How The Game In Clothing And Apparel Is Changing

Since the turn of the millennium, Amazon (AMZN) and eBay (EBAY) have been joined by several players in the e-commerce industry. EBay was the first to launch in 1995 while Amazon followed shortly in 1996. Both companies had different ideologies about the market, but now, there is little to separate the two in terms of the target market.

While the two may carry the tag-name pioneers of the ecommerce marketplace, serious questions are now being asked with regard to their ability to continue dominating the industry. Companies like Wal-Mart (WMT), Target (TGT), and BestBuy (BBY) are now trying to stake their claims despite entering the space late while in China; Alibaba (BABA) has launched a realistic challenge towards becoming the world’s market leader in e-commerce.

Clothing and Apparel is one of the most dominant business segments in the e-commerce industry. It is a market that has attracted several players especially due to the high level of fragmentation.

Startups are now able to target specific business segments of the e-commerce industry and this is proving to be a key ingredient for success. Some good examples include StyleWe, Swap.com, and Jabong, which have identified specific market segments to target including women clothing and sportswear, used clothing and apparel, and kids clothing, among others.

Specialization has enabled them to gain traction in the highly competitive industry of clothing and apparel. For instance, women are known to be shopaholics and this is probably why new market entrants such as StyleWe are viewing the segment as a strategic target if they can provide something unique to customers.

Another interesting revelation has been the way the clothing and apparel market has been shaping up. Traditionally, markets are known to expand globally, such that if a company sets up in New York, its next target market would be national expansion and then regional expansion in the Americas before finally stretching its wings to overseas markets.

However, based on recent trends, it appears as though companies are cutting down their global exposure to focus more on local and regional markets.  This is probably due to an increase in online sales as compared to a decrease in store sales. Another reason could be in a bid to cutting risks associated with operating in multiple countries/markets.

For instance, Asian countries dependence on textile supply from within the region increased to 90.2% in 2014 from 87.7% in the year 2000. Within the Eurozone, the numbers are a bit smaller, but still, larger compared to international exports. As of 2014, the EU imported nearly 60% of textile from within the member states whereas, in the American countries, 89% of the apparel exports were shipped to the region.

The culture of online shopping appears to be redefining the clothing and apparel industry’s playing field with growth in retail online sales typifying a big shift in market dynamics. According to Statista, retail online sales have been experiencing incremental growth over the last few years with the e-commerce market in the US projected to double in size by the year 2020 from last year’s sales of $342 billion.

On the contrary, store sales have continued to decline thereby suggesting that any clothing and Apparel Company looking to remain competitive must embrace online retail and integrate it optimally to its business model.

Some companies like J.C. Penney (JCP), Macy’s (M) and Kohl’s (KSS) appear to have accepted the change, but still, they can’t seem to get their game plan for the e-commerce market right. While discounting is a crucial part of selling products online, the threat of industry giants such as Amazon.com and eBay continues to influence how these traditional department stores curve out their slices of the online retail market.

Conclusion

In summary, the Clothing and Apparel industry has changed significantly over the last two decades. The global market has been shrunk to the size of a handheld device such as a smartphone, where anyone can now purchase products at the touch of a button.

However, this technology has also brought with it some problems, key among them, the question of shipping. As such, localized sales (including regional imports and exports) have increased. This has also opened opportunities for local players as well as startups looking to focus on specific segments of the e-commerce market.

Some traditional department stores have struggled to cope while e-commerce giants like Amazon have continued to expand their empires.