How Can The Fast Fashion Business, Which Has Been Defeated Repeatedly, Be Targeted By E-Commerce Platforms?

It is a true portrayal of overseas fast fashion brands in China in recent years. Among the three major fast fashion brands in the world, ZARA and H&M have continued to close their stores in China, and even suffered a decline in revenue. GAP directly sells its business in China to Baozun E-commerce. Due to the drag of GAP, the net loss of Baozun E-commerce will nearly triple in 2022.

Although the development of overseas fast fashion brands is poor, domestic e-commerce platforms are all eyeing fast fashion. In half a year, bytes are laid out fast and fashionable twice in a row. Taobao launched its own fast fashion clothing store "ifashion" offline and online. Jingdong and Pinduoduo also have relevant layout at home and abroad.

It just reflects the industry change of fast fashion. After e-commerce cut off the middle link, consumers' feedback on preferences becomes faster, and it is more difficult for fast fashion to capture the "fashion trend", leading to the failure of ZARA and H&M localization. However, capturing consumer preferences and forecasting trends is the ability circle of e-commerce, and SHEIN is the proof of * * *. SHEIN has become the leader, and e-commerce giants will certainly not miss this opportunity.

This paper holds the following core views:

1. Fast fashion is the most suitable category for e-commerce. The gross profit rate of fast fashion is more than 50%, far more than that of ordinary consumer goods (20%). It is a category that brings ******************* to e-commerce self support. More importantly, fast fashion focuses on fast iteration, and e-commerce platforms can make better predictions on trend iteration by virtue of data advantages.

2. The e-commerce platform has formed a * * * advantage over traditional fast fashion brands. In the trend prediction, e-commerce's response speed and innovation speed are far higher than traditional fast fashion enterprises. The amount of new products launched by ZARA in one year is only equivalent to the amount of new products launched by SHEIN in one month. In terms of price, e-commerce relies on a more flexible supply chain production model, and the price of most products can reach half of that of fast fashion brands.

3. In the past, fast fashion was positioned between high-end brands and mass brands. Nowadays, fast fashion is extending to both ends of cost-effective products and high-end brands. The former is the embodiment of e-commerce platform exchanging price for market, while the latter is the necessary choice made by traditional fast fashion brands to cope with competition and maintain growth.

　 　/ 01 /

E-commerce focuses on fast fashion

Since this year, you can clearly notice that all major e-commerce platforms are launching their own fashion brands in their own ways.

Not long ago, Byte Beat set up a self-supporting clothing team and recently launched a store called "Feiyun Weaving" on Diaoyin E-commerce. "Feiyun Weaving" shop mainly sells fashionable women's clothing, including down jackets, knitwear and thermal clothing. There is no obvious difference between the price and that of mainstream fast fashion brands, ranging from tens to hundreds of yuan.

In fact, this is not byte * * * getting involved in fast fashion. Half a year ago, Byte just launched IfYoouou, a fast fashion independent station. Earlier, Byte also invested in fast fashion brands * * * and Starlinker, etc.

Fast power and fashion is not just a move of dithering. In the Internet field, Alibaba, JD, Pinduoduo, or overseas or domestic are all making efforts to become fast and fashionable.

For example, Taobao launched its own fast fashion clothing store "ifashion" in the domestic market, and launched cross-border fast fashion e-commerce brand AllyLikes and fast fashion e-commerce platform Miravia in overseas Alibaba. In addition, JD has also launched the "JD Fashion" before in order to create one of the top 100 fashion benchmark brands. As for Pinduoduo, although it does not promote fast fashion in China, TEMU, which has made great efforts overseas, is based on fast fashion clothing categories.

To some extent, the e-commerce platform is driven by SHEIN in its fast fashion.

SHEIN focuses on fast fashion women's clothing with cost-effective performance. At present, its business covers more than 220 countries and regions. Looking at the development of SHEIN, its growth rate is comparable to that of overseas versions. In 2022, SHEIN's revenue will be $22.7 billion, up 52.8% year on year. In 2020 and 2021, the year-on-year growth rate of SHEIN's revenue was 211% and 60%. From 2014 to 2020, SHEIN has achieved 100% year-on-year growth for six consecutive years.

The extremely fast growth rate has made SHEIN recognized by investors. Despite the depressed investment and financing environment, SHEIN's valuation SHEIN has lost a third of its value, but its valuation is still around 65 billion dollars, more than JD.

The great success of SHEIN's efforts in fast fashion e-commerce has given a new idea to the increasingly involved e-commerce giants.

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Self supporting * * * selection

In the inner volume of e-commerce, self support has become the choice for e-commerce to strengthen its advantages, and fast fashion clothing is the category most suitable for e-commerce self support.

From the perspective of market space, the clothing market is huge and will continue to grow in the next few years. According to the consulting data of Ai Media, the retail sales of clothing commodities above the designated size in China will reach 997.46 billion yuan in 2021. It is expected to reach 1107.18 billion yuan in 2025.

Not only is the market large, but also the fast fashion clothing is far higher than other consumer goods. The gross profit rate of Inditex and H&M, the parent companies of ZARA, is more than 50% all the year round. The gross profit margin of VW FMCG is generally around 20%. This means that the amount of * * * gained by the e-commerce platform is far higher than that of other products.

In terms of the external environment, the decline of traditional fast fashion brands has also given e-commerce platforms a good opportunity to exert themselves. In recent years, the performance of ZARA, H&M, GAP and other traditional fast fashion brands in China has gone from bad to worse. One of the most obvious cases is that GAP sold its business in China to Baozun E-commerce, which in turn has become a drag on the performance of Baozun E-commerce - because of the poor performance of GAP, the loss of Baozun E-commerce will triple in 2022.

There are many reasons for the decline of fast fashion brands in Europe and the United States, but e-commerce has brought about changes in the supply and demand side, making it lose the advantage of fast iteration. E-commerce cut off multiple distribution links in midstream, and the speed of consumers' feedback on preferences has also become faster. For fast fashion driven by new products, it means that it is more difficult to catch "fashion trends". This is also an important reason for the unsuccessful localization of ZARE and H&M.

But it is the ability circle of e-commerce to catch fashion trends. Relying on the data advantage, e-commerce platforms have a much higher grasp of trend iteration than traditional fashion brands.

Compared with traditional fast fashion brands, which mainly focus on offline sales, e-commerce platforms have more consumer data and user behavior to predict fashion trends. For example, SHEIN can improve the prediction accuracy by connecting the user behavior of its app and website with the back end, so that it can extract popular elements in different regions in real time, and even predict fashion trends. For example, in 2018, Shein successfully predicted that lace is popular in America in summer and cotton is popular in India.

Even if the trend prediction is wrong, the e-commerce platform also has a strong error correction capability. After product prediction, SHEIN will adjust the market test by virtue of its digital capability. For example, it conducts A/B tests on a large number of SKUs every day, and then adjusts the order quantity of the factory in real time according to the website and App user behavior, so as to automatically predict demand and adjust inventory in real time, and digitize the entire production process of the clothing industry.

With this accurate trend prediction ability and strong error correction ability, e-commerce platforms have the confidence to launch new products faster, and even open the intergenerational gap with traditional fast fashion brands: SHEIN can achieve an average of 2000 new products every day. As the ancestor of fast fashion, ZARA is worshipped by the industry. It can launch 12000 new models twice a week and every year, which is equivalent to the number of new models launched by SHEIN in a week.

With multiple advantages, it is a general trend for e-commerce platforms to become more fashionable. However, the entry of e-commerce platforms has also changed the development logic of the fast fashion industry.

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Fast fashion is extending from middle brand to both ends

In the past, fast fashion brands were often positioned between high-end brands and mass brands. On the one hand, fast fashion quickly follows the design concept and style of high-end brands, and on the other hand, it achieves low prices with the help of industrialization and the accompanying global supply chain, which has formed the characteristics of "fashion, rapid renewal, and affordable" and is popular all over the world.

But now fast fashion brands are extending from the middle to both ends of high-end brands and high price products. The former shows the trend of high-end upgrading of ZARA and other traditional fast fashion brands, while the latter shows the behavior of TEMU and SHEIN exchanging low prices for the market.

The change of industrial logic began with the entry of e-commerce platforms. The core weapon of SHEIN and TEMU in overseas market is price. Both of them have achieved the fast fashion product positioning, but their prices are lower than those of popular brands. According to statistics, the average unit price of American women's clothing in 2022 will be about $14.95, and that of men's clothing will be $14.94. The average price of SHEIN clothing products is only 10.70 dollars, and the price of TEMU is lower than SHEIN.

Such e-commerce platforms as SHEIN and TEMU can make fast fashion * * * cheap, which is the product of the combination of Internet mode and Made in China. Through website data, analysis of trends and prediction of popularity, e-commerce platforms can produce goods in small batches or directly rely on pictures for terminal pre-sale. After creating explosive products, they can focus on large-scale production to reduce costs. And the rapid response capability of Made in China also supports the sales model of e-commerce platform, which is sometimes small scale test and sometimes mass production.

However, it is obviously difficult for traditional fast fashion brands to run through the above model. The trend is not as accurate as the e-commerce platform's prediction, and the price is not as low as the e-commerce platform. The traditional fast fashion brands want to continue to grow, only the high-end way is left.

This is also what ZARA has focused on in the past few years. ZARA mainly makes high-end transformation through product co branding and raw material upgrading. In May 2022, ZARA and the new creative director of luxury brand Bally, Rhuigi Villase ? or, reached a cooperation to launch the new brand Redesigning Human Uniform; In September, ZARA launched capsule series together with American designer Narciso Rodriguez. In terms of product composition, the high-end fabrics used by ZARA have also improved. In 2021, the use rate of cashmere will increase by 44% and that of leather will increase by 16%.

Thanks to the co branding and product upgrading, the price of ZARA products has increased significantly. UBS data shows that from 2022, the initial price of ZARA products every month will rise by 10% or more than a year ago.

From the results, the high-end upgrade of ZARA has also achieved results. In fiscal year 2022, the sales of Inditex, the parent company of ZARA, increased by 17.5% year on year, and the net sales of * * * increased by 27% year on year. ZARA is also a company that has achieved * * * growth among traditional fast fashion brands in the past year.