The difference between “virtual” and “actual” is nowhere more important than in the world of online fashion. Buying clothing, footwear, jewelry and accessories involves far more subjectivity than shopping for products like books, CDs or electronics, and most people want to get up close and personal before committing to a new wardrobe item or an expensive gift.
Fashion e-tailers are handicapped by narrow bandwidths and low-speed connections that make buying online a pale substitute for the brick-and-mortar experience. But in the next few years — when fancy features that are now mere twinkles in developers’ eyes become widely adopted — department stores may acquire the ambience of ghost towns. The perplexing question facing fashion e-tailers today, though, is how to get there from here.
The Legacy of Boo
Like many other dot-coms in the year of the e-commerce shakeout, some fashion Web sites are faced with cash shortfalls and low investor confidence. To make matters worse, the spectacular failure of Boo.com earlier this year cast a pall over the entire online fashion industry.
After burning through approximately $135 million (US$) in less than a year, the trendy company was unable to attract a savior and saw its stock price fall to almost nothing before Fashionmall.com (Nasdaq: FASH) swooped in to pick up the scraps. Though Boo will live on under new management, it will function as a fashion portal rather than an e-tail store.
Analysts generally agree that Boo suffered from a deadly combination of financial mismanagement and technological precocity. The site was dazzling to the comparative handful of Web shoppers who had the speed and bandwidth to appreciate it, but for most visitors it was either frustrating to navigate or entirely inaccessible.
However, other fashion e-tailers that have taken a more cautious and fiscally responsible approach have gone under too. The European men’s apparel site, Dressmart.com, collapsed in August, after sixteen months of what had appeared to be steady progress.
Internet research firm Forrester said that “Boo.com’s storied demise made investors skittish, leading to Dressmart’s downfall. Although Dressmart’s business plan was solid — the firm was on track to show profits in late 2001 and experienced steady sales growth through July — the retailer simply ran out of funds to sustain the multinational business that its investors had pushed since the outset.”
Not all the Internet fashion news is discouraging, though. Fashionmall reported a sharp increase in Q2 revenue — up 131 percent, excluding barter — and a net loss of just $0.06 per share. However, Fashionmall does not sell directly; it functions as a portal, generating revenues primarily through the sale of advertising and space for manufacturers, retailers and catalog operations.
Bluefly, Inc. (NASDAQ SmallCap: BFLY), which calls itself “a full service outlet store for designer fashions,” also reported strong second quarter revenue growth of over 480 percent from its second quarter 1999. Though the company reported losses of $1.12 per share, Bluefly said that a 70 percent reduction in acquisition costs spurred a record increase in customers.
Even though overall online shopping figures reached a summer plateau in July, fashion sales were up. According to the latest Online Retail Index from the National Retail Federation (NRF) and Forrester, consumer spending on footwear and apparel rose from $197 million to $214 million for the month.
Nevertheless, the immediate successes for online fashion still seem to be tethered to the brick-and-mortar world. Companies doing well online include Sears, JC Penney, Spiegel and Victoria’s Secret. Consumers evidently have more confidence in stores they patronize in the real world than in fashion pure plays.
Gradually Going Techno
According to Forrester’s report, “Fashion: The Online Frontier,” the biggest challenge facing fashion e-tailers is that their customers cannot touch or try on clothes and accessories.
To address that problem, a handful of the most established brand names in the fashion world are experimenting with some of the innovative features that initially drew wows for Boo’s site. Allowing Web shoppers to view clothes on a computer “mannequin,” whose proportions accurately represent the customer’s, is one of the most promising ways to improve the sensory quality of the online fashion shopping experience.
Lands’ End introduced its interactive “personal model” to online shoppers earlier this year, allowing them to see how the company’s swimsuits would look on a variety of body types. The feature allows shoppers to select different face shapes, hair colors, skin tones and physical proportions, and the models can be turned around to show several different views.
JC Penney’s “Just4Me.com” is a gateway to specialty areas of the company’s site for plus, petite and tall sizes. A feature dubbed “My Virtual Model” allows shoppers to create customized models that replicate their figures. The models can also be saved for future shopping sessions. According to JCPenney E-Commerce President Paul Pappajohn, more than 100,000 site visitors have used the feature to “try on” clothes.
More than half the 40 fashion e-tailers interviewed for Forrester’s report said they already incorporate zoom and pan features on their sites to help customers get a closer view of the merchandise. Other technologies that are currently in use — though more sparingly — are features that allow shoppers to view products together, 3-D product shots, animation and video.
The fashion landscape will change dramatically within the next few years, Forrester predicts. “Fashion merchandise is tough to sell online. But by 2004, retailers will forge a new business model called ‘fashion on-demand’ that will mix broadband access and interactive TV (ITV) to appeal to consumers’ subjective tastes and approximate the touch and feel of merchandise,” the report says.
Forrester urges fashion e-tailers to create separate versions of their Web sites to accommodate customers with broadband access. The companies can then try out new features on the technically souped-up sites without discouraging the majority of shoppers who have slower connections.
The research firm also suggests that more effective organizing principles may attract shoppers in greater numbers — technological enhancements are not the only game in town. Clothes should be “tagged” to attributes linked to categories of shoppers, Forrester says. For example, a customer who likes TV lawyer Ally McBeal’s mini-skirted business suits might be offered a wide range of choices with the tags “clean and spare” and “daring.”
Additionally, Forrester recommends that fashion e-tailers forge strong relationships with content producers — a move that may prove critical if the fashion future unfolds according to the research firm’s vision.
Lazy Impulse Buying
There will undoubtedly be heated debate over whether it is a welcome opportunity or a TV viewer’s worst nightmare, but the future almost certainly includes a little “Buy Now” button that will light up when products showcased by celebrities are available for a quick sell.
“The Truman Show” — a recent film that depicted a central character who had no idea he was living his entire life as the star of a long-running TV program — included a hilarious scene with the hapless Truman’s wife pitching breakfast cereal while he tried in vain to carry on a normal conversation. It seemed funny at the time.
However — if Forrester is correct — innocent viewers chuckling at some witticism from sitcom psychologist Frasier may be unhappily distracted from the punch line by a not-so-subliminal offer to purchase the safari shirt he’s wearing in a choice of three earth tones. Extra-large sizes priced slightly higher.
The technology is already available to implement the “lazy impulse buy” feature, and a whole lot more, as soon as the number of people with broadband access to the Web reaches critical mass. When marketers start playing in earnest with the unlimited possibilities for embedding content with commercials, the online fashion industry may skyrocket.
On the other hand, the dizzying onslaught of e-commerce opportunities may turn off some observers, and to them, a little good old-fashioned spam may start to look downright palatable.