Facebook report predicts that $30bn of the fashion market in India will be digitally influenced by 2020
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A report launched by management consulting firm The Boston Consulting Group (BCG) and social networking company Facebook titled ‘Fashion Forward 2020’ has predicted that out of $70bn Indian fashion market today, about $7-9bn is already digitally influenced. This influence is expected to multiply nearly four times to reach $30bn by 2020, a number that will constitute 60-70% of the total branded apparel market.
As to what prompted this research, Umang Bedi, Facebook’s managing director for India and South Asia, explained: “BCG and Facebook both found that one out of every three people that are shopping, online or externally, buy apparel and fashion so fashion is a good logical entry point. We see, for Facebook users in India (184 million people plus), 56% highlight fashion as an interest category, and if you break that down to the demographics it is the 18-34 year olds that are driving this category.
Fashion, apparel, shopping, lifestyle, footwear all dominate Facebook, and we heard the same thing from Boston Consulting Group. Even Instagram users are interested in fashion and one out of two users purchase the brand they follow on Instagram.”
Abheek Singhi senior partner and managing director at BCG, said: “The fashion market in India is currently estimated at $70bn. Online contributes to about 5% of the total at around $4bn.
The online fashion market is estimated to treble by 2020, to reach $12-$14bn. This will translate to a significant 11%-12% share of the total fashion market. Also by 2020, nearly half the fashion buyers will be digitally influenced. Digital influence in fashion has grown more than five times since 2013. Some 40%-50% of brand spend is already digitally influenced," he added.
According to the report, digital footprint, which refers to fashion buyers with internet access, has more than doubled in the last three years. It will continue to grow rapidly as internet penetration is expected to grow 2.5 times by 2020 in India. Mobile is the primary device for internet access for 73% of urban users and 87% of rural users and this trend is likely to continue, as smartphone penetration continues to drive internet penetration in India.
Important pointers from the report:
Mobile as the quintessential device for shopping and internet usage
Mobile has also become the predominant device for fashion ecommerce, with 85% of online shoppers preferring to shop on their smartphone. Within mobile, mobile apps are the preferred way of purchasing, with 80% of consumers preferring to use them over mobile websites. Mobile websites are seeing higher usage in small towns where consumers are typically operating with low capacity handsets. This, however, implies a potential barrier for new players. On an average, a consumer keeps three to four online shopping apps on his/her phone. New players must offer a unique proposition for consumers to create space for them on their phones.
Fashion is the foremost category that most people buy online
Among new online shoppers, 30% start with apparel and footwear. Among mature shoppers who buy multiple categories online, 70%-75% buy apparel, footwear and accessories online. Deals and discounts and promotional material, such as emails, are key purchase triggers for new shoppers.
However, low familiarity with websites or apps, as well as return policies, are big concerns for first time shoppers, who thus prefer spending low amounts online. Hence, ensuring flexible payment options and smooth handling of returns/complaints is necessary to gain the trust of a new shopper.
Paradigm shift in the nature of online fashion shoppers
By 2020, the number of consumers purchasing fashion online will more than double. They will no longer be the typical young, metro residing, male users of today. A larger number of women and older age groups will start buying online, creating a much more balanced and representative shopper profile. There will be two and a half times more women shoppers and three times more older shoppers compared to today. Online shopping will also take off in India’s lower tier cities as the consumers there mature and the network and delivery infrastructure improve. Tier 2/Tier 3/Tier 4 cities will comprise more than 50% of the online fashion shopper base by 2020.
Finally, the report call out the need for shift in media spending towards digital where further scope exists for brands and retailers, as currently only 10-15% of ad spend is on digital media, despite the magnitude of digital influence on fashion expenditure.
The report concludes by drawing out implications for fashion players to win in this digital world, which include ‘here and now’ strategies like leveraging digital to connect with consumer across the various touch-points, to more futuristic strategies like optimizing assortment at ‘individual’ level and digital-enabled personalization.