London College of Fashion
PG Certificate in Buying and Merchandising
Online Fashion Market to grow 45% by 2015:
Changes in traditional Supply Chain Management and
Shifts in Marketing Strategy and Tactics
December 2, 2011
Zoe C. de la Borbolla del Valle
STUDENT ID: DEL11346120
If Internet was disabled now, 30% of the almost seven billion world population would face severe problems and their economies would be put at risk of a full blown catastrophe (Dholakia et al. 2002). The most affected regions would be North America, Europe, Asia and Japan, which immensely depend on the Internet to continue enjoying the way this tool has eased and shaped the lifestyle in these regions. The Internet has not only changed the way people communicate with each other but also the way people carry out business, something the UK fashion industry have experienced strongly. Mintel (2011), a leading consumer research agency, forecasts a growth in online fashion sales of 45% by 2015 reaching a total of ₤6.9 billion. Considering today’s broadband infrastructure in the UK, the Internet economy as a whole is likely to grow by 10% annually from 2010 translating into representing 10% of the UK GDP by 2015 (The Boston Consulting Group, 2010).
Not long ago, the traditional channels offering fashion were stand alone stores, department stores and direct sales strategies such as catalogues. For fashion retailers of all kinds, the development of the Internet created a virtual venue, and many chose to venture out and develop the online version of their stores and for many fashion labels this has been a gold mine. However, the explosion in internet sales has also created new challenges for the fashion labels when it comes to Supply Chain Management (SCM) and Marketing Strategies to maximise profits whilst keeping the customers happy.
Practice makes perfect
Today’s success of online sales is the result of a healthy learning process as from the mid-1990s, with the rapid expansion of the Internet, electronic commerce rapidly developed however many times unsuccessfully. Initial online processes suffered from high introduction, upgrade, and maintenance costs, as well as security issues affecting digital transfers leading to many companies failing to fulfil customer orders, hence eroding consumer trust (Tetelman, 2002). Several years of trial and error served to learn from common mistakes faced by online businesses. Since then specialists from several disciplines have taken part in the study and development of online commerce and have dissected its components for better analysis, crucial for a good understanding and successful management increasing efficiency and profitability.
e-Business, e-Commerce and the Boo.com failure
Fashion retail industry professionals need to understand how the online commercial activity has been classified, mainly the difference between e-Business and e-Commerce. e-Business is an electronic information management system for a company’s internal needs often supported by huge amounts of external information. e-Commerce is the part of an e-Business dealing directly with the revenue of a company, in fact, since e-Commerce controls revenue it could be considered as the final or main goal of the e-Business (Leon Peña, 2008).
Knowing how the e-Business is classified allows for categorizing each aspect of the business models B2B, B2C,C2C and m-Commerce making sure different requirements in terms of design, marketing, supply chain, finances and management are adhered to, in order to offer the right platform for the right product, for the right customer at the right time. Despite e-Commerce being relatively new phenomena its fundamentals have been established and that has therefore made it easier to spot strengths, weaknesses, opportunities and threats for any given online store.
Hence, it is...