4 The difficulties and considerations of online selling

The internet represents a unique selling medium that does not allow

consumers to use those senses that they are used to using when buying, such

as touch, and this is one of the primary reasons why apparel sales on the

internet are comparatively slow.

According to Shop.org, quoting the United States Department of Commerce,

US$xxxxbn of apparel was sold online in the US in 2007. This is said to

represent less than xx% of all apparel sold in the US, however, and this is

attributed to apparel being sight- and touch-centric. According to Internet

Retailer, consumers need to “see, feel and touch” in order to make accurate

purchases of apparel, because they like to know if the outfit is suited to their

body shape and size before buying. Unfortunately, the online store does not

allow this and it’s therefore of little wonder that the average purchase price for

apparel online stands at just over US$xxx.

According to the NPD Group, some xx% of shoppers were deterred from

purchasing clothing online in 2007 because they could not try the product on.

There are several issues that make it difficult for the online retailer to sell

products:

○

○

○

○

consumers are reluctant to exchange personal information, such as

credit card details, and e-mail addresses with retailers;

consumer loyalty is hard to earn and then retain;

online return policies are often not consumer-centric and deter buyers;

and

the costs associated with customer acquisition are often high and

without guaranteed retention.

These are all factors that contribute to lost online sales revenue, which was

estimated to be over US$xbn per annum in 2007, according to Internet

Retailer.


Chapter 5 Market trends, 2006-2014

Chapter 5 Market trends, 2006-2014

According to Shop.org’s 11th annual study on the state of online retailing, total

online-only sales in all sectors grew by xx% in 2007 to a value of US$xxxbn;

these sales are expected to reach over US$xxxbn in 2008 and escalate

beyond US$xxxbn by 2014. However, weak economic conditions are

expected up until 2010, with strong price competition continuing in the apparel

market, due to low-priced imports increasing in volume. Furthermore,

outerwear consumption is expected to increase only marginally by

approximately xxx%.

The total women’s outerwear market in the UK grew by xxx% during 2002-

2006, according to Textrends.org, and is expected to reach an estimated value

of EURxxxxbn by 2008. This sector is also the largest in Europe and accounts

for approximately xx% of the overall apparel market in the UK. However, a

2007 Confederation of British Industry (CBI) survey of the women’s wear

market, found a smaller growth in value than in volume for online apparel

sales, value growing xxx% and volume xxx%. This suggests that per unit

values are falling, though the general consensus is that this market is less

susceptible to change in trends than men’s wear.

With an annual growth of xxx% in 2007, the online men’s outerwear market is

worth an estimated EURxxxbn; however, the xxx% growth in volume was larger

than sales growth by x% in 2007, suggesting that below-average prices were

prevalent in the market. Most of the outerwear sub-sectors have also displayed

positive growth, with the highest values being in the cotton trouser and

overcoat sectors.

Even though the proportion of children to inhabitants is decreasing, this market

remains strong. The online children’s outerwear market grew by xx% to

EURxxxbn over the period 2002-2007, and this segment’s value is expected to

increase by EURxxxm during 2008. The best-performing sector within this

segment is infant wear, which grew by xx% during the 2002-2007 periods.

Textrends.org reckons that this sector will exhibit further growth of xxx% per

annum up until 2014.


Chapter 6 Considerations for retailing apparel online

Chapter 6 Considerations for retailing apparel online

In relation to e-commerce and the sale of apparel online there are four main

considerations that should be evaluated in order to judge business

performance:

○

○

○

○

the number of visits compared to sales;

company performance history;

companies per sector and segment performance; and

business targets, goals and sales forecasts.

Probably the most important consideration for any online business is its overall

conversion rate, or the number of visits compared to sales. If a business’

conversion rate is poor then profitability will also be poor, and obviously the

more sales made per visits will increase a business’ turnover. The best way of

doing this is to offer the consumer a well-laid out, easily read site that is

compelling and shows merchandise aptly, with relative speed. J William

Gurley, an eminent writer about investments in cyberspace, stated in the 6

March edition of Fortune magazine that “the conversion rate is a single metric

– make that the single metric – that captures all…aspects of a high-quality

website.” Overall, the benchmark for apparel retail indicates that just xxxx% of

all visits result in purchases, according to E-Metric Research Group’s 2007

report entitled Measure Twice, Cut One – Metrics for Online Retailers.

Repeat buyer versus new buyer

Often when consumers have not been to a company website before they will

take their time reviewing who the business is and exploring the website, and

this usually means that they are comparing the value and quality of goods.

However, if this consumer has purchased from a business before it is highly

likely that he is returning to the site to make another purchase, because he has

already carried out comparative research and tested out the business’

services.

Ratings.com states that over the period 2005-2007, buyers who have not

purchased from a company before usually have a conversion rate of less than


Chapter 7 Online apparel sales challenges

Chapter 7 Online apparel sales challenges

Fulfilment returns

One of the major factors governing internet sales and the e-retailer is

fulfilment. In a 2008 survey conducted by Internet Retailer, it was revealed that

e-commerce store owners were considering better methods to manage and

fulfil orders, which meant they reduced their costs and also were able to raise

their postal charges. According to the survey, xxxx% of chain retailers,

cataloguers, web merchants and consumer brand manufacturers taking part in

the survey spend US$x or less to process and ship an order, compared with

xxxx% of retailers participating in a similar Internet Retailer study conducted

two years ago.

Postal and shipping charges were increased by business owners so that they

could cover the time and transportation costs of getting the order to the

consumer. Increasing automation permits many e-commerce owners to make

a larger profit because it takes less time to fulfil orders. Several 2007-2008

surveys, such as the November 2007 Forrester Research work, have found

that around xx% of merchants charged US$x or more to ship an order in 2007.

“More merchants are running a profitable fulfilment department because they

are doing a better job of crunching the numbers and looking for even more

sophisticated methods to improve warehouse management and logistics,”

Brian Neale, senior manager with Sedlak Management Consultants Inc, a

Highland Hills, Ohio retail logistics and distribution planning company, told

Internet Retailer in February 2008: “Web retailers are making money on

shipping because their systems are integrated and they know how to weed out

unnecessary costs and procedures.”

E-commerce, therefore, has invoked a new business to be created – e-

fulfilment, where companies take the hard work out of filling orders and then

shipping them. This innovation is adding to the increased growth of e-

commerce.


Chapter 8 Legislation

Chapter 8 Legislation

Production of apparel and the sale of clothing in the US is maintained and

regulated by government legislation; the main considerations are as follows:

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‘Made in the US’ labels must appear on products, if manufactured in

the country;

if products are environmentally friendly this must also be stated

somewhere on the garment;

all artwork, music or text used in advertisements, and promotional

material for merchandise, must have third-party rights, including

copyrights;

if any product claims are made, these must be made by consumers,

celebrities or experts in the form of testimonials;

all products must adhere to safety codes and display warranties,

disclaimers and warnings if they are considered harmful to the

consumer in any way whatsoever, and this includes packaging;

all rights must be cleared, such as copyright, trademark, First

Amendment, defamation, privacy and publicity;

any graphics, designs and photographs used must display a

trademark and trade address in words;

all logos and slogans, as well as colours used in relation to products,

must adhere to the rights of privacy and publicity; and

comparative advertising and comparative pricing such as ‘sale’, ‘free’

and ‘no sales tax’ must adhere to copyright, defamation and other

privacy and publicity laws, and in no way misrepresent the product.

The US and Europe have sanctions in place that prevent current legislation on

imports and exports, restricting trade, especially when many big brand names

such as Nike and Marks and Spencer use suppliers outside of their country.

John Cheh, CEO of Esquel which employs a workforce of over xxxxxx people

globally, and manufactures over xxm garments for major brands such as Nike,

Marks and Spencer, Abercrombie and Fitch and Hugo Boss, said:

“The situation now is far better than the chaos in 2005 [when the EU re-

imposed quotas on imports of some Chinese textiles and apparel]. After two

years of transition, we shall wait for three months to see the numbers in the


Chapter 9 The future

Chapter 9 The future

The number of internet users is continually growing, and with this comes

business expansion for e-commerce – especially as more consumers become

net savvy and technology gets increasingly more innovative, making the online

shopping experience one that is accurate and enjoyable.

Originally developed by the US government as a way for academic institutions

to correlate research information and share valuable data in the 1980s, the

internet has since blossomed. The world’s population according to Internet

World Stats, a research company that monitors the world population and

internet use, is estimated to be xxxxbn in 2008. Of these over xxxbn people

worldwide now use the internet, or approximately xx% of the world’s total

population. Of this total number of users, North America accounts for

approximately x% or xxxm people, and Europe xx% or approximately xxxm

people. Furthermore, it is estimated that xx% or xxxm North Americans will

use the internet frequently in 2008, compared to xx% or xxxm Europeans.

North America is said to have the highest internet saturation in the world,

followed by Australia and the Oceania region and then Europe.

Statistically speaking, Nielsen//NetRatings estimates that some xxxxxm

Americans, or xxxx% of the total population, had regular access to the internet

as of March 2008. In comparison, xxxx% of UK nationals, xxxx% of all French,

xxxx% of all Germans and xxxx% of all Italians had internet access, also

according to Nielsen//NetRatings data.

In February 2008, Pew Internet & America Life Project Surveys estimated that

xx% had purchased a product online (based on a sample of xxxxx

respondents). This figure is believed to rise above xx% in 2008, as higher fuel

prices and a stagnant economy leverage staying at home and conducting

broader research to find better deals. Broadband use also increased, with over

xxxm US citizens connecting to the internet via this service in 2007, whereas

only xxm used broadband in 2005.

The survey found that xx% of US citizens stated that the internet had

increased their ‘ability to shop’, compared to only xx% in 2001. And xx% of US

internet users shopped several times in a week as they felt that internet


Chapter 10 Conclusion

Chapter 10 Conclusion

Online apparel retailing totals approximately xxx% of the overall clothing

market in the US; however, while this medium may appear small in

comparison to offline sales, it is also important to remember that currently only

xx% of the world’s population has internet access, and that online sales and

marketing is an ever-expanding frontier with the number of internet users

growing daily. Furthermore, the internet offers an exciting ‘new’ platform for

designers, manufacturers and retailers alike, with online merchants now able

to sell apparel lines to consumers worldwide without locality restrictions.

Statistically speaking, consumers are finding the prospect of purchasing online

more attractive, as are businesses in the realm of selling, thanks to innovative

technology such as virtual fit, virtual rooms and inventory and order

management software , which have made buying and selling online easier.

Privacy, the vast range of apparel and virtual stimuli are said to be consumer

draw cards to making online purchases, plus buyers are also able to

comparatively shop and seek out the best price and quality for garments

simply by clicking their mouse, rather than searching endlessly for days offline

without success for that ‘perfect’ item.

Online apparel marketing is young – in fact, it has only really been present

since the year 2000. This means that its overall concept is still in its infancy,

waiting to mature and grow with technology as consumers seek easier, and

more enjoyable alternatives to acquire the goods that they desire.

With an increasing internet population and more people using the home/office

to transact, online apparel marketing is ready to advance. This represents an

excellent opportunity for small businesses, with their being able to have a

global impact with a relatively simple business operation. Large businesses, on

the other hand, can mix and match their physical infrastructure, buying power,

and multinational presence to create powerful synergies for sales

maximisation. Consumers benefit from the convenience, high knowledge level,

and strong supply competition that the medium provides. In all, online apparel

commerce is a true “win-win-win” situation – and the best is yet to come.


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