Online disruption of the fashion industry: back to the beginning?

The concept of ready to wear is fundamental to today’s fashion industry. Clothes can be produced half a world away, months in advance of the selling season and then available for a consumer to try on and complete a purchase in as little time as one has in a lunch break. Consumers have long benefited from lower prices and convenience from this system as compared to the time constraints and cost of having clothes made to order or of making clothes themselves.

Looking at the online landscape for fashion today, however, there is emerging demand for the use of technology to get closer to where fashion was a century ago, but better: custom clothes and accessories at (or close to) ready to wear prices. Examples of this trend are popping up in multiple categories: Indochino and Alton Lane for men’s clothing, Shoes of Prey and Milk & Honey for women’s shoes, Bow & Drape for women’s clothing, and others. Additionally, companies like Bonobos (men’s apparel) and ThirdLove (bras and intimate wear) are gaining traction by trying to solve for other fit problems that are remnants of standard sizing practices. These companies are using online channels to gain a following and distribution that would be considerably more expensive, if not impossible, in the offline world. Obviously, going online avoids the extensive costs of real estate and labor, but additionally, the online world represents an opportunity to communicate a unique value proposition to targeted consumers. The ability to reach a dispersed audience online increases the probability that these messages will reach a consumer who is willing to change his or her behavior and gives these companies the chance to develop a sustained customer base.

But does it make sense to use the virtual world to solve for one of the more complex conditions of the physical world: not only varying body shapes and types, but also varying personal preferences for a product category with a wide range of textures, colors and weights? Emerging players are using all types of technology to facilitate the flow of information between the separated parties. To get information about consumers, companies are utilizing everything from simple surveys, to web cams and iPhone apps to sophisticated body scanners. An ecommerce company is more cost effectively able to ship a consumer a free physical measuring kit and have the consumer input his or her information electronically than reach that consumer in person at scale. To provide better information to consumers, companies are employing better photography and rendering techniques as well as video and virtual try-on technology, among other advances.

Rather than seeing these technologies completely replace brick-and-mortar retail, however, some of the most successful of these ecommerce companies are using their scale to do things they never set out to do: build stores. Will the technology ever be enough to have mass market appeal or has the internet simply made bringing these value propositions to scale easier?

1 Comment

  1. Allen Ruiz

    Nice topic, Molly – also very curious to see how this plays out over time. I am on the camp that you mention about the internet simply making online value propositions in the Fashion space easier to scale.

    A couple thoughts that I thought of as I read your blog:

    The first is around different customer types and adoption cycles. Some people just don’t like shopping for clothing online and it will be a while before retailers abandon B&M stores. Some online-only shops are also following this B&M trend as you mention (Bonobos) and I would venture that they are trying to increase trust / adoption by having a presence on the ground. This reminds me of bridging the gap that exists in the Marketing theory “Crossing the Chasm” (also a book by Geoffrey A. Moore), where different consumers adopt new technologies at different rates (innovators, early adopters, early majority, late majority, and laggards). I think that the Fashion industry is one of those that will take a while for full adoption (at least a decade). Another reason for this delayed adoption also has to do with online still not meeting customer demands (particularly the aspects you touch on around sizing, taste, etc). Let’s even assume that online gets it right…People still enjoy making an experience out shopping at the store. Maybe it’s just me, but I just don’t see how going online and clicking “Buy-now” for an expensive suit or piece of jewelry compares to actually going to a store and trying the product first-hand… and I do shop online, but not for meaningful Fashion items (more for basic fail-safe items).

    The second area that your blog made me think of is if stores really want to be online-only. I would venture that the answer is No for most established brands. These stores could probably upsell you on many things if they get you into their B&M store. They theoretically have trained staff to better service your needs vs. a website. Being online only can also make it easier to become commoditized and force you to compete on price more often. So overall, there seems to be a tension going on here and established players are not likely going to let go of B&M anytime soon- they will likely want to bring online into the B&M store before doing the opposite.

    With all the limiting factors you bring up, I feel that this industry somewhat mirrors commercial airline flight speed progress over time. Very different industry and maybe even a strange analogy, but for various reasons, commercial airplanes still fly at roughly the same speed that they flew at over 40 years ago (even with existing capabilities to surpass that)… Maybe there are just some “speed limits” in the Fashion ecommerce space that will take some time to fully play out and therefore, I don’t see online taking over the mass market anytime soon.