{"id":9190,"date":"2019-03-05T17:53:17","date_gmt":"2019-03-05T22:53:17","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/zalando-digital-disruption-in-the-fast-fashion-industry\/"},"modified":"2019-03-05T18:21:49","modified_gmt":"2019-03-05T23:21:49","slug":"digital-disruption-in-the-fast-fashion-industry","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/digital-disruption-in-the-fast-fashion-industry\/","title":{"rendered":"Digital Disruption in the Fast-Fashion Industry"},"content":{"rendered":"
Since a decade ago that fast-fashion including \u00a0H&M and Zara disrupted the fashion industry with lightning-fast production, trend-led products and a vast retail footprint. But today a new wave of digital disruption is coming from e-commerce players like Zalando, Boohoo, among others, leading retail’s growth.<\/p>\n
What makes e-commerce players the winners?<\/strong><\/p>\n Value creation<\/u><\/p>\n The global online fashion market is predicted to reach $765 billion by the year 2022, making 36% of total fashion retail sales vs 27% from last year and 14% from 2014 (1). Thus, consumer behavior is shifting from brick and mortar to online super-fast over time. Besides, BCG partner and a fashion industry expert said “Even today, online retailing at the surveyed companies is growing three times as fast as the brick-and-mortar business. This trend shows no sign of slowing down”(2). In fact, we can mention several department\u00a0and specialized stores such as Sears, JC Penney, and GAP, Hollister, respectively that have closed several stores. Moreover, giant fast-fashion H&M is planning to close 160 stores in 2019 (3).<\/p>\n If we thought that fast-fashion companies including Zara and H&M were super-quick turning around collections vs “mall retailers” such as: GAP, Abercrombie & Fitch, etc. , some e-commerce players are even more agile and nimble. Furthermore, for speed, Boohoo.com, Asos, and Missguided can produce merchandise in two to four weeks. On the other hand, it takes Zara about 5 weeks to get a design from its origin to the store\u00a0shelves and H&M between a few weeks to six months. Moreover, Fashion Nova, Southern California cheap & affordable fashion online, is lightyears ahead. “It can design, manufacture, and market its wares on its sites within one to two weeks”, according to its CEO Richard Saghian (4).<\/p>\n <\/p>\n Typically H&M charges $ 4.9 euros (Germany, biggest market) for delivery in 3-5 days and 3.95 euros at Zara, which offers free delivery for orders over 50 euros. However, “neither can trump Zalando, which lures shoppers by offering free delivery within 2 days and free returns within 100 days”. \u00a0In addition, “People keep pushing free delivery, same-day delivery, incredible levels of customer service, but someone has\u00a0to pay for that” said\u00a0Bryan Roberts of consultants Kantar Retail (5). Thus, I strongly believe that Zalando is trying to imitate Amazon in the fashion industry trying to win against fast-fashion players with cheaper and faster delivery days as well as better customer service.<\/p>\n Boohoo, Fashion Nova, among other fashion e-commerce players sells online only at a time when more fashion is being bought via commerce vs. fast-fashion brands that need a large volume of goods to fill of brick-and-mortar stores. Moreover, according to the BBC, Boohoo can batch-produce items “in the low hundreds” to test out on its site, and an option not available to fast-fashion brands (6). Thus, e-commerce players can predict and “know” better their customers using data analytics to release better assortment over time vs. fast-fashion.<\/p>\n Value Capture<\/u><\/p>\n Zalando, like Amazon, focused on the growth of their market share instead of cashing in on quick – short term- earnings. Moreover, they started building Germany’s online leader in shoes, followed by expanded their assortment to other categories (apparel, accessories, etc.), followed by geographical expansion and finally improve its operations (7).<\/p>\n\n
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