E-commerce and Retail: The Era of Omni-channel Marketing

To go online or not, is not the question, today. It is not to prefer one over another, but to understand the strength of merging online and offline; whilst many still discuss which one to choose from these two 'options'. Brick-and-mortars and online stores can, in fact, trigger the sales for each other, in contrary to what is believed. The trick is where and how to connect both channels. And eventually, seamless integration of online and offline channels would result in a balanced growth for the brand as a whole.

The Fashion E-commerce Industry

Online sure is playing a major role in a brand's results. Statistics show that the global online retail accelerated faster than the brick-and-mortar retailing, in 2014. Out of over nine hundred billion dollars of global online retail value, Apparel/Accessories/Footwear purchasing segment completed the year as the second largest category with 19.1 percent of share and contributed revenues of around 188.4 billion dollars in total. The value of the segment is expected to have a growth of 59.2 percent since 2014 and exceed 300 billion dollars by 2019.

It is now possible to see that the course of events are ever changing. Online sales are on a rise regardless of the price range. So far, online luxury goods sales generate less than 5 percent of the 270 billion dollars of total revenue of the industry. However, within a high growth rate of 30 percent per year, the E-commerce in luxury is expected to represent one-fifth of luxury industry revenues by 2020 - which means regardless of the price range, online luxury goods will be at par with electronics, gardening and home appliance categories.

How Offline can benefit from the Online

Many brick-and-mortar store owners, on the other hand, still do not expect big results from online store, and they are even afraid of it as the fast progress in online retailing is thought to be affecting physical sales, negatively. But, why not to benefit from the opportunities of online stores such as saving cost of physical maintenance, being able to show and sell entire collection regardless of the time and geographical limitations, or the big data about customer behaviour and market potential to understand? The examples from the industry remain quite convincing.

The Winners

a) Deckers Outdoor Corporation

An example of a well-implemented innovative approach through offline and online stores is that of Deckers Outdoor Corporation - the parent company of UGG, Teva, Sanuk and others. The company had an increase in the net sales on both platforms. Deckers allowed its customers to customise and view the RFID tagged items they are trying on the four touch-screens placed throughout the store, within a created content including product information, as well as style tips, videos, related marketing campaigns, and suggested complimentary products. The store uses the technology also to inform more customers about its lesser-known brands.

Last April, the company announced an increase in their net e-commerce sales by 37.5 percent, whereas an increase of 17.6 percent was seen in the net sales through retail stores. Together with retail stores and e-commerce, wholesale channel of the company also showed a significant performance increase for each brand.

b) Burberry

Known as the digital leader of the industry, Burberry is another company increasing its growth year-on-year not only online but also offline. Perceiving online growth as not a threat but a stimulating factor, the two channels of the brand are triggering the sales for one another. Announced as a one week program, Runway-to-Reality allowed customers to purchase Prorsum items straight from the SS13 runway. This, however, did not affect offline sales negatively but increased the liking for the brand even more. Conversely, noteworthy positive growth since, can be increasingly observed in all the channels of the brand - Retail (digital included), Wholesale and the Licensing

To add further, the brand’s strategy here shows itself how it successfully made its current and potential customers familiar with its online and offline integration. In the last fiscal year, 15% underlying growth, 12% comparable sales growth and 25 mainline store openings, including a flagship in Shanghai, were recorded.

c) Patrizia Pepe

Italian brand Patrizia Pepe also benefited from its e-commerce platform by the end of the fiscal year 2013. Although, the net revenues of the brand had a decrease of 6 percent in the same period, e-commerce kept its contribution percentage and supported the total revenues of the company, by 3 percent.

Financial report of the company, Tessilform S.p.A.,  shows that retail sales in the same period also increased. With 18.6 percent of increase, retail channel sales of Patrizia Pepe reached almost one and half million of Euros. In other words, the online store of the brand did not cannibalise the offline sales; in contrary, it appeared as an additional touch-point for the brand's customers.

d) Hugo Boss

Hugo Boss, with a full division dedicated to its online store, has been seeing an increase in its online sales by 10 million euros on an average, every year. The links between the two sales channel of the company are integrated to provide the customers a seamless, integrated brand and shopping experience. Hugo Boss first acquired its online store’s front-end and then rebuilt hugoboss.com. The brand now constantly tunes its online store with as many features as it wants and control how they function. The brand looks at its own website analytics to find where the glitches are, and then acts upon it. The Group, Hugo Boss AG, has also invested in cross-channel customer relationship management in order to offer customised service whilst analyzing the customer personally and on a target basis. By 2016, the Group plans to move into omni-channel phase together with enhancements in IT and logistics, and will offer more services such as “Click & Collect.”

Furthermore, Hugo Boss’ 5-year sales through the Group’s own retail channels as well as its wholesale and licenses are constantly showing an increasing trend in terms of sales. Amongst those, DOS showed 38 percent of increase in the fiscal year 2014, whereas, the online sales growth was 3 percent and outlet sales growth was 16 percent, respectively.

Engaging customer anytime anywhere in an omni environment is now not an option but a must. Those brands who realized this fact and took steps strategically, have started to win already. It's now or never, competition is hyper, leaders are many, sales are crucial. Hence, it's about time to utilize all the tools available to the brand at hand and integrate them all to provide a customer a wholesome brand experience.

Want to learn more on the best possible omni-channel strategies leading to increased sales, read Fashionbi's marketing researches: Omni-channel Retailing Part 1 and Omni-channel Retailing Part 2

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