The past decade of globalized consumer culture took online shopping to a new level, but the pandemic created an unprecedented reliance on online shopping. With that boom in e-commerce came new standards for digital consumer experiences. Consumers expect expedited deliveries, personalized online experiences and abundant virtual resources. How can fashion and beauty brands meet these new expectations?
Glossy’s E-Commerce Forum gathered industry insiders from influential brands and retailers to create a dialogue about the state and the future of the fashion and beauty industries. Speakers touched on how they reach target audiences, drive sales and navigate evolutions during the pandemic. More specifically, they talked about three key points when it comes to keeping up with today’s nimble consumers:
1. Revamping omnichannel by using data and creating a conversation between physical and digital marketing spaces.
2. Focusing on customer retention over acquisition by providing an excellent e-commerce experience at every stage of the customer journey.
3. Finding a differentiator rather than market white space to generate profit.
Here’s what these industry leaders said.
Revamp the omnichannel experience
E-commerce is accelerating, but that doesn’t make stores obsolete. Consumers still value experiences they can only have in-store, such as trying on clothes and having in-person conversations with sales associates. Physical stores give consumers access to a tangible experience, which helps inform their purchasing decisions. But beyond consumer purchasing experience, stores also have a role to play when it comes to marketing.
The question then becomes: How does a brand create a conversation across digital and physical channels to reach its goals? A revamped omnichannel strategy is the solution.
Leveraging consumer data across all channels is paramount. But it’s also a challenge. Current trends in retail necessitate collecting, understanding and taking advantage of data, especially now that digital marketers can no longer rely on third-party cookies to provide rich pools of consumer data.
Intermix CEO Jyothi Rao spoke about how to use consumer data to achieve a balance between “IRL” and “URL” in marketing strategy. She also addressed how physical stores can help brands reach target audiences and build awareness. From hosting community or influencer events to gathering a wealth of consumer data, physical stores can be powerful marketing tools.
Physical retail helps immerse customers in a brand story. Below, Rao discussed how Intermix pushes content and data between digital and physical channels.
Q&A with Intermix CEO Jyothi Rao
Q: What’s your take on omnichannel?
A: “First of all, about 70% or more of retail sales are still done in stores, in physical retail. And what we see at Intermix is that our customer who shops both channels has almost twice the retention rate as a single-channel shopper. And they’re spending about three- to five-times more than a single-channel shopper. So clearly there’s financial value.
Having said that, the way in which physical retail has existed needs to evolve… Most retailers and brands can’t afford to [open massive physical stores]. For a physical retail location to exist, it needs to add a tremendous amount of brand value. You need to be able to acquire valuable customers in your target market… You need your stores to be productive and profitable.”
Q: Tell us about your physical footprint now. How many stores do you have?
A: “We have a collection of 30 boutiques around the country. We’re in the most covetable locations. We have six locations in New York City, we’re in the Hamptons, Palm Beach, Miami, Aspen, L.A., San Francisco… We make sure the locations are where our customers live and work, which is changing, of course.
It’s important to identify your target market and where they are. Of course, permanent locations are big investments… [Use] your online data to really determine where your customer is and where they’re moving to before you make those investments, because they’re very asset-heavy and capital intensive.”
Q: How did your audience’s expectations change during the pandemic?
A: “Shopping behavior changed during the peak of [the pandemic], but [our target audience] is back to normal behavior. There are a few things we noticed, for sure, in the last couple of years: One is that the expectations from consumers on what the e-commerce experience should be is extremely high. You have to be engaging [them] with great content at every touch point — email, SMS, on-site, social channels, all of that… And then the e-commerce experience itself … has to be frictionless, has to be fast, has to be incredible.”
Focus on customer retention through the post-purchase experience
As many brands experience the financial burden of customer acquisition efforts, a new emphasis on customer retention has some looking to new avenues to re-engage customers. Retail has many unique opportunities to re-engage customers post-purchase.
Head of marketing communications at ParcelLab, Katharine Briggs, introduced a recent study of the top-80 fashion retailers in the U.S. The study focused on product orders, which were analyzed using 65 different data points. ParcelLab discovered several missed opportunities to retain customers post-purchase.
Apparel brands have challenges specific to their industry, including frequent returns. Briggs proposed that brands reframe the way they think about e-commerce challenges. She encouraged retailers to use what they might see as a negative customer interaction as an opportunity for a positive post-purchase strategy.
“[Customers are] met with an almost black hole of experience after they’ve checked out,” said Briggs. “Fifty-three percent of U.S. consumers said that this is the most emotional part of the customer journey. That’s not surprising. They’ve parted with their money and they haven’t got a parcel. There’s this huge gap where they’re not hearing anything from you. And delivery times can take longer than ever with the supply chain issues right now. We really need to change this.”
So how can brands go beyond confirmation emails and carrier tracking pages? According to ParcelLab’s key findings:
1. Only 28% of top U.S. fashion retailers recommend other related products. Briggs said that tailored recommendations show customers that you really know them and that you’ve taken the time to invest in them.
2. Seventeen percent of top U.S. fashion retailers process returns in less than five days. “Five days is pretty quick,” said Briggs. “But we found that, when it did take longer than five days, the retailers didn’t communicate anything. The customer dropped off the return and then, nothing. Not only does that increase inquiries, which is a huge drain on customer service, but the customer just has no idea what’s going on. And you’re really missing out on this opportunity to engage with them, get them back into your ecosystem and potentially get them to repurchase.”
3. Eighty-seven percent of customers want brands to engage with them during returns.
Brands have to leave that positive last impression during the returns process. “Let’s be honest: The customer journey is a circle,” said Briggs. “But one bad experience will break that experience, and you’ll lose your customer.”
Find a differentiator, not a white space
The end of the generalist brand is upon us. To be profitable in the long term, brands need to put product first and to find a unique voice. It’s the difference between valuable products built on innovation and expertise and products built on an opening in the market. But why does that matter?
In an oversaturated market, brands have to stand out. A gap in the market may have merit, but it comes down to how and why a brand intends to fill that gap, it’s important they ask: Do we back a unique value proposition that will speak to the target audience? If not, the brand won’t see a great deal of profit. Nick Brown, co-founder and managing partner of Imaginary Ventures, wants brands to find a differentiator, not just market white space.
Q&A with Imaginary Ventures co-founder and managing partner Nick Brown
Q: What’s guiding your portfolio strategy?
A: “We were always a little bit of an outlier in the space. For us, product is always the most important thing. The first investment I made when I started investing in 2010 was in Warby Parker. It was a very different time… Competition to invest in brands was very different than it is now. There was a lot of low-hanging fruit that companies like Warby were able to take advantage of.
At some point along that 10-year journey, everybody started having to make money. Facebook got more expensive, the algorithm got more restrictive… People have been talking a lot about inefficacy in performance marketing. What we ultimately have to do now is revert back to great products and great storytellers.
We’re looking for any vertical, any category, any space that we feel has a different point of view, has a different voice and has an exceptional product.”
Q: What’s the difference between finding white space in the market and having a differentiator?
A: “I’m shocked by how many companies that ask us for capital have no point of view on product. It sounds funny … but many founders see whitespace and they think, ‘No one has disrupted this category for a long period of time, and so I’m going to do it with a focus on tech, with a focus on marketing, with a focus on distribution. But I’m not going to think about the product.” That’s alien to me. At the end of the day, the customer is too smart. There are too many products for him or her to purchase.”
Q: What is a great product?
A: “It’s innovative. It’s something new. It’s ultimately a question of value and quality. The customer does a lot of research before they purchase. They spend a huge amount of time on reviews. And for them, patience, before you purchase an item, is really key. I spend a lot of time thinking about that when I look at a business. Repeat stats are more helpful than new customer stats. Anyone can spend a lot of money on acquiring new customers, but getting them to come back is super challenging. Any business that is doing a better job achieving that than the majority of companies we see is interesting.”
Also worth knowing
Staying nimble as a brand during global economic turmoil is necessary. Financial experts, political figures and others attempted to make future predictions at the outset of the pandemic. But how could one possibly predict the future in a time with so many unexpected twists and turns?
The pandemic has taught brand leaders that they must expect the unexpected. They might as well toss out strategies that worked long-term in the past. These days, what worked on Monday won’t work on Tuesday.
Industry leaders like Thakoon Panichgul, founder of Thakoon, and Mike Wright, director of product marketing at Grin, discussed how to stay on top of the volatile e-commerce environment and evolving consumer behaviors.
Top takeaways from these two speakers include:
1. Plan for the short-term, not the long-term.
As evidenced by the erratic nature of the past two years, it’s pointless to plan long-term marketing strategies. Panichgul urged brands to stay agile and invest in short-term plans. This reduces the chance of wasting labor and energy.
2. Lean on creators.
Wright recommended relying on creators to help cut costs, grow brand awareness and reach new audiences. In short, good storytelling can help weather the storm.
3. Be open to new ideas.
Gen Z is ready to take the wheel. Panichgul spoke about hiring new roles to accommodate shifting consumer behavior. Roles could include social media managers for the brand’s TikTok.
Where is the industry headed?
The retail industry, including fashion and beauty brands, is undergoing a major makeover. Between new needs to prioritize e-commerce convenience, build community, innovate around omnichannel strategies and create new opportunities for customer re-engagement, industry leaders have their hands full.
Rao at Intermix emphasized the importance of moving content and data between brand channels. ParcelLab’s Katharine Briggs introduced a study that revealed new post-purchase touchpoints in retail. Nick Brown at Imaginary Ventures hammered it home that product is profitable when brands have a differentiator. And Thakoon Panichgul at Thakoon and Mike Wright at Grin offered guidance on how to stay on top of tumultuous economic and consumer behavior changes.
Brands must follow their target audiences. More consumers are seeking excellent experiences that mimic in-store service. To meet that demand, it’s time for brands to find strategic ways to use consumer data in a post-cookie world, take innovative approaches to engaging consumers and ensure they have something valuable to offer.