Paul Fredrick
Transcription
Paul Fredrick
IR RESEARCH INTERNET R E TA I L E R the global leader in e-commerce data BEHIND THE ONLINE APPAREL BOOM There’s an explosion in online sales of apparel. Here are the financial, operating and marketing statistics and trends of the 250 leading apparel e-retailers that are taking all of the growth away from stores. Sponsored by: BEHIND THE ONLINE APPAREL BOOM BY JACK LOVE An exclusive look at who and what is steering U.S. apparel sales to the web from stores. T he United States is the largest apparel market in the world, consuming about 30% of the output of thousands of apparel manufacturers—and millions of their workers—around the globe. And more of America’s retailers are dedicated to selling apparel than any other product line. So when there’s a sea change in the way apparel is sold, it’s a very big deal. According to a new research report published last month by Internet Retailer, that transformation has begun as billions of dollars of apparel sales are moving from physical stores to the internet. That report, entitled “Behind the Online Apparel Boom,” reveals that U.S. websites last year sold an estimated $80 billion in apparel, an increase of 19.7% from the prior year, growth that’s fully five percentage points greater than the country’s total e-commerce market. By comparison, U.S. store sales of apparel grew a mere 1.1% to an estimated $375 billion in 2015. With apparel sales surging online and sagging in stores, the web’s share of 2015 apparel sales rose to 17%, up from 14.8% in 2014. By comparison, e-commerce last year accounted for 10.6% of retail sales when factoring out items not normally bought online, such as fuel and automobiles, according to the U.S. Commerce Department. Not since Amazon.com Inc. began cannibalizing bookstores in the 1990s and Apple Inc.’s iTunes did the same to music stores a decade later, have web-only merchants gobbled up such a significant share of a major retail market at the expense of stores. Much of the growth of the online apparel market share is attributable to the massive expansion of Amazon’s marketplace, through which Amazon markets and processes purchases of apparel for hundreds of mostly small and midsized apparel retailers and manufacturers, taking a cut of each transaction. Created in 2002, apparel and accessories SKUs and sales on Amazon’s marketplace have soared in recent years, and last year alone grew 48% to $16.3 billion, according to research from Cowen Group. 1 » BEHIND THE ONLINE APPAREL BOOM Online Share of U.S. Apparel 2014 2015 14.8% 17.0% 220 basis points increase Source: Top500Guide.com Amazon’s apparel sales growth came largely at the expense of stores, not from other apparel e-retailers. The 250 apparel and accessories merchants included in Internet Retailer’s Top 1000 database, which ranks America’s largest e-retailers based on 2015 web sales, grew their combined revenues by 14%. That roughly equals the average growth rate for all e-retailers and suggests that Amazon’s apparel sales growth was incremental to—not detrimental to—online sales of other apparel merchants. The Internet Retailer research report analyzes the sales, marketing and shopper trends in the online apparel market through a detailed analysis of the 250 apparel e-retailers ranked in the Top 1000 database. And one of its principal conclusions is that apparel websites owned by retailers that also operate stores are more than holding their own in apparel e-retailing. For example, the websites of the nation’s nine leading department store chains in the database—all formed prior to the creation of Amazon’s marketplace—collectively account for the largest share of the online apparel market. In fact, despite the growth of Amazon’s online apparel business, the department stores’ websites last year grew 19% to $15.6 billion, nearly all of it in apparel. Sponsored by: Bronto The success of department stores helps explain why retail chains’ websites still account for more than half of the nation’s online apparel sales. Fully 63.9% of total sales of the 250 apparel websites included in the Top 1000 were generated by retail chains’ websites, with only 14.3% by web-only merchants, 14.5% by apparel manufacturers and 7.3% by catalogers. The online performance of department stores is the biggest single reason for this anomaly. Unlike retail chains in many other segments of the retail market, department stores were early adopters of e-commerce technology, setting up their sites between 1996 and 2002, and heavily promoting them through paid search advertising to leverage their brands and loyal customer bases. Web-Only Apparel Merchants Are Growing Faster This experience is different from most other merchandise segments of the e-commerce market, where web-only merchants hold sway. Nearly 42% of the total sales of Top 1000 e-commerce operators are controlled by web-only merchants, which last year grew 16.9%, well above the average 14% growth rate of all Top 1000 e-retailers. Even with the counter-balancing effect of the department stores, however, web businesses of all retail chains accounted for 28.1% of total online sales, and they grew just 11.7% last year. is Nine Line Apparel, a 4-year-old site that sells patriotic clothing and accessories geared to military veterans and first responders. It became the country’s fastest-growing apparel e-retailer when it grew 391% last year to $9.3 million in annual sales. It expects its e-commerce sales to exceed $15 million this year. Overall, web-only apparel merchants last year grew faster than their competitors from retail chains and branded manufacturers. In addition to Amazon’s influence and the historic success of apparel chains in e-commerce, Internet Retailer research reveals many new trends driving the growth and changing the nature on the online apparel market. These are summarized below. As the Nine Line story illustrates, the online apparel market is becoming more segmented. Internet Retailer’s research measured the sales and growth of 17 merchandise segments of the online apparel market, the first such detailed analysis of its kind. It shows that 77% of the market comes from four traditional segments—department stores (31%), other general apparel merchants (26%), shoe manufacturers and retailers (12%) and women’s apparel (8%). But four of the five fastest-growing segments of the online apparel trade are either narrow or underserved niches, including men’s apparel (which grew at 29%), outerwear (up 26.6%), specialty apparel such as the merchandise Nine Line sells (up 23.5%); and plus-size apparel (up 19.4%). (See chart, page 12.) 16.3% Web-Only 14.8% Retail Chain 13.8% Manufacturer 3.9% Cataloger TOTAL 14.0% Source: Top500Guide.com TARGETING NEW MARKET SEGMENTS WEB-ONLY MERCHANTS Until a few years ago, clothing merchants and manufacturers with well-established store and product brands, such as Nike Inc., Macy’s Inc., Lands’ End Inc. and Coach Inc., drove much of the online apparel business. But last year, seven of the 10 fastest-growing apparel e-retailers were newer webonly merchants without household names that are targeting extremely narrow market segments. One of many examples Online apparel sales soar and take market share from stores U.S. Apparel Sales 2015 2014 2015 Growth Online Apparel 250 $50,401,772,630 $44,219,513,219 14.0% Amazon & Other E-Retailers $26,581,522,985 $20,076,985,972 32.4% Total Online Apparel $76,983,295,615 $64,296,499,191 19.7% Apparel Stores $375,350,000,000 $371,230,000,000 1.1% Total Apparel Sales $452,333,295,615 $435,526,499,191 3.9% 17.0% 14.8% Online Share of U.S. Apparel Source: Top500Guide.com, U.S. Commerce Department, Internet Retailer estimates. 2 » BEHIND THE ONLINE APPAREL BOOM Sponsored by: Bronto Conversely, some of the slowest-growing online apparel segments feature a wider selection of products. The general apparel category grew just 9.3%, well below the market. Off-price and flash-sales apparel, which are focused on lower prices and not on a product niche, also underperformed the market, growing just 8.7% and 2.7% respectively. But the worst performing apparel and accessory segment online is handbags and luggage, once a high flier in e-commerce. This segment is still led, but no longer dominated, by Coach. Its website once featured substantial discounts on promoted items, which led to lower margins and possibly tarnished the high-end nature of the brand. Last year the brand’s management eliminated those promotions. Web shoppers revolted, and Coach’s online sales fell last year to an estimated $200 million from $500 million the year before, the largest decline in the apparel and accessories market. The moral: When web merchants compete on price, they must do so only if discounted prices can be sustained over the long term. MARKETING CHANGES While department stores and other major apparel brands established a dominant position in the online apparel market through heavy spending on search advertising, paid search marketing is no longer yielding incremental gains in apparel sales, likely because this marketing platform is so saturated. It is true that the 10 apparel e-retailers who spent the most on paid search grew sales last year by 19%, but those gains can be traced to other forms of marketing. Indeed, the 10 apparel e-retailers spending the least on paid search marketing grew nearly 25% in 2015, thanks to other digital marketing channels. A similar pattern is seen with the original form of digital marketing—email—where the biggest users grew at a slower rate than the least frequent emailers. On the other hand, social media marketing appears to be the most powerful form of online apparel promotion right now. The 10 apparel websites with the greatest number of Facebook likes—and highest ratio of likes to sales—grew 18.6% last year, compared to just 5.6% for apparel e-retailers with the weakest presence on Facebook. A similar, though somewhat smaller, spread in sales is found between apparel websites that have the largest and smallest following on Twitter. 3 » BEHIND THE ONLINE APPAREL BOOM Men’s Apparel: Fastest-Growing Segment of Online Apparel 2015 growth rate Men’s Apparel 29.0% Outerwear 26.6% Specialty Apparel 23.5% Shoes 20.5% Plus-Size Apparel 19.4% Department Stores 19.0% Custom 18.4% Women’s Apparel 17.7% Children’s 15.9% Sportswear 15.9% Uniform/Tradeswear 15.7% Fashion Accessories 13.1% Online Apparel 250 average growth General Apparel 9.3% Off-Price Apparel Sleepwear/Lingerie 8.7% 4.6% Flash-Sales Apparel 2.7% -31.5% Handbags/Luggage 14.0% Source: Top500Guide.com Sponsored by: Bronto "The 10 apparel websites with the highest percentage of male shoppers (a median of 65%) last year grew at an impressive 21.5% rate" THE SHIFTING DEMOGRAPHICS OF ONLINE APPAREL SHOPPERS It may come as no surprise that women make up the largest segment of online apparel shoppers, averaging 56% of the buyers on the 250 apparel sites studied in the report. But it is surprising that the 10 apparel websites with the highest percentage of male shoppers (a median of 65%) last year grew at an impressive 21.5% rate, compared to just 13.9% for the 10 apparel sites with the highest percentage of female shoppers (a median of 75.5%). These demographics coincide with the report’s revelation that men’s apparel is the fastest-growing segment in the online apparel trade. Broken out by age, apparel websites that appeal mostly to millennial-age shoppers are also growing faster than sites targeting older shoppers, once the core of the online apparel business. Sales at the 10 apparel e-retailers with the greatest percentage of shoppers 34 years old and under (a median 62% of these merchants’ customers) grew faster than the 10 apparel websites with highest median percentage of shoppers 35 and older (78%). This is despite the fact that the former group had an average ticket of just $91, or $38 below the average ticket of all online apparel merchants in the study. 4 » BEHIND THE ONLINE APPAREL BOOM This age demographic variation coincides with trends related to the incomes of online apparel shoppers. Countering the impression that wealthier shoppers are to be more highly coveted, the 10 apparel websites with the highest percentage of shoppers earning less than $60,000 annually (61%) grew by 16% last year, three times the growth rate of the 10 apparel e-retailers with the wealthiest shoppers, 64% of whom had incomes of greater than $60,000. This is despite the fact that the average ticket for the first group was just $78, less than half the $199 average ticket of the second group. With online sales pressing ever closer to 20% of total U.S. apparel sales, retailers must understand who and which categories are steering growth. Jack love is the founder and publisher of Internet Retailer JACK@VERTICALWEBMEDIA.COM | @JACKLOVEIR Sponsored by: Bronto SPONSORED INSIGHT Cart and browse recovery campaigns drive revenue, but don’t require extensive resources Paul Fredrick is a respected brand among men’s apparel. The company had made strides over the years to effectively reach its online shoppers, but recently decided to up its communications game. “Our biggest priority was to improve the relevance of our email communication to customers,” says Scott Drayer, vice president of marketing at Paul Fredrick. “And we thought that through implementing campaign automations, we could improve the relevance and speed of communication– which would be beneficial for both Paul Fredrick and our customers.” By using automated campaigns, such as cart recovery and browse recovery, Paul Fredrick is among innovative retailers finding ways to become more relevant to shoppers. “Technology is allowing apparel brands to take better command of their conversion funnel,” says Susan Wall, vice president, marketing at Bronto, a commerce marketing automation platform provider. But not all retailers are taking advantage of the benefits these tools offer, likely because they think it may be too difficult to implement and maintain with their limited resources, Wall says. “And that’s simply not true,” she adds. “With these cart recovery and browse recovery apps, a nontechnical business user can dream up, build and deploy sophisticated, automated marketing plans–without the need for IT help.” Cart recovery apps allow marketers to send automated, personalized emails to shoppers who put something in their shopping cart and then leave the site without purchasing. “Cart recovery campaigns are all about getting those cartabandoning customers back to the site to complete that purchase,” Wall says. “These emails are incredibly powerful persuaders.” So powerful, in fact, that retailers that use Bronto’s Cart Recovery app have seen 53 times the return on investment, according to Bronto’s analysis. Browse recovery also is a powerful tool, Wall says. It captures and stores product page views for all shoppers and ties that behavior to a known contact or saves the browse activity so it can later be matched to a known contact. With that information, merchants can set up automated emails that will encourage shoppers to revisit their sites and check out those items they’ve browsed, or offer recommendations for similar items. “Browse recovery applications have been used by larger commerce marketers, such as Amazon, but have only recently reached the ease and cost effectiveness that allow small and mid-tier merchants the capability,” Wall says. Wall says these tools are more valuable to retailers now than ever because of the evolving apparel e-commerce landscape. “Customer expectations are changing overall,” Wall says. “They know retailers have a lot of information about them, and they expect those brands to use it to deliver personalized communications. And that’s especially important in apparel, where customers are probably doing more browsing than they are when shopping in other categories.” These tools have certainly paid off for Paul Fredrick, which uses Bronto’s platform for commerce marketing automation. “Automated campaigns, including cart recovery and browse recovery messages, now account for about 30% of our email-generated revenue,” Drayer says. Additionally, since implementing Bronto’s platform, Paul Fredrick has achieved more than 70% revenue growth from recurring messages and a 5.6% increase in emailgenerated revenue year over year from post-purchase email campaigns. And the company’s abandoned cart messages saw a conversion rate of more than 10% in just three months. Drayer adds that with Paul Fredrick’s old platform, campaigns used to take weeks or more to execute. Now, he says, they only take minutes or hours. “The interface is very user friendly and allows us to accomplish things quite easily–giving us the opportunity to try them much more easily,” he says. Wall says that rather than feeling intimidated, apparel brands should be empowered by these tools. “Every year, retailers are feeling more pressure to drive revenue, and they need more ways to do that without adding on new resources,” she explains. “With these apps, there is so much more that retailers can do with their existing resources to drive more revenue. And Bronto can help them do that.” Top 250 Apparel Leaders “Automated campaigns, including cart recovery and browse recovery messages, now account for about 30% of our emailgenerated revenue.” Scott Drayer Vice President, Marketing The Bronto Marketing Platform is the ultimate solution for retailers to drive revenue through email and cross-channel marketing. With Bronto, it’s easy for Paul Fredrick to analyze, target and reach their audience with highly-tailored, personalized messages that get noticed and generate clicks and orders. For more information, visit bronto.com. THE ONLINE APPAREL 250 The largest e-retailers in North America that predominantly sell apparel are ranked here in their primary segment of apparel retailing. These merchants collectively represent 65.5% of the online apparel market in the U.S. 7 General Apparel Shoes Rank Rank Company Name Women’s Apparel Company Name Rank Company Name 1 Gap Inc. 1 Nike Inc. 1 Yoox Net-a-Porter Group 2 L.L. Bean Inc. 2 Foot Locker Inc. 2 Chico's FAS Inc. 3 Urban Outfitters Inc. 3 adidas America Inc. 3 Nasty Gal Inc. 4 Lands’ End 4 JustFab Inc. 4 Revolve Clothing 5 J. Crew Group Inc. 5 Shoebuy 5 The Talbots Inc. 6 Ralph Lauren Media 6 Tory Burch LLC 6 Kate Spade 7 Abercrombie & Fitch Co. 7 DSW Inc. 7 ModCloth Inc. 8 American Eagle 8 Deckers Brands 8 The Real Real Inc. 9 Eddie Bauer LLC 9 Shoes.com 9 The Limited 10 Express Inc. 10 Mason Companies Inc. 10 New York & Co. Inc. 11 Karmaloop.com 11 Caleres 11 Bluefly Inc. 12 Aéropostale Inc. 12 Nine West Holdings Inc. 12 Rent the Runway Inc. 13 Brooks Brothers 13 Crocs Inc. 13 Forever 21 14 Boden 14 Benchmark Brands Inc. 14 AmeriMark Direct LLC 15 ASOS.com Ltd. 15 TOMS Shoes Inc. 15 David's Bridal Inc. 16 Levi Strauss & Co. 16 Wolverine Worldwide Inc. 16 AMI Clubwear 17 DrJays.com 17 New Balance 17 Christopher & Banks Corp. 18 The Buckle Inc. 18 Payless ShoeSource Inc. 18 bebe stores Inc. 19 Guess Inc. 19 PlanetShoes 19 Destination Maternity Corp. 20 Hot Topic Inc. 20 Stuart Weitzman LLC 20 Lafayette 148 New York 21 Sundance Catalog Co. 21 Aldo Group Inc. 21 Dolls Kill 22 Trina Turk 22 Sole Society 22 Reitmans 23 Hugo Boss 23 Genesco Inc. 23 Eileen Fisher Inc. 24 Everlane Inc. 24 Skechers USA Inc. 24 PromGirl LLC 25 American Apparel Inc. 25 Heels.com 25 BCBG Max Azria Group LLC 26 Pacific Sunwear of California 26 Boot Barn Inc. 26 Charlotte Russe Inc. 27 Uniqlo USA Ltd. 27 ShoeZoo.com LLC 27 Peruvian Connection Ltd. 28 Burberry Ltd. 28 JGear Inc. 28 DVF.com 29 Tilly's Inc. 29 StreetModa.com 29 The Wet Seal LLC 30 A/X Armani Exchange 30 Sneakerhead.com 30 Dailylook 31 Michael Kors 31 Shiekh Shoes 31 Skye Associates LLC 32 Jimmy Jazz 32 Cole Haan LLC 32 The Red Dress Boutique 33 rue21 Inc. 33 R.G. Barry Corp. 33 Ulla Popken 34 Roots Canada Ltd. 34 Shoes of Prey Ltd. 34 Francesca's 35 Island Co. 35 BootBay.com 35 Yoogi's Closet 36 Vince LLC 36 Gotham City Online 36 Lilly Pulitzer 37 Tonzof Inc. 37 Okabashi Brands Inc. 37 Le Tote Inc. 38 C.C. Filson Co. 38 WhatSheBuys 39 Hermes International 39 Planet Blue 40 True Religion Brand Jeans 40 Michael Stars Inc. 41 Calvin Klein Inc. 41 BoutiquetoYou.com 42 80sTees.com Inc. 42 UsTrendy 43 BlueCotton 43 KatydidCollection.com 44 Steven Alan 44 Long Tall Sally 45 Lifted Research Group Inc. 46 South Moon Under 47 Luxury Divas Corp. 47 Luxury Divas Corp. » BEHIND THE ONLINE APPAREL BOOM Sponsored by: Bronto Sportswear Children’s Clothing Rank Rank Company Name The Children’s Place Rank Company Name 1 Fanatics Inc. 1 Coach Inc. 2 VF Corp. 2 Carter's Inc. 2 eBags Inc. 3 LuLuLemon Athletica Inc. 3 Hanna Andersson Corp. 3 Vera Bradley Retail Stores 4 Under Armour Inc. 4 The Gymboree Corp. 4 Tumi Inc. 5 The Finish Line Inc. 5 Tea Collection 5 Bag Borrow or Steal Inc. 6 MLB Advanced Media 6 CookiesKids.com 6 Kaehler Luggage 7 National Football League 7 Lolly Wolly Doodle Inc. 7 Fashionphile LLC 8 The Orvis Co. Inc. 8 Children's Wear Digest Inc. 8 Emilie M. Accessories LLC Zumiez Inc. 9 BabyEarth 9 6 Pack Fitness 10 Swap.com 10 10 Road Runner Sports Inc. 11 RevZilla 12 Discount Dance Supply Men’s Apparel 13 National Hockey League Rank 14 Title Nine 1 The Men's Wearhouse Inc. 15 NBA Media Ventures LLC 2 Bonobos 16 Prep Sportswear 3 Destination XL Group Inc. 17 Swell Inc. 4 J. Hilburn Inc. 18 World Wrestling Entertainment 5 Paul Fredrick 19 Speedo USA 6 Andrew Christian 20 Quiksilver Inc. 7 Nine Line Apparel 21 Active Ride Shop 22 LogoUp.com Inc. Specialty Apparel 23 MMAWarehouse LLC Rank 24 Barstool Sports 1 Sheplers Inc. (Western) 25 Massey's Outfitters 2 Betabrand Inc. (Crowdsourcing) 26 Sports World Chicago 3 Tipsy Elves LLC (Humorous) 27 StrongerRx Worldwide Corp. 4 Inked Shop (Think Tattoos) 5 Galls LLC ("Public Safety") Sleepwear/Lingerie 6 Country Club Prep Rank Company Name 7 ShoptheTV.com 1 L Brands Inc. (Victoria's Secret) 8 Captain Dave's (Police) 2 Bare Necessities Inc. 9 Express Design Group 3 Jockey International Inc. 4 Spanx Inc. 5 Frederick's of Hollywood Inc. 6 HipsandCurves.com 7 HanesBrands Inc. 8 Hourglass Angel LLC 9 WebUndies.com LLC 10 Rank Company Name Company Name Phoenix Leather Goods Uniforms/Tradeswear Rank Company Name 1 Duluth Trading Company 2 Dungarees.net 3 U.S. Patriot Tactical 4 Working Person's Enterprises 5 Queensboro.com 6 BareBones WorkWear 7 ChiefSupply.com 8 French Toast 9 Slate Rock Safety LLC 10 Historical Emporium Inc. Outerwear Rank Company Name 1 Columbia Sportswear Co. 2 LeatherUp.com 3 Coolibar Inc. 4 Ibex Outdoor Clothing LLC 5 Rock/Creek Outfitters 6 ScotteVest Inc. Ranger Up Plus- Sized Apparel Custom Apparel Rank Flash Sale Apparel » Handbags/Luggage 1 9 8 Company Name Company Name Company Name 1 Ascena Retail Group 1 CustomInk 2 Eloquii Design Inc. 2 Threadless.com 3 Igigi Inc. 3 Spreadshirt Inc. 4 Ashley Stewart Inc. 4 Indochino 5 JunoActive by Junonia 5 SunFrog Shirts 6 DesignByHumans.com Inc. 1 Gilt Groupe 2 RueLaLa.com 3 Beyond the Rack Rank 4 JackThreads.com 1 TJX Cos. Inc. 5 The Clymb 2 BHFO Inc. 6 DesignByHumans.com Inc. 3 Stein Mart Inc. 4 Burlington Coat Factory 5 Steals.com Off- Price Apparel BEHIND THE ONLINE APPAREL BOOM Rank Company Name Company Name Fashion Accessories Rank Company Name 1 Wild Attire Inc. 2 Trend Nation LLC 3 The Tie Bar Sponsored by: Bronto THE CONCLUSION All of the sales trends in online apparel retailing point to an inescapable conclusion that selling clothing and accessories online is a very hot market at the moment. But simply competing in this market does not guarantee success. Though apparel is one of the web’s fastest growing markets, it is perhaps the most competitive. Responding to that competition by offering deep promotional discounts has not been a strategy that leads to success. Nor does following the crowd that appeals to the most common types of shoppers with the largest selection of apparel. Targeting a select group of shoppers with a highly specialized line of apparel—and building and strengthening your brand with a high level of social networking with your shopper base—is a formula more likely to yield success online. Couple that strategy with some level of participation in apparel marketplaces run by Amazon and others, as opposed to going it entirely alone—is perhaps the very best formula for prospering in today’s online apparel market. FULL REPORT “BEHIND THE ONLINE APPAREL BOOM” How to Obtain the Full Report The 38-page “Behind the Online Apparel Boom” is available for purchase in a downloadable PDF format for $299. It contains complete rankings and growth rates of all 250 apparel e-retailers in the Top 1000 database, complete details of the report’s findings presented in 30 charts and tables, and an in-depth analysis of the leaders and latest trends in the country’s online apparel market. For details and to order, visit www.InternetRetailer. com/top-1000-apparel-leaders/ For details and to order, visit www.InternetRetailer.com/top-1000-apparel-leaders/ An Exclusive Report from Internet Retailer ©Copyright 2016 Internet Retailer® & Vertical Web Media LLC. All rights reserved. Top 500 Guide® is a registered trademark of VWM.