Unable to ‘try’ before they buy, consumers would never embrace online clothes shopping – or so many retail analysts once argued.
Yet according to yStats, apparel is now the biggest e-commerce sector worldwide, the fastest-growing US e-commerce category, and accounts for more than three-quarters of internet sales in China.
With New York Fashion Week in full swing, let’s explore which factors have helped fashion e-tailers solve delivery-related issues and overcome any ‘try-before-you-buy’ limitations.
Factor 1: Free shipping and no-hassle exchange/return policy
High shipping costs are the biggest cause of shopping-cart abandonment, cited by 44% of shoppers, according to a survey by North American Technographics. Trialling free shipping, which prompted 65% of respondents to a comScore survey to refer websites to friends, nevertheless eats into margins and can render sales uneconomical. A UPS study showed that 63% of customers research return policies before they buy, too. Some 40% of apparel is returned – in Germany this figure rises to 50% – compared to just 5-10% of electrical goods.
Shoe and apparel seller Zappos deployed the strategy successfully, albeit patience was required. Founded in 1999 the US e-tailer absorbed €73m worth of annual shipping costs while sales soared. By the time it finally generated a profit in 2006, 65% of sales were repeat custom. Zappos removed the risk of buying multiple sizes by also offering free returns. This naturally burdened the e-tailer with greater costs still, but per-order shipping costs rise only marginally with each additional item, thus relieving pressure on margins. Zappos also mitigated costs by paying for cheap, ground-shipping returns. Reassured by a 365-day return timescale, most buyers nevertheless returned items quickly but tolerated waiting a few days for their refund. Zappos’ return process is simple too, with return labels easily printed from the website.
Factor 2: Using social media to deliver personalised customer service
Varying sizes, changing fashions, shifting seasons, buying for specific occasions – in no other industry is prompt, informed and friendly customer service more important. 53% of customers expect brands to reply to complaints within one hour – 72% when the medium is Twitter – according to Lithium Technologies. And a complaint can quickly escalate damagingly on Twitter, as Gap and American Apparel discovered.
ASOS, which boasts more than three million Facebook fans, responds directly to queries made through its social media channels – 44.7% of its tweets are direct replies. Scoring 87%, the UK fashion brand topped the Sticky Eyes social media index, which measures the level and positivity of customer engagement. It maintains separate Twitter accounts for customer service – one for men and one for women – and responds well beyond 5pm and even on weekends. Follow-up calls and emails are also made where appropriate. ASOS’s profits soared 23% to €66.5m in the year to 31 August 2013.
Factor 3: Partnering with a trusted ecommerce logistics company
Growth in immature markets is often hampered by underdeveloped financial services and inadequate, congested transport infrastructure. According to a 2013 study by Vela Asia, only 5% of e-commerce shoppers in Indonesia, Malaysia, Vietnam and the Philippines pay for goods online.
A trusted, end-to-end logistics partner can help you navigate the local market, its transport infrastructure and regulatory hurdles.
Bangkok-based WearYouWant, which partnered with an end-to-end e-commerce solutions company, achieved record sales the month after introducing Cash-on-Delivery (COD) in October 2013. “The conversion rate on COD is higher than bank transfer and bank service combined. The pay ratio, which is people who add the item to the cart and actually pay for it, for COD is 90%,” said Martin Toft Sørensen, the e-tailer’s co-founder. “Working with a logistics company also allows us to have our branded packaging. It means a lot to us since we’re still a young company. It helps us when people see our name. Plus the logistics company allows us to do target marketing.”
Not all e-tailers enjoy as much financial backing as Zappos did in its formative years or the sheer economies of scale of ASOS. But free shipping can be made economical by encouraging additional purchases – and 30% of returns are made after ordering multiple sizes – or offsetting free shipping with a higher purchase price. However, compare your prices against your competitors’ first.
Customer service best-practice as exemplified by ASOS is easier to emulate. Hire staff with strong digital-communication skills and consider incentivising community managers to work evenings and weekends by offering flexible working hours.
Finally, choose a logistics partner with glowing testimonials, evidence of reliable delivery and innovative services that help you adapt to local markets.