eCommerce is an indispensable business model that fashion companies must use to win Vietnamese customers, especially after the COVID-19 pandemic. It also helps them adapt to changing customer behavior and provides competitive advantages for future breakthroughs. Fashion eCommerce is a key business trend for many fashion companies today, whether they are local or foreign brands.
1. The potential of eCommerce for the fashion industry in Vietnam
Statista predicts that the CAGR (compound annual growth rate) for the fashion eCommerce market will be 14.2% between 2017 and 2025. CAGR is expected to reach USD 1 trillion by 2025. The US market accounts roughly 20% of the CAGR, or 204.9 billion USD.
Fashion eCommerce is second in importance on the Vietnamese market after eGrocery (The Vietnam eCommerce White Paper, 2021).
2. Benefits of implementing eCommerce within the fashion industry
2.1. Increase the breadth and reach of your business
Fashion companies will have a new channel of sales through eCommerce, in addition to offline commercial activity in stores. eCommerce allows customers to shop whenever and wherever they want, regardless of their location.
eCommerce can be used simultaneously to reach customers in multiple areas, especially the fast fashion industry for women. Livestream, Shoppertainment, Affiliate and other marketing activities are more effective, which allows enterprises to expand their commercial reach.
2.2. Adapting to the change in customer behaviors
Consumer behavior has changed dramatically since the COVID-19 crisis and the social distancing order. All categories have seen an increase in online purchases, as well as a shift from physical to digital buying. The percentage of fashion customers online grew from 18% in 2000-2021 to 48% by 2020-2021. Fashion businesses must now implement eCommerce.
Moreover, eCommerce technology allows organizations to track, analyze, and synthesize each target group’s consumption habits. This is something that offline purchasing can’t do. This allows businesses to have sufficient aggregated and forecasted information to execute business plans.
2.3. Enhance the user experience
Customers will make faster purchases if they have access to technologies that enhance their user experience on e-commerce.
Customers can quickly purchase products by using visual experiences like photos, videos, and virtual reality. The use of VR/AR technology allows people to shop online for clothes, shoes, and accessories in much the same way as they would in a physical store.
eCommerce allows businesses to personalize the experience by gathering, evaluating and summarizing consumers’ consumption habits. This is often done with the following features: Recommendations products, Products seen and so forth.
eCommerce offers seamless customer experience across multiple channels (Facebook and Instagram, Tiktok and Zalo), eCommerce marketplace (Shopee), Lazada Tiki, Sendo etc), eCommerce website, mobile app, and eCommerce website.
3.1. Shein – The unicorn in the fashion eCommerce sector
Shein, a Chinese eCommerce site that specializes exclusively in accessories and apparel, was founded in 2008. The company’s motto is “everyone can appreciate the beauty and fashion” and strives to offer a wide range of products. Shein is considered a fashion “empire”, with a valuation of $100 billion. This is more than Zara ($69 billion) or H&M (23 million).
Shein focuses on the young segment of Gen Y/Gen Z who are frequent users of the Internet. This brand uses technical components to reach more customers in a precise and appropriate way.
Shein developed an eCommerce system with a website and a mobile application to target overseas markets like Australia, Europe, America, Australia, the Middle East, and Australia. Shein advocated Social Commerce and Ecommerce Marketing, Affiliate Marketing and KOC as well as other strategies to increase brand awareness and engagement.
Shein’s mobile app had more than 7 million active users in the US (Airnow Data). The hashtag #Shein was viewed more than 10,000,000 times on TikTok (Jing Daily) by 2021. In 2021, revenue reached $15.7 billion. This is 60% more than in 2020 ($9.8billion). You can see that Shein is an excellent example of how eCommerce can be used to grab market share in fashion.
3.2. Coolmate – The missiles of fashion eCommerce in Vietnam
Coolmate, a menswear startup was founded in 2019. Coolmate is a combination of “cool” and mate, which means the brand’s primary purpose is to act as a fashion buddy for customers. This company was founded in 2012 and received $500,000 funding from Sharktank Vietnam after just two years.
Coolmate uses the Direct to Customer Ecommerce model. It focuses on creating its own fashion website to offer a fast and affordable buying experience. Coolmate is committed to high product quality and makes sure that it meets international standards. Coolmate recommends that you apply the strategies of Ecommerce Marketing and Affiliate Marketing to make e-commerce easier.
This fledgling company has many other notable statistics, including the $500,000 agreement for 12.5% interest and 2.5% of the consultancy shares. Coolmate’s 2021 sales will rise 3.5 times to VND 133.9 billion, which is an increase of 3.5 billion from 2020. Revenues are expected to grow to VND 440 billion by 2022, and then go public (initial public offering) in 2025. Coolmate’s growth has been greatly aided by eCommerce, which also provides the foundation for fashion businesses to grow according to market trends.
Yody (previously known as Hi5) is an apparel brand for families that was established in 2014. To supply high-quality Vietnamese fashion products to customers all over Vietnam and the world. Yody employs more than 700 people, and there are 90 outlets in Vietnam.
The “tripod” of product quality, human resource development, and investment in technology is what this fashion brand values. Yody focuses its efforts on talent recruitment and culture training in order to encourage employees in human resources development. Yody’s products are designed for comfort and convenience and can be used in many situations such as working, going out and attending meetings.
Yody focuses his technology efforts on implementing a multi-channel online sales strategy, such as eCommerce websites, Facebook, Livestream and eCommerce marketplaces. This will allow Yody to be competitive in the eCommerce race as well as adapting to changing customer behavior.
Yody was named one of Vietnam’s ten most promising young start-ups in 2016. Yody’s sales in physical stores will be down by 65% by 2021 but its internet segment will grow by more than 10%. The company plans to continue to grow its online revenue by 20% over the next year.
The best way to use fashion ecommerce depends on the strategy and size of each company. However, eCommerce is essential for a successful business in this sector. Foreign brands, luxury or mass, should be aware of this huge trend to adapt and succeed in Vietnam.