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Fashion flourishes in the cloud

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 27 Nov 2014
An e-commerce study showed as far back as 2012 that fashion was the single biggest category of online retail in SA.
An e-commerce study showed as far back as 2012 that fashion was the single biggest category of online retail in SA.

Forget groceries, gadgets and getaway packages - fashion is the industry making the biggest splash online in SA.

Already in 2012, World Wide Worx's e-commerce study showed apparel was the single biggest category of online retail in SA - and not much has changed, apart from the market maturing. So it is no surprise that local apparel giant The Foschini Group (TFG) has joined the online fashion fray, following research into the market abroad and locally.

TFG CIO Brent Curry says the group has taken an omni-channel approach to retail technology, allowing for integrated and seamless shopping across all its brands, including apparel stores Totalsports, DueSouth, Sportscene, Fabiani and Markham.

Giving the group the edge, says Curry, is its investment in predictive analytics from Endeca. "It is the combination of the platform as well as the deep insights that TFG already has through our accounts and rewards programmes that truly sets us apart. We are now offering online purchases via our store cards. We have three million account-holders, many of which don't have credit cards, and for whom online shopping is now a reality."

Room for more

It is this differentiation, says World Wide Worx MD Arthur Goldstuck, that will cement TFG's place in the heavily competitive arena. "There will always be room for a big new player with big new ideas. Especially in the constantly evolving online space, there is always room for more players if they do things differently and have a compelling offering."

Recently appointed Groupon SA CEO Emilian Popa - one of the founders of Rocket Internet, the company that built fashion e-tailer Zando - says, if he could advise any aspirant online fashion start-up, he would say: "Don't start unless you have significant funding and choose the right model (full price/catalogue vs flash sales, mass market vs niche, multi-category vs mono-category). If you go for full price/catalogue, have a deep selection of styles for similar products. Have a great customer service team."

Goldstuck says, when Zando came along in 2012, it shook up the local market, because it came in with an indisputable value proposition. "2012 was a big year for fashion online, but Zando shook up the market because it brought in best practice in design and usability of the site - and the business model itself."

He says US-based Zappos set the benchmark by offering free delivery and a compelling returns policy - and Zando looked at what "the best guys in the world" were doing and moulded its model around them.

Popa says Zando launched as a multi-category fashion retailer, starting with shoes, adding accessories, and later on apparel. "The model is similar to its sister companies launched in other emerging markets and follows the success story of Zalando in Germany."

Other online fashion players that have been very successful in differentiating themselves, notes Goldstuck, are Woolworths and Mr Price. "If you go to Mr Price online, you get the impression that you are in Mr Price's world - which is youthful and economical. Woolworths leveraged its already strong online presence that was focused around groceries, and relaunched around 2012, also then selling clothing online."

Among local online fashion players are Spree, Takealot and Superbalist. Goldstuck says the market is made up of these, plus a significant pool of smaller players.

"There is still massive potential in the e-commerce market in SA. Online retail only makes up less than 2% of the overall retail market, so the market is far from saturated. The key to online retail is converting people from having the propensity to shop online, to actually shopping online. This was where Zando had its success - and where many others have fallen short."

Nikki Cockcroft, head of online services at Woolworths, warned in 2012: "In five years' time, retailers that are not in the e-commerce space will never be able to catch up."

Goldstuck says, while the online fashion market may have diminished in terms of the number of players since 2012, the market itself is still growing.

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