1. Fashion which is a USD 100 Bn market in ASEAN was hit hard by the pandemic, however activewear and accessories segments remained strong

Lockdowns and WFH decreased overall spending on Fashion and there was also a shift of spending from formal attire to casual wear and sportswear.

At a country level, Vietnam and Thailand’s fashion market recovered much quicker than COVID-stricken countries such as Indonesia and the Philippines.

At a y-o-y level looking at Q4’20 figures, formalwear and footwear had negative y-o-y growth. However, sportswear and accessories categories, experienced positive y-o-y growth due to consumer demand for leisure and lifestyle items during lockdowns and beyond.

Note–

   a) 1+ positive y-o-y growth
   b) 2-negative y-o-y growth

2. Majority of consumers are now looking at sustainable fashion and value purchases; the luxury segment consumption remained largely unaffected

Overall, consumers valued bang for their buck and opted for high quality, multiple-occasion apparel pieces, styled with trending accesories, which prompted a surge in accessories demand.

Meanwhile, sustainable fashion reached new heights with mixed fiber composition, increasing the overall product life cycle of fashion pieces.

Shift in consumer behavior

Value shoppers opted for cost-saving methods to stretch tight budgets.

Premium and super premium consumer cohorts dabbled in both categories. The premium consumer cohort also partly shifted towards mass brand purchases.

Luxury brand consumers showed no change in purchasing behavior.

3. Brands are looking to have more control of inventory, operations, pricing, and their end consumer

The online channel has gained prominence among Brands for two reasons –

1. Consumers are spending a lot more time on digital channels – hence it is important to create strong touchpoints and engage consumers digitally.

2. Online share of sales for brands have gone to >10% in many cases. If you account for online influenced sales, this number would be even higher.

Hence, brands are now keen to gain more control of pricing, content, shipping, and marketing of their goods to get close to their end consumer and control their experience/brand perception.

Platforms are now shifting their business models to cater to brands’ demand for greater control. Wholesale business model share transitioned towards brand preferred consignment and marketplace, business models.

Shop in shop business models took off by providing consumers greater variety in addition to their core line.

Fashion e-Commerce Business models

4. Sellers have also flocked online to increase their reach and offset the decline in offline sales

Offline sellers entered the online fashion marketplace as a result of COVID-induced supplier constraints and reduction in footfall in their stores.

Sellers benefited from faster scale-up and low-cost setup offered by marketplace business models offered on e-commerce platforms. They also started using the fulfillment services provided by e-commerce platforms.

They further enhanced their portfolio by including masks and other accessories as well, following the consumer demand trends.

For a seller, the choice between an e-commerce horizontal vs a vertical is a tricky one. Sellers who are focused on gaining quick access to a large userbase prefer horizontals while sellers keen on category curated supply-chain support, higher margins etc., prefer verticals. There are clear benefits of associating with each kind of platform.

From a consumer standpoint, while majority of Fashion sales happens on Horizontal e-commerce platforms, we do see a shift among more mature consumers towards verticals for more curated offerings and a category centric experience.

Seller preference Drivers: Horizontals vs Verticals

Note–

   a) Horizontals are e-commerce platforms with multiple categories such as Shopee and Lazada

   b) Verticals are fashion focused e-commerce platforms such as Zalora and Berrybenka

   c) Marketplace business model – Brands only list their products on the platform

   d) Consignment business model – Platform helps the supplier with back office set-up while the supplier controls the pricing and maintains ownership of the goods although inventory is stored at platform’s warehouse