The Internet has broken down global borders for both the discovery and accessibility of fashion. For instance, fashion discovery site Lookbook.nu has fashion bloggers posting from over 40 major countries, and US traffic only represents 20% of the total monthly active uniques. Ecommerce sites such as Net-a-Porter, Shopbop, and Luisa Via Roma offer speedy international shipping. Here are the key business trends that marketers need to know.
1. Commoditization of the shopping experience — online and offline.
As a tourist, shopping in different countries was a scavenger hunt of finding unique up-and-coming designers that were local to that country. Ecommerce was a gateway to international fashion discovery. However, times have dramatically changed.
Most brands are accessible online and available at multiple retailer websites. At first blush, the difference in shopping on the clean, minimalist pages of Italy's Luisa Via Roma vs. Net-a-Porter is limited. Additionally, shopping destinations in key metropolitan hubs have become increasingly less differentiated. You can find a Gap, Gucci, and H&M in almost every major city. With international expansion a top strategic focus for many fashion companies, this trend will continue to secondary markets. Swedish retailer H&M, Spanish fast-fashion powerhouse Zara, Japanese Uniqlo, and UK specialty retailers like Reiss and AllSaints have expanded footprints in the US. Similarly, US-based brands like Coach, Gap, Estée Lauder, and Michael Kors attribute an increasing volume of sales from international stores and wholesale accounts.
Retailers have to differentiate their online experience with compelling content, service, and curated offerings tailored to local tastes and weather patterns.
2. The international shopper is spending both at home and abroad
The Chinese consumer is important not only in numbers but also their global spending habits, which have analogies to other international shoppers. According to Bain and Company, Chinese consumers represent 25% of global luxury spenders and make one-third of the luxury purchases in Europe. This demographic is an important one offline and also online as the number of Internet users, 564 million in 2012, surpasses that of the US and UK combined. Many brands are focused on this market due to this growth and impact both in China and key markets across the world.
Sixty percent of Chinese shoppers' total luxury spend is done abroad due to the lower relative pricing driven by import taxes and exchange rates. Similarly, countries like Japan, Brazil, and Korea have high import taxes on luxury items and consumer electronics. Retailers with high tourist traffic are increasingly catering to tourists. Media groups like Affinity China targeted toward the Chinese luxury consumer offer access to events around the world, often hosted by luxury brands such as private fashion shows put on by Neiman Marcus and a Tiffany's luncheon with Wolfgang Puck.
3. The international rules of the game drive business complexity
Although borders have disappeared, global fashion companies need to manage the complexities of launching and growing businesses by region.
Online marketing initiatives need to be tailored to both social and search marketing. According to Accenture, more than 90% of Chinese consumers use social media and microblogs to learn about companies' products or delivery, and 44% of Chinese consumers check social media before making a purchase for peer-to-peer recommendations. Luxury brands have paved the path in jumping on social. Burberry is leading the path with a presence on seven unique social platforms in China. Google leads the pack in search engine market share in most countries. However, in Asia, page rankings on leading search engines are important: Yahoo in Japan, Naver in Korea, and Baidu in China.
Furthermore, regulatory issues in countries like China and Russia build barriers to entering these ecommerce markets; however, the right partnerships can facilitate entry. For example, Burberry recently launched a Chinese ecommerce site on Tmall. Next Solutions offers brands end-to-end services to launch ecommerce in Russia. Consultancies like China Edge based in the U.K. offer brand marketers workshops and certifications on best practices in targeting Chinese consumers.