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Research shows that there is huge potential for online fashion retailing. The fashion business (in Malaysia) is now recording RM16 billion for 2014 (forecast) and it is expected to balloon up to RM21 billion in 2020 with a per annum growth rate of 7%. With 50% of the population owning computers and 56% internet penetration rate, coupled with an average of 5 credit or debit cards per household, it can only mean that the figure can grow significantly.
ASHION has been one of the popular means for entrepreneurs to showcase their passion for business. It may consist of small and medium enterprises but it has significantly contributed to the sub-economy of the creative industry in the country and pretty much fuel the retailing sector as well. It is no surprise that many youth, particularly female, have been interested in having their own fashion business. My wife is one of them. She has a retailing business selling costume jewellery on social media.
What is the current trend in fashion retailing in Malaysia? You may have noticed the word social media in the previous sentence. Well, that is the hint. Retailing has gone beyond physical stores. Gone are the days where people rush to Jalan Tunku Abdul Rahman to queue in front of Mun Loong or Globe Silk Store or even Wisma Yakin at Jalan Masjid India. People are talking about Zalora and Fashion Valet. In the new era of internet, youth are brave to purchase online when their parents are still contemplating using ATM machines! (I know my father refuse to use ATM machines - he queues at the bank with a cash cheque in his hand :)
What makes it possible for youngsters to embark on fashion retailing online? Gen Y in particular works on visual basis. What is being showcased online is good enough for them. On the other hand, Gen X still requires the touch and feel of the garment and worry too much about cyber security. There is a mismatch for economic potential here - the ones with money, i.e. Gen X, are the ones who are without confidence (for online purchase) and the ones who are willing, i.e. Gen Y, are not at the mature income level for significant purchases. Nevertheless, both Gen X and Y aging from 20 to 39 with average income of RM10,000 per month continues to be a major driving force as far as online purchases are concerned.
Research shows that there is huge potential for online fashion retailing. The fashion business (in Malaysia) is now recording RM16 billion for 2014 (forecast) and it is expected to balloon up to RM21 billion in 2020 with a per annum growth rate of 7%. With 50% of the population owning computers and 56% internet penetration rate, coupled with an average of 5 credit or debit cards per household, it can only mean that the figure can grow significantly. Malaysia is within the Top 10 of the e-commerce index (AT Kearney Study) garnering RM250 million worth of e-commerce transactions that is expected to double in the next 5 years. With the infrastructure and logistics quality for delivery that is on par with the United States of America (Based on World Economic Forum), it only reinforces the new age shopping habit.
The AT Kearney Study also uncovered that the new economies that will significantly fuel the fashion online industry globally are United Arab Emirates, Oman, Saudi Arabia, Kuwait, Brazil, China and,... surprise, surprise,.... Malaysia. As mentioned earlier, these countries have good logistical infrastructure unlike countries like Indonesia, India, Philippines and the consumers are more confident of online shopping unlike their counterparts in countries such as Russia, Turkey, Jordan, Panama and Morocco. An aspect worth gauging as far as confidence is concerned would be the return rates of goods sold via online. Some countries like Germany has return rate as high as 50%. Some countries have poor internet penetration and online banking facilities; and as such, their method of retailing is stuck at conventional cash-based transactions such as Cash on Delivery ("COD").
Sometimes the term "Demand Pull" does not work in the fashion industry as fashion is not derived from what people want. Fashion enlightens people with what they don't know what they want.
What is next in the new age fashion retailing world? Ever heard of augmented reality? Modern consumers demand much more that just product showcase. They want experience. They want to be told what their total fashion solution would be. Sometimes the term "Demand Pull" does not work in the fashion industry as fashion is not derived from what people want. Fashion enlightens people with what they don't know what they want. With that kind of complex behaviour, no wonder consumers get excited with fashion shows both live as well as online. The total combination of all apparels from head to toe matters. Some online stores offer that trial and error before a purchase is done. Consumers can pick and choose combinations of apparels - the augmented reality mentioned earlier. Some e-commerce engine piggy ride on the world of media and entertainment. TonTon for example gives viewers of online TV/Film content the pleasure of clicking on celebrities' image if they fancy what the celebrities are wearing - linking them to an e-commerce site that sells that particular outfit worn by the celebrities in the TV/Film show.
Another new age platform is the social media. Consumers are on the go and they want to see product showcase at the utmost mobility. Asian market will tend to follow the behaviours of large economy like China where 88% of its population uses social media and 66% writes product reviews after doing online purchases. Facebook and Instagram prove to be very useful for visual attention. You see many celebrities minding their daily lives on Facebook and Twitter and along with that, fashion gets showcased. Tagging a fashion brand with celebrities creates a powerful tool for marketing. Just recently I had a conversation with a famous emerging fashion designer, Fairuz Ramdan, who claims that he has achieved that success by using a real live walking fashion model, Wak Doyok (See picture in earlier paragraph above), who lives his life on daily basis with the sole purpose of showcasing his fashion every hour of his daily routine. A bizarre phenomenon but hey, if it works, why not? Today fashion designers have turned their backs on conventional mediums such as TV/Radio commercial or newspapers.
What is next in the genre of fashion? You may recall some of the countries I mentioned earlier. Most of them are from Middle East. Middle Eastern money is leaving Europe and the Americas and is heading its way towards Asia. South East Asia and China will be their (Middle Easterns) shopping heaven. Therefore, it makes perfect sense that Islamic fashion is being embraced. This movement alone will be the single most powerful catalyst to drive the world fashion movement to consider Islamic fashion as genre of the contemporary consumers globally. In Malaysia we have plenty of Islamic fashion designers and even the non-Islamic ones are testing waters (such as Melinda Looi). Islamic is in trend but not necessary forever. You will have to be dynamic in identifying what the market will accept. Zara restocks its designs every 2 weeks and Uniqlo implements "planned obsolescence" by forcing new designs to the market rather than reacting to consumers' preference - tell consumers what they don't know what they want (again).
So in a nut shell, if you want to be a fashion business entrepreneur, what do you need to consider? Well, keep your costs lean. Concentrate on matters that matter most. Go online. Forget about opening your physical store first. Continuing with the conventional placement at other retailers such as Metrojaya, Parksons and the like but do it concurrently with your online presence. Do Zalora or Fashion Valet. Do augmented reality stuff and surf on social media wave. Strive for efficiency and effectiveness of delivery activities. Choose reliable delivery partners to ensure goods get delivered expeditiously and choose reliable suppliers so that you have an optimal inventory level that keeps warehousing cost to the minimal yet ensuring sufficient stock to met demand - the Economic Order Quantity.
Price your goods wisely because online buyers are very price sensitive. Benchmark your product and its pricing to competitors and rationalise what margin is healthy for your cost structure. If you have trouble in that, you may have to reconsider your cost structure or types of products. Finally, spend money on marketing that is focused in addressing your audience - social media being the best. When business gets more solid, you should also go for Omni-channelling, which means, you use all methods of selling with interaction with consumers: Online, Mobile, Catalogues, Call Centre, Pop Ups, Stores, COD, Fashion Shows, Linking e-Commerce to Content, etc - integrating online and offline channels.
..... tell consumers what they don't know what they want .....
* kopihangtuah
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