online apparel boom

38 Pages·2016·6.38 MB·English

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RESEARCH
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RETAILER
BEHIND THE
ONLINE APPAREL
BOOM
There’s an explosion in online sales of apparel. Here
are the financial, operating and marketing statistics
and trends of the 250 leading apparel e-retailers that
are taking all of the growth away from stores.
Sponsored by:
Newgistics | ForeSee | Bronto
CONTENTS
1 The Leaders…3
The Amazon effect….4
Analyzing the Top 250 apparel e-retailers in America…6
The retail chains still dominate online apparel….7
Department stores: The anchor in online apparel…8
Web-only apparel sites are growing faster…9
Toward a new competitive balance—Who’s growing fastest…11
Apparel sites in decline—Failures in pricing…12
2 What Types of Merchandise Sell Best Online…14
Men’s Apparel…15
Outerwear…16
Specialty Apparel…16
Shoes…16
Plus-Size…19
Department Stores…19
3 What Types of Apparel Are Underperforming Online…20
Handbags & Luggage…20
Sleepwear & Lingerie…21
General Apparel…21
4 How Search and Social Marketing Drive Online Apparel Sales…22
Search engine marketing….23
E-Mail marketing….24
Social media marketing…25
5 What Types of Shoppers Drove the Growth in Online Apparel in 2015?…29
The gender factor…30
The youth factor…31
The wealth factor…32
6 CONCLUSION…33
About the Author:
Jack Love is co-founder of Vertical
Web Media and publisher of its
Internet Retailer media properties.
BEHIND THE
ONLINE APPAREL
BOOM
BY JACK LOVE
Apparel is the resilient backbone of the American economy. More retailers are devoted to selling apparel and accessories than
any other form of merchandise. And more than any of type of product, apparel is what consumers purchase during the year-end holiday
season, which is when most retailers bank their profits for the entire year.
So when there’s a sea change in the way consumers shop for apparel, the waves wash over the entire U.S. economy. That sea change is
happening right now and consumers in droves are abandoning apparel stores for apparel websites.
Online Apparel Sales Soar... ...And Take Market Share Away From Stores
2015 Growth Online Share of U.S. Apparel
Total U.S. Online Apparel Sales 19.7%
2014 2015
Total U.S. Apparel Store Sales 1.1%
14.8% 17.0%
220 basis points increase
In 2015 alone, total reportable online apparel sales grew by 19.7% to an estimated $77 billion, fully 55% faster than the growth rate for all
other types of merchandise sold on the web. Even these numbers are understated because they exclude the online sales of apparel by
mass merchants, such as Wal-Mart Stores Inc. and Target Corp., which do not break out their sales of clothing on the web.
Even with that understatement, the web last year account for 17.0% of total apparel sales in the U.S., up from 14.8% the previous year—a
remarkable one-year gain of 220 basis points in share of market for apparel e-retailers. Aside from the market share that Amazon.com Inc.
grabbed each year from book stores in its early days and the bite that Apple Inc. took from record stores in the years following the launch
of iTunes, the web has not previously taken such an enormous amount of revenue from stores so quickly. It is the reason why store sales
of apparel grew a meager 1% last year—less than one-third of the average growth of store retailing—and why so many apparel stores have
been shuttered or are hanging on by a proverbial thread.
How Apparel Sales Fare Online Vs. Offline
U.S. Apparel Sales 2015 2014 2015 Growth
Online Apparel 250 $50,401,772,630 $44,219,513,219 14.0%
Amazon & Other E-Retailers $26,581,522,985 $20,076,985,972 32.4%
Total Online Apparel $76,983,295,615 $64,296,499,191 19.7%
Apparel Stores $375,350,000,000 $371,230,000,000 1.1%
Total Apparel Sales $452,333,295,615 $435,526,499,191 3.9%
Online Share of U.S. Apparel 17.0% 14.8%
Source:
Top500Guide.com, U.S. Commerce Department, Internet Retailer estimates. Online Apparel 250 are the 250 merchants ranked in the Internet Retailer Top 1000 primarily classified as selling apparel and
accessories. Amazon and other e-retailers is Internet Retailer’s estimate of the online sales of apparel transacted on Amazon, and other retail websites, not primarily categorized as apparel retailers. Total
apparel sales is an analysis of U.S. Commerce Department data
3
THE LEADERS
The Amazon Effect
As with so many other changes in the retail
landscape wrought by the internet, it is Amazon
that is leading the shift in apparel sales from
stores to the web. Since it formed its Apparel and
Accessories marketplace in 2002, through which it
sells apparel for other retailers and manufacturers
for a fee, Amazon has steadily taken market share
from apparel stores. But last year, Amazon’s apparel
marketplace shifted into high gear (see the cover
story on “Amazon’s Foray into Fashion” in Internet A Breakdown of Amazon's Apparel Catalog
Retailer Magazine’s January 2016 issue). According
to investment banker R.W. Baird & Co., Amazon Product Count
(Amazon and Product Count
increased the number of apparel and accessory Category Marketplace) (Amazon Only)
SKUs on its website by 87% in the 12 months
Clothing, Shoes & Jewelry - Men 9,770,753 119,968
ending October 31, 2015.
Clothing, Shoes & jewelry - Women 8,353,306 213,888
This product expansion, along with other Clothing, Shoes & Jewelry - Girls 959,086 23,071
aggressive moves, drove the online giant’s Clothing, Shoes & Jewelry - Boys 851,758 18,895
apparel sales up by 48% last year to $16.3 Clothing, Shoes & Jewelry - Baby 434,245 17,855
billion, according to the Cowen Group investment Clothing, Shoes & Jewelry - Misc/Other 13,053,289 300,677
consultancy. That stunning growth in one year’s
Total 33,422,437 694,354
time massively extended Amazon’s lead in online
apparel over second-ranked Macy’s Inc. and Source: 360pi, May 2016
expanded its share of the total online apparel
market to 21%. In fact, Amazon’s apparel sales last
year equaled the combined web sales of its five
largest competitors in the online apparel segment,
including Macy’s, Nordstrom Inc., Kohl’s Corp., Gap
Inc., and L Brands (the parent company of Victoria’s
Secret).
Led by Amazon, the country’s Top 10 Apparel
Retailers (see top 10 list on next page) grew their
web revenues by 26.7%, double the growth rate of
all other retail websites in the U.S. Together these
10 leading apparel e-retailers last year accounted
for 49% of the online apparel market, a high
concentration given the hundreds of web merchants
specializing in apparel.
Apparel sales grew
48%
for Amazon.com in
2015 to $16.3 billion
4
THE LEADERS
10
1.
Amazon.com Inc.
TOP 2016 Top 1000 Rank: 1
2015 Online Apparel Sales: $16,300,000,000
2014 Online Apparel Sales: $11,000,000,000
Growth: 48.2%
2.
Macy’s Inc.
2016 Top 1000 Rank: 6
2015 Online Apparel Sales: $6,210,000,000
2014 Online Apparel Sales: $5,400,000,000
Growth: 15.0%
3.
Nordstrom Inc.
ONLINE APPAREL 2016 Top 1000 Rank: 18
2015 Online Apparel Sales: $2,832,000,000
2014 Online Apparel Sales: $2,356,000,000
Growth: 20.2%
4.
Kohl’s Corp.
2016 Top 1000 Rank: 19
2015 Online Apparel Sales: $2,818,400,000
2014 Online Apparel Sales: $2,168,000,000
Growth: 30.0%
5.
Gap Inc.
2016 Top 1000 Rank: 20
2015 Online Apparel Sales: $2,530,000,000
2014 Online Apparel Sales: $2,503,000,000
Growth: 1.1%
6.
L Brands Inc.
2016 Top 1000 Rank: 28
2015 Online Apparel Sales: $1,681,724,000
2015 Total Top 10 Online Apparel Sales 2014 Online Apparel Sales: $1,628,000,000
Growth: 3.3%
$37,803,241,700
7.
J.C. Penney Co. Inc.
2016 Top 1000 Rank: 33
2014 Total Top 10 Online Apparel Sales 2015 Online Apparel Sales: $1,415,200,000
2014 Online Apparel Sales: $1,220,000,000
$29,843,531,779 Growth: 16.0%
8.
L.L. Bean Inc.
2015 Growth 2016 Top 1000 Rank: 34
2015 Online Apparel Sales: $1,412,517,700
26.7% 2014 Online Apparel Sales: $1,284,107,000
Growth: 10.0%
9.
Neiman Marcus
2016 Top 1000 Rank: 36
2015 Online Apparel Sales: $1,338,400,000
2014 Online Apparel Sales: $1,184,424,779
Growth: 13.0%
10.
Fanatics Inc.
2016 Top 1000 Rank: 38
2015 Online Apparel Sales: $1,265,000,000
2014 Online Apparel Sales: $1,100,000,000
Growth: 15.0%
5
THE LEADERS
Analyzing the Top 250 Apparel
E-Retailers in America
Despite such heavy concentration at the top
of the online apparel market, it is impossible
to fully grasp the magnitude and analyze the Online Apparel 250
forces behind the online apparel boom without 65.5%
looking closely at a much larger swath of the
market. This report does just that by studying
the performance of the country’s 250 largest
e-retailers (referred to in this report as the Amazon & Other
“Online Apparel 250”) which obtain virtually all E-Retailers
The Make-Up
of their revenue from apparel and accessories.
of the Online 34.5%
These leading apparel web merchants comprise
Apparel Market
one-quarter of the e-retailers that are ranked,
profiled and thoroughly detailed in Internet
Retailer’s Top 1000 Database, which contains
276 separate financial, operating, marketing and
performance metrics on each of America’s 1,000
largest e-retailers. Based on the information
in that database, which was mined to produce
this research report, the Online Apparel 250
Source:
accounted for $50.4 billion of total web-based Top500Guide.com, Internet Retailer estimate. Online Apparel 250 are the 250 merchants
apparel and accessory sales in 2015, or 65% ranked in the Internet Retailer Top 1000 primarily classified as selling apparel and accessories.
Amazon and other e-retailers is Internet Retailer’s estimate of the total value of apparel sales
of the entire online apparel market. Most of
transacted on Amazon, and other large store-based websites like Walmart, Target and other
the remaining market share is controlled by discount stores, or those not primarily categorized as apparel retailers.
Amazon’s apparel marketplace, the detailed
financial and operating performance of which is
not subject to outside scrutiny.
This report will analyze all aspects of the Online
Apparel 250—their make-up by type of merchant
and classification of apparel they sell. It will
examine the fastest growing apparel websites
as well as those in decline. It will look at their
pricing and measure the impact of all aspects
of their marketing efforts—from promotional
e-mails they distribute to customers to the base
of Twitter followers they have cultivated. And it
will describe in detail the demographics of their
shoppers. In all cases, the report seeks to explain
how all of these factors affect the growth of their
online apparel sales.
$50,401,772,630
TOTAL 2015 WEB SALES FOR THE ONLINE APPAREL 250
6
THE LEADERS
The Retail Chains Still
Dominate Online Apparel
A close observer of the table of the 10 largest online apparel merchants will notice one
very differentiating characteristic of this market: Aside from top-ranked Amazon, whose
apparel sales come primarily from its marketplace platform representing more than
40,000 of retailers and manufacturers which buy, stock and ship the merchandise
they sell through Amazon, all of the remaining top 10 apparel sites are operated
by retail chains. That is a distinctly different competitive makeup from all
other merchandise categories in e-commerce, and in fact, from the global
e-commerce market as a whole.
Our 2016 Top 500 Guide, which ranks the country’s 500 largest e-retailers
that control 84% of the U.S. e-commerce market, reports that 41.3% of
total sales of the Top 500 web merchants is generated by web-only
merchants, while 32.5% is generated by websites run by retail chains,
11.1% by manufacture websites and 9.7% by catalogers. The chart
on the right of this page shows a different picture for the online
apparel business.
When it comes to the Online Apparel 250, retail chains control
a whopping 63.9% of web sales, compared to just 14.3% for
web-only apparel retailers, about the same share that’s
held by the websites of apparel manufactures. Why do BIG CHAINS
store chains dominate this one, very significant segment
Dominate the 250
According to online pricing
automation company 360pi,
Largest Sellers
there are 40,080
of Apparel Online
apparel sellers on Amazon as
of May 2016.
Total: $50,401,772,630
of e-retailing, while chains in other market
63.9%
segments have much less control of the
Retail Chain
e-commerce market? As we shall see later in 14.3%
$32,228,842,833
this report, it isn’t because of their pricing
Manufacturer
models, above-average conversion rates,
$7,298,815,768
the types of apparel they offer to online
shoppers, or the demographic make-up of
their shopper base.
Online
Apparel 250
Sellers by Type
14.5%
Web-Only
$7,199,479,027
7.3%
Cataloger
$3,674,635,001
Source:
Top500Guide.com. Figures exclude apparel sales on Amazon and other merchant sites not primarily
categorized as apparel such as Walmart.com and Target.com.
7
THE LEADERS
Department Stores:
The Anchor On Online Apparel
Rather, it seems, the dominance of chain stores in the online apparel market has more to do with their long-standing relationships with
consumers, particularly those who view an apparel purchase as a very personal decision, one that should be done with merchants they
trust. The data support this hypothesis.
No big-name retail chains have a stronger reputation for apparel—and multi-generational connections with apparel buyers—than
the country’s major department stores. Before websites, they were the place where America shopped for the leading apparel brands.
Fortunately for them, a good number of department stores—from Macy’s to Neiman Marcus—saw the need to embrace the web early on in
order to keep their apparel customers from abandoning them in the digital age for a younger, flashier, and tech-driven web-only retailers.
Indeed, six of the nine department store chains in this study were launched between 1998 and 2001. And after they launched their sites
using their well-known brands, they promoted them heavily with paid advertising on Google and other search engines. Even today, four of
the top 10 search advertisers in the Online Apparel 250 are department stores chains.
That e-retailing record has served the department stores well. The nine department stores that occupy the ranks of the Online Apparel 250
control 30.9% of the total revenue generated by all 250 apparel web merchants. These nine department stores are the single biggest reason
that store chains still dominate the online apparel business. Just as their off-line cousins anchor suburban malls, the online department
stores anchor apparel e-retailing. Had chain stores in other markets followed the early lead of department stores, they may have avoided
the fate of the retail chains that bit the dust in the last decade at the hands of their web-centric rivals.
Web-Only Apparel Sites Are
Growing Faster
It may well be too late for other types of store-based apparel
merchants to benefit from the department store lesson.
That’s because in apparel, as in all other corners of the Web-Only Apparel Merchants
e-commerce world, web-only merchants are in ascendance. Are Growing Faster
While chains dominate apparel e-retailing, web-only
merchants now boast the fastest rate of growth. The 91 web- Web-Only 16.3%
only apparel merchants in the Online Apparel 250 grew web
sales last year by 16.3%, comfortably above the 79 retail Retail Chain 14.8%
chains on the list, which grew at 14.8%.
Manufacturer 13.8%
More worrisome for the chains is the fact that the web-
only apparel merchants are growing faster by attracting
Cataloger 3.9%
the highly coveted millennial and gen-x shoppers. These
shoppers account for nearly two-thirds of their customer
TOTAL 14.0%
base. By comparison, 62% of consumers who shop at the
websites of apparel chains are 45 years old and above. That Source: Top500Guide.com
group may be wealthier now, but their incomes—and their
spending on apparel—are not growing as fast as younger
consumers. If the websites of the department stores and
By Attracting A Younger and More
other apparel stores cannot reverse this demographic
Male-Oriented Clientele
imbalance, their position at the top of the online apparel
business is clearly at risk.
Merchant Type Shoppers Under 45 Male Shopper %
Web-only apparel merchants are also attracting the fastest-
Web-Only 64% 49%
growing group of online apparel shoppers—men. No
Retail Chain 38% 40%
merchandise segment in online apparel is growing faster
than men’s clothing. As we’ll explore in greater detail in the Manufacturer 61% 43%
shopper demographic section of this report, the 10 apparel Cataloger 50% 37%
e-retailers with the highest percentage of male shoppers
Online Average 61% 44%
last year grew their sales by 21.5%, or 50% faster than the
average growth rate for the Online Apparel 250. In short, the
Source: Top500Guide.com
web-only merchants are growing faster than all other types
of apparel competitors by targeting the two fastest-growing
niches in the apparel market, something the more nimble
web-only merchants do well in all segments of e-commerce.
8
SPONSORED INSIGHT
The right end-to-end e-commerce platform
drives apparel retailers’ success
Apparel retailers today are facing multiple challenges.
Fast fashion—that is, new clothing lines moving from the
catwalk into circulation at record speed in response to
fashion trends—continues to grow. That means brands
are scrambling to ensure their products are available for
customers when they want them. Additionally, international
expansion is becoming increasingly important for apparel
retailers to stay relevant and ahead of their competition.
“A lot is changing in the world of apparel retail,” says Chris
Andrasick, chief strategy and innovation officer at Newgistics,
which owns Tacit Knowledge, a commerce integration
time-to-market reasonable. And they should serve as a
consultancy he founded in 2002. “And these brands must be
dynamic customer communications engine that delivers
able respond quickly.”
relevant messages to customers—increasing retention and
retailer revenue.
According to Andrasick, this changing apparel environment
means these retailers are facing scalability challenges with
Additionally, an e-commerce platform should incorporate
their e-commerce platforms. “They are struggling to scale
technology and services that handle logistics. “It should
in terms of third-party logistics, and how they deal with
create a truly integrated brand experience—including
fulfillment and returns,” he says. “And to fix this, they really
fulfillment, pick and pack, package delivery, and returns
need help right-sizing their platforms by finding solutions
management—from device to doorstep,” Andrasick says.
that help them with all of their true end-to-end needs.”
Newgistics’ ncommerce platform encompasses all of
This requires the types of tools that allow retailers to focus
these attributes, he adds. “ncommerce is a single platform
on their business, rather than technology, he says. To do that,
designed to simplify e-commerce and allow retailers to focus
they need a platform that incorporates several important
on building their business rather than their technology,” he
attributes.
adds. “A key business rationale behind bringing ncommece
to market is that there are many layers of touch points in
The most effective e-commerce platforms, Andrasick says,
the digital shopping landscape, as well as the post purchase
should be able to adapt to any screen format as well as
experience, that are better served if we’re taking a holistic
provide high-resolution images. They should incorporate
approach to commerce – in this way we create value by
machine-learning personalization technology so that
bringing these different services together.”
brands are able to cater to customers’ unique interests and
predicted behaviors. These platforms should offer real-time
As apparel retailers continue to face growing challenges
control so retailers are able to update content across all
related to fast fashion and global expansion, they need
geographies—including internationally—instantly, and should
tools that will enable them to adapt immediately to stay
utilize big data trend analysis to extract actionable insights
competitive and relevant to their customers. And an end-to-
and drive better business decisions.
end e-commerce platform that takes a holistic approach to
their business may be the answer.
The best platforms should include prebuilt customizable
front-end user experience templates so that products are
displayed appropriately, allowing for an exceptional customer
experience while keeping costs, development efforts and
The Online Apparel 250