Clothing Finally Largest Ecommerce Category

The inevitable has happened – clothing is the number one ecommerce category by sales according to ComScore.

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As we all know I’m sure, Consumer Electronics has long been the King among stuff sold online, in part because of the early adopters of the Internet where more inclined to buy this stuff (read: geeks). Nevertheless, what’s perhaps more surprising is how long clothing has taken to surpass electronics.

There are three reasons for this I believe. The first is the aforementioned change in the makeup of consumers aka now everyone buys online, not just those geeks. Secondly, the smartphone has both consumed the entire electronics category – the PC, Laptop, Home Audio, TV, Camera, Camcorder and other devices are now largely mobile devices. Lastly, retailers are finally accepting folks want to buy clothes wherever – at home, in the office and not all in store anymore.

This is profound change and as always there will be winners and losers. Free shipping and returns – a standard for clothes where people often try before they buy – will put further pressure on bricks and mortar retailers. Brands will also begin participating in more direct to consumer stuff i.e why give a retailer margin when you can sell direct?

All in all, the brands stand to win and off course consumers will win. But what about both offline and online merchants?  They have to suck it up.

Google Store Confirms Value of the Store

As we discussed previously regarding Google’s increasing ecommerce efforts, the company has gone one step further now by not only opening it’s first physical store in London, but more interestingly, it’s own Google Store.

Google Store

Source: Google

As the company says in a blog post:

“You can shop Nexus phones and tablets, Chromecast and Chromebooks, learn more about newer technology like Android Wear, Nexus Player and Nest, and stock up on accessories like cases, keyboards and chargers,”

Undoubtedly, as we saw with the Microsoft Store, this is a case of seeing those thousands of folks at Apple Stores and thinking, we need to do this too. Now, we can’t fully attribute Apple’s rise from struggling bankruptcy threatened pc maker to the world’s most valuable company to stores. But undoubtedly, the stores – both Apple Store Online and their 450+ physical counterparts – have greatly contributed.

The human experience is something we can’t live without, despite the rise of the Internet as a way of doing commerce. Sure, we are more and more liking the convenience and pricing of Internet retail but nothing beats the theatre of a great store such as Apple. The question for those like Google following their lead; can they also be great at Retail?

This is a competency that requires mastery of the physical store environment, Apple developed this between Jobs and Ron Johnson over the best part of a decade. Other great retail experiences such as those at leaders like Costco and Whole Foods with food or Macy’s and John Lewis department stores, Zara and Forever 21 in apparel or IKEA in home furnishings have been refined over multiple decades. Interbrand released a great report summizing what it takes to join this club.

But getting the physical store right isn’t enough, Walmart have long been a leader in mass merchandising yet have until recently, struggled online, particularly against Amazon. The reason they’ve struggled? Unlike Apple and others, they haven’t been able to offer that truly integrated online-offline experience. In today’s world, the relationship between an ecommerce store and it’s physical counterpart is vital; if you don’t meet the consumer’s needs by offering a seamless experience, you will struggle to compete.

No doubt Google’s Store is a work in progress, what remains to be seen is how serious they are about Retail. What is for sure is that the role of the Store for those businesses selling to consumers is more valuable than ever.

Online to Offline Opportunity

It looks like Wanda, the Chinese Real Estate (Shopping Mall) company is attempting to do what no other company online ‘marketplace’ has done thus far – online to offline. eBay has made attempts and failed, likewise Google and Amazon to a large extent. Possibly the only player in the space today of scale is Instacart, who ironically have just raised a ton of money to go after the opportunity.

TechCrunch notes:

Wanda E-commerce hopes to differentiate from Alibaba and other rivals like JD.com by focusing on an online-to-offline business model. Wanda claims that its various holdings give the “world’s largest offline consumer network,” with 1.5 million customers in 2014, a number that it expects to reach six billion by 2020. The company’s advantage is that it already has a significant number of brick-and-mortar retail businesses that it can leverage to gain customers and data for its online services.

The opportunity is unprecedented – attempting to develop a true multi-channel marketplace model that allows shoppers to seamlessly shop in store and online. How exactly Wanda will pull this off (like Instacart’s financials) is unclear at this stage. For sure, we’re not seeing the rise of bricks and mortar utilizing this model so there’s no reason it shouldn’t work for the marketplaces either.