The growth in fashion e-commerce concerned many fashion retailers at first but most at least accept its inevitable growth, and some are now embracing it. A recent survey suggests more than half of firms believe online sales will account for 10-30% of the total, but a few think e-commerce should account for more.
A recent survey by Senken Shimbun showed that most fashion retailers believe online sales should account for between 10%-30% of the total. Currently many see less than 5% of sales from online, although there are significant exceptions. United Arrows takes around 12% online and Urban Research 20%. Senken surveyed 94 businesses, with 35% saying online sales should be about 10% of total turnover, but a significant 20% wanting online sales of 20-30% and 9% saying even 50% or more was appropriate for their business. Just 18% said digital sales should be less than 10%.
Although many admitted they had been concerned about the impact of e-commerce on sales at physical stores, most now found that it helped encourage store visits, with customers browsing online and then visiting a store to try something on. They also said that online promotions helped raise brand awareness and were a net benefit to physical store sales.
Going forward, around a third of respondents said the biggest issue was overhauling inventory management systems, in particular to make it possible to show warehouse and store inventory levels to online customers to maximise sales opportunities at their own stores. Some also talked about the possibility of reserving an item at a particular store for 48 hours. The second biggest priority was to invest more in O2O marketing to increase the flow of traffic from web to physical store through coupon campaigns, mobile marketing and store events marketed online, with the third being to improve smartphone compatibility of online stores.
The trade paper puts a conservative estimate on the value of the online fashion market at around ¥500 billion in FY2012, but expanding quickly to ¥1 trillion in the next two years. However, including sales of apparel at Rakuten, Amazon and other portals, as well as independents, the fashion e-commerce market is clearly already around ¥800-900 billion and will likely break ¥1 trillion in 2014.
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