Do Fashion Brands need a B2B eCommerce store?
Fashion brands need to carefully consider their sales channels, as each has its advantages and disadvantages. Although the wholesale channel is by far the largest revenue source for fashion brands, eCommerce is becoming more important every day.
This article looks at both wholesale and eCommerce models, to determine which one will be best suited to your strategy. It also provides some ideas about how you can maximize your returns in either model.
Wholesale Model
The wholesale model is incredibly popular for established fashion brands that want to establish themselves quickly. You sell product directly to boutiques or distributors who then offer your brand/products to their customers. This means that you skip the extra step of building an eCommerce site, but rather focus on just making sure that boutiques and distributors want to sell your product. It is a quick way to establish yourself in the market quickly.
However, there are disadvantages with this model. The whole reason why people buy fashion brands online is because they want an easy shopping experience. With Apparel Manufacturers, you need to deal with sales agents who might not know much about your brand or product line. This can lead to customer complaints when they find out that you don’t have the size/color/variation that they want. Also, it’s difficult for customers to take part in trend discussions and connect with your brand when points of contact are limited (eCommerce allows customers and fans to comment on each item individually).
Wholesale definitely has its limitations, which is why we always suggest that brands start with an eCommerce site, before establishing a wholesale model. The website acts as a virtual showroom for your products. Customers can get a feel of what you offer and how it looks, without having to purchase from a retailer who may not have the product in stock. It also ensures that they’re getting the exact product that they want.
The Pros:
– Much less expensive than setting up your own store in each territory – Sales agents are experienced in sales & marketing strategies for fashion brands – Retailers handle all logistics (shipping/phone/customer service) so brand doesn’t need to invest money in these areas – Get feedback directly from customers about product design & styling
Cons:
– Challenging to manage – Limited control over shopping experience – Quality of product can vary from retailer to retailer – Sales channels limited, so it’s difficult to get your brand out there
eCommerce Model
In the eCommerce model, fashion brands typically set up their own dedicated online store. This is a good way for smaller fashion brands to test the market, within a limited budget. You build your own website and handle all aspects of marketing, sales & logistics. Customers have access to a wide range of images, colors and sizes on all products. It allows you create a direct relationship with your customer where they feel more connected to your brand. However, this requires a large investment in time and money so might not be suitable for every fashion brand.
The Pros:
– A personal connection with customers from the very beginning – You have complete control over your product offering and customer experience – Price range is generally higher as you can include all costs in final price (no retailer markup) – Leaner logistical set up means a shorter turnaround time for new orders
Cons:
– High development costs – Design & merchandising team required to keep website alive and fresh – Shipping cost increases with every additional item ordered, so it’s expensive to fulfil large backorders (backorder build up is very common with eCommerce brands as they wait too long before making next batch of products). Shopper may become disinterested if there’s not enough variety in store. They’ll go elsewhere to find what they’re after.
The Pros:
– Easy to manage – No need for shipping or storage warehouses – Shoppers are already familiar with the store concept, so it’s easy to get them interested in your brand
Cons:
– Limited selection of styles compared to traditional B2B eCommerce stores – High development costs because you need an entire team just to maintain the website – Customers have access to free returns, which can cause issues when dealing with different time zones and currencies. This means longer turnaround times for new orders. It also requires a much larger inventory because shoppers might return products that they bought accidentally or didn’t like after trying them on at home. Adding 10 shoeboxes of inventory is cheaper than replacing 100 pairs of shoes if they all come back.
The Pros:
– More control over shopping experience – No markups & higher margins because you’re cutting out the middle man and selling directly to the consumer
Cons:
– Targeting and segmenting your audience becomes harder when you have to compete with all other brands in an assigned category (e.g., trainers) – Sales are reliant on how good your website is, so it can be difficult to grow online sales without a large development budget. You need more than just pretty pictures of products on a website for people to buy them! If shoppers can’t find exactly what they’re looking for or get confused by poor product descriptions, then they’ll leave the site and go elsewhere instead. It’s also much harder to build brand loyalty online, as there is no physical store to visit.
