Apparel Blog Post (1)

Expand Your Apparel Omnichannel with an E-commerce DTC Strategy

Trends in Apparel E-commerce

The fashion industry invokes images of glimmering Parisian catwalks, sophisticated window displays, and trendy retailers with booming electronic music.

It is also an industry evolving. 

Fast fashion has dominated the fashion market with high-volume, low-cost garments. Now, the trend is leaning toward more stable and timeless offerings.

Millennials and Generation Z are also much more environmentally and value-conscious consumers—with an affinity for e-commerce retail.  

Prior to the coronavirus pandemic, fashion designers, such as Armani, Prada, Gucci, and Burberry, were already flirting with digital storefronts.

Their direct-to-consumer (DTC) model is another strategy to connect with loyal customers and yield critical consumer analytics.  

As the pandemic spread across the globe, e-commerce with branded online stores quickly became a critical part of the apparel industry’s omnichannel strategy. 

Many brick and mortar retailers were shuttered because of lockdowns. Thus, e-commerce apparel fulfillment and distribution became essential.

What the fashion industry discovered is a greater reliance on the expertise of 3PL clothing distribution.

Apparel Industry Faces Contraction

Similar to other sectors, the apparel supply chain is interconnected across regions. Fashion brands often rely on low-cost sourcing in developing countries for manufacturing.

Worldwide, the apparel industry employs 60 million workers, helping to generate $1.9 trillion in global revenue in 2019. 

As 2020 approached, the industry outlook for apparel was already weak. However, the onset of the coronavirus pandemic coupled with a global supply chain further crippled the apparel industry. Countries instituted lockdowns that affected manufacturing operations and the global workforce.

Within the first few months of 2020, “the average market capitalization of apparel, fashion, and luxury players dropped almost 40% between the start of January and March 24, 2020—a much steeper decline than that of the overall stock market,” according to McKinsey & Company’s The State of Fashion 2020 Coronavirus Update.  

What is most striking is the number of retailer bankruptcies year to date.

S&P Global reported 40 U.S. retail bankruptcies through July 2020—outnumbering total bankruptcies in 2019 and 2018. Fashion companies such as Brooks Brothers, Forever 21, Lord & Taylor, and Ascena Retail Group fell victim to bankruptcy filings.

Planning for future demand and coordinating with suppliers remains difficult as coronavirus cases surge worldwide and further bankruptcies loom.

This places additional challenges on apparel fulfillment and distribution efforts. 

The uncertainty surrounding the pandemic does not bode well for 2020 revenue. The McKinsey & Company report, states, “We estimate that revenues for the global fashion industry (apparel and footwear sectors) will contract by 27% to 30% in 2020 year on year, although the industry could regain positive growth of 2% to 4% in 2021.”

A Brighter Road to DTC Apparel Fulfillment and Distribution

An e-commerce presence is likely required for apparel companies to achieve positive growth and thrive in the post-Covid economy.

According to Data Commerce 360, its 2020 Online Apparel report states that online apparel sales accounted for 38.6% of total U.S. apparel sales in 2019, and 100% of the growth in retail clothing sales.

However, most analysts agree that a holistic omnichannel strategy (DTC, third-party retailers, and wholesalers) is the most profitable path forward.

McKinsey & Company reports that “Six out of ten people now use at least one digital channel in their shopping journey for an apparel garment. This has major implications for physical stores.”

A DTC model is an essential part of tracking the customer journey. It is an apparel fulfillment strategy difficult to achieve from a third-party retailer.

How does a DTC model help drive the apparel fulfillment and distribution strategy of fashion brands? Consider the following areas:

·     Personalization. Whether it’s web stores or social media, fashion brands can custom-build their ideal vision of the customer experience. Personalization can occur through branding, apparel assortment, and consumer lifestyle.

In one omnichannel example, a DTC fashion brand used Instagram to illustrate what customer peers were wearing. Images included a link to order the garment online, with the option for in-store pick up.

·     Analytics. In today’s competitive retail landscape, leveraging big data is essential. Through e-commerce, apparel companies can glean valuable customer data about shopping and ordering preferences.

Apparel brands can use this data as a competitive advantage for new product development and deeper customer insights. 

·     Sustainability. Apparel companies are under greater pressure to operate in more sustainable ways and reduce carbon emissions. Providing alternatives to fast fashion with higher-quality garments and timeless appeal are ways fashion designers are heeding the call.

E-commerce and DTC complement sustainability initiatives while providing a digital platform to communicate the stories behind their efforts.  

·     Logistics. For luxury apparel brands, removing the middleman and taking full ownership from manufacturing to marketing to distribution, can reduce costs significantly and expand profit margins. It also enables control of product inventory and apparel fulfillment and distribution decision-making.

However, this responsibility requires an understanding of every facet of the apparel supply chain, including product returns. Does your material handling company have this expertise?

Outsourcing the apparel fulfillment and distribution process to a third-party clothing distribution leader can yield efficiencies and cost savings of their own.   

Matt Kaden, managing director at MMG Advisors, says in his op-ed The DTC Reckoning Is Real. What Next? “What DTC fashion and apparel brands need to do now is chart a new course of action that will lead to sustained business success. Well-capitalized retailers, manufacturers, and DTC holding companies present strategic partnership opportunities and a more realistic path to profitability for these brands,” says Kaden.

“Founders and executive teams at DTC brands should not underestimate the know-how that leaders who have managed through past crisis can provide, the scalability of established operating infrastructures or the force of robust balance sheets.”

Leverage the Expertise of SSI SCHAEFER for E-Commerce Apparel Fulfillment and Distribution

Kaden’s advice is one that fashion brands should heed in today’s volatile retail environment.

SSI SCHAEFER provides the e-commerce apparel fulfillment and apparel distribution expertise that luxury fashion brands require for their DTC business. E-commerce is changing the game for fashion brands as DTC becomes a staple omnichannel offering.

Statista projects the U.S. apparel and accessories e-commerce market to generate $153.6 billion in revenue by 2024.

With this anticipated growth, fashion companies need a partner to help them scale their DTC fulfillment and distribution strategies.

SSI SCHAEFER provides best-practice insight into e-commerce fulfillment. Its solutions enable pick-in-sort efficiencies through software and automation designed for fashion retailers. 

The control center is WAMAS®, by SSI SCHAEFER, which is a leading warehouse management system.

Apparel customers have the same order fulfillment and delivery expectations as other retail sectors. They expect an available product with next- to same-day delivery.

The strength of WAMAS is its adaptability to both traditional and omnichannel fulfillment and distribution models, while seamlessly integrating with fashion brands’ existing infrastructure and ERP systems.

With locations worldwide, SSI SCHAEFER offers fashion brands streamlined apparel fulfillment and distribution solutions for both inhouse strategies or 3PLs.

Make the e-commerce DTC investment with a partner that can guarantee efficiency, reliability, and scalability for the future.



Links:

https://luxe.digital/business/digital-luxury-ranking/most-popular-luxury-brands/

https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/manufacturing/blogs+and+articles/manufacturing_textiles

https://www.statista.com/topics/965/apparel-market-in-the-us/#:~:text=In%202019%2C%20global%20retail%20sales,trillion%20U.S.%20dollars%20by%202030.&text=Store%2Dbased%20retailing%20was%20valued,million%20U.S.%20dollars%20of%20revenue

https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/the%20state%20of%20fashion%202020%20navigating%20uncertainty/the-state-of-fashion-2020-final.ashx

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/july-retail-market-us-sales-jump-7-5-in-june-bankruptcies-hit-3-year-high-59458563#:~:text=In%202019%2C%2032%20retailers%20went,a%20secondary%20classification%20of%20retailing

https://www.thefashionlaw.com/retail-woes-a-bankruptcy-timeline/

https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/its%20time%20to%20rewire%20the%20fashion%20system%20state%20of%20fashion%20coronavirus%20update/the-state-of-fashion-2020-coronavirus-update-final.pdf

https://www.statista.com/outlook/244/100/fashion/worldwide#market-onlineRevenueShare

https://www.businessoffashion.com/articles/opinion/op-ed-the-dtc-reckoning-is-real-what-next

https://www.voguebusiness.com/consumers/direct-to-consumer-lasting-impact-on-fashion-levis-nike-samsonite

https://www.digitalcommerce360.com/article/online-apparel-sales-us/

https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Ready%20to%20where%20Getting%20sharp%20on%20apparel%20omnichannel%20excellence/Ready-to-where-Getting-sharp-on-omnichannel-in-apparel.pdf?shouldIndex=false

https://www.supersuperagency.com/download/ecommerce-customer-experience-cx-guide-2020-pdf-download

https://qz.com/1418251/luxury-labels-like-gucci-and-cartier-going-direct-to-consumer/

https://www.abetterlemonadestand.com/direct-to-consumer-brands/

https://www.ssi-schaefer.com/en-th/market-sectors/fashion-logistics/fashion-81778

https://pages.ssi-schaefer.com/en-us/ecommerce-best-practice-guide-download

https://wamas.software/