Is Fashion Ecommerce Still a Financially Viable Business Model?

With the ongoing economic turbulence many sectors including that of fashion have seen significant global disruption. The fashion retail sector in particular has seen profitability move southward in the past number of years, we have seen many high street brands simply drop off the radar. This is derivative of two major factors namely, challenges by way of online technology and also due to the fact that fashion is an elastic sector and is duly affected by economic downturns.

In the last eight years we have seen an increase in the number of fashion e-commerce platform start-ups. Many have survived and many have simply “disappeared into the ether” yet this trend continues to grow exponentially? Ever since Natalie Massenet former CEO and founder of Net-a-Porter launched the phenomenal online luxury fashion powerhouse, she has set sail a thousand ships of fashion start-up converts.

Yet every other week there are whispers of fashion start-ups “blowing up”, that the Fashion E-commerce industry is simply a dead saturated market, too easy picking consisting of low hanging fruit. Furthermore, it is thought of as being very capital-intensive to maintain, innovate and even more expensive in terms of marketing requirements for customer acquisition.

So is there a magic formula? A significant number of fashion start-up firms flounder and very few survive without significant angel or VC funding. Each one seems to be looking for the next explosive formula. Perhaps there isn’t a grand design and maybe the answer is right here beneath our noses. It could simply involve keeping adept with the times.

We have seen the impact of social media on the bottom line in many industries maybe these methodologies need to be employed? It should no longer be about shopping it should be about social shopping. Women are the largest demographic in terms of online purchases and we all know that they are a “social species” when it comes to shopping! The advent of facebook and twitter have somewhat alleviated the strain of marketing overheads and some relatively new start-ups such as have gained a significant proportion of their user base from facebook so social commerce seems to be one way forward.

The Fashion e-commerce sector is like any industry and will fluctuate with tastes, availability to credit and economic climates. There are still opportunities up for grabs; the market is set to grow to 380 billion USD by 2015. Over 20{e7d6fa4e8694ee13263b5b1b267d343b9ec32481fb17b24e2dd9c88ec2e630a8} of fashion purchases are done online by 72{e7d6fa4e8694ee13263b5b1b267d343b9ec32481fb17b24e2dd9c88ec2e630a8} of women. It is therefore, nonsensical to think that returns will consistently evade the voyeurs of this industry? Maybe, the answer is to potentially look at new and innovative ways of monetizing the industry as opposed to the pure rigid top down techniques that the fashion industry consistently uses. Additionally, to create models that allow for flexibility, that can readily pivot and recoil if need be, to be less virtual and more engaging and to enforce into action information garnered via customer feedback mechanisms.

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