The state of play and major trends in the online fashion market

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Fashion is the largest online market in the world. Apparel, accessories, and footwear count a combined global value of $664.5 billion in 2020, representing the largest e-commerce sector in the world.

Current developments

Over the next five years, annual sales are projected to reach around $1 trillion. Two main factors are driving this growth: the penetration rate of the market and the role that e-commerce is playing in retail fashion.

Geographically, consumption is leaning heavily toward China. Their 2020 sales totaled $284.3 billion, exceeding those of the following four countries combined (US, UK, Japan, and Germany).

China’s dominance is predicted to increase in the future.

The COVID-19 lockdown has had the effect of a gas pedal on the online fashion market, bringing several years of development to the industry. Kantar has measured a digital surge in fashion throughout every country in Europe, regardless of how long each country has been using this sales channel. The tendency to buy online only got stronger in the UK in 2020, with half of fashion spending in the first quarter taking place via this channel.

Consumer buying behavior

Online shopping offers fashion shoppers a new world of possibilities and naturally, they are looking to make the most of it. Whether it’s customized items or opening a simple interface on their mobile device, shoppers are influenced by a wide range of factors that drive them to favor online shopping.

Today, attentions are particularly focused on personalization, choice and multichannel, realistic customer reviews, accurate listings, and finally, the values conveyed by the brands.

Major market trends and industry best practices

Major trends are emerging in e-commerce in general, but they seem to be particularly strong for the fashion market. Particularly important are:

  • Multichannel: the best fashion e-commerce sites sell to their customers through Instagram Shopping posts, Facebook stores, or marketplaces like Zalando, La Redoute, Wish, etc.
  • Social media presence: when used correctly (as is the case with DNVBs, for example), all social platforms can be useful for fashion brands. They help drive engagement, collect consumer data and build lasting brand loyalty.
  • Selling on marketplaces: a fashion marketplace is a way to streamline the production process. It can be a great way for retailers, especially new startups or small businesses, to get exposure while being profitable and attracting the right audience.
  • Rising use of technology: Technology is expected to dominate fashion e-commerce in 2021, combining technological innovations with customer preferences. Key technologies include artificial intelligence, chatbots, and virtual reality.
  • Consumer shift towards sustainability and environmental responsibility: Through circular e-commerce, consumers have a way to put a product back into the supply chain, either by recycling, renting, or reselling it. In 2019, second-hand clothing grew 21 times faster than traditional retail.

The next years may prove challenging for brands of all sizes, and marketplaces and other online platforms can provide a real lifeline for many of these brands, especially those that are newer. We are sure to see a change in consumer habits and choices after the pandemic. The time has come for brands to observe, study and rethink their business models and strategies, and to give the utmost importance to customer expectations, especially those related to the environment and sustainability.

To learn more, check out our complete industry focus on the online fashion industry!

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Naomi Botting

Senior Communications Manager - UK, Northern Europe, China