Fashion E-commerce and E-Marketplaces in Europe
Nearly one third of global online shoppers are shopping for fashion, which makes it one of the most important sectors of the e-commerce market.
The market is expected to grow at an average growth rate of 14% per year to reach $630 billion in 2021. Europe’s fashion market is $87 billion in size and represents approximately 16% of the fashion retail sales in Western Europe. Apparel e-commerce penetration is expected to reach 30% by 2021 (vs. 22% in the US) in Europe’s two most important markets – UK and Germany.
The importance of internet retailing goes beyond that of shopping online, as it is an important research and communication channel as approximately 43% of shoppers say they research and compare apparel products online.
E-marketplaces are a core part of fashion internet retailing accounting approximately for 30% of it in Western Europe. While Zalando remains the first in market (with a 7.4% share), Amazon Fashion is marching on, after reaching $12-17 bln estimated sales in the US in 2017.
Amazon Fashion is known to have the broadest customer base with over 340 million online buyers in Europe, across 28 countries on 5 marketplaces (Amazon.co.uk, Amazon.fr, Amazon.de, Amazon.it, and Amazon.es) and the most sophisticated logistics network, that allows it to provide 1-2 day free shipping to its Prime members. In fact, in a recent a survey by Cowen & Co, online shoppers said that this program and fast delivery is the biggest reason why they shop for clothes on Amazon, followed by excellent customer service and the large number of product reviews. The main disadvantages are the lower content curation relative to competitors and selection that is still very skewed towards essentials (underwear, t-shirts, headwear).
Zalando targets 25-45 year olds, has about 22 million active customers and in 2017 it has reached sales of €4.5 billion. What one can find on Zalando are mostly in-season products, only 20%-25% of which overlaps with products listings on Amazon. Zalando is working to enhance partnerships with fashion brands also recently launching the 3P model and onboarding important brands such as Oysho. Zalando also distinguishes itself on curation and personalized recommendations and superior customer experience (e.g., returns allowed within 100 days vs 30 days average for competitors).
Fashion in Europe will not be a “winner-takes-it-all” market, but the e-marketplace channel is important as its top 3 players reach approx. 380 million active customers per year in Europe. It is important for brands to be present online with high quality content and use all opportunities for customer engagement to learn first-hand and build lasting relationships with customers. Fashion shopping represents a social activity that spans multiple devices and channels, and thus it is also important to move away from having an online vs. offline approach to one that spans across channels.
Starting from September 2017, Witailer is helping fashion companies define their e-marketplace strategy to maximize branding and sales benefits while minimizing risks and providing direct support on topics from content enhancement to advertising to operations. Discover all our services for brands here.