CATEGORY: ECD 2022,NEWS AND FACTS
INTERNATIONALIZATION IN FASHION: HOW TO NAVIGATE THROUGH CURRENT CHALLENGES
At the ECD Global London, Paul Alger from (UKFTA) and Aimé Fundani, Head of International Marketplace at Trendyol, took on the exciting yet complicated topic of internationalization in the fashion industry. The ECD expert panel prides itself on deep diving into the real reality of how the industry is changing and how to use insights to digitize to full potential. Luckily, the ECD panelists were in energy-igniting, idea-provoking London, which has ranked as the top center of fashion in recent years. With the online sales of apparel, shoes, handbags, and accessories would collectively account for close to a third of e- commerce revenue in the United Kingdom post pandemic.
(Pictured in from left to right) Paul Alger, Aimé Fundani and Alexander Otto at the ECD Global London.
Let’s ease into this one. Global expansion is attractive. Where can your commerce fully thrive if already maximized in your own country? Other countries of course! Many brands, retailers and marketplaces are naturally still charmed by the idea of global sales, international trading and the gain from global expansion. Fresh and established fashion brands want to branch out of their own country and take advantage of the opportunity to sell their products worldwide. Unfortunately, current market conditions are proving to be challenging not only for big players but for small brands. More importantly, the real transformation however, comes with newer obstacles and changing factors to bear in mind.
Here are six things to consider before going global
1. Have you considered starting local?
Everyone wants to go global and big and get there fast, but it’s ok to start small, or local. Trendyol is a great example. In 2010, they started with their private fashion labels in Turkey, before even considering exploring new territory. On their turf, they could have flexibility and control on their production costs and study their own market first and pioneered into more efficient ways to ship products within the EU. They started off local, and with a “slow and steady wins the race” approach, since their start in 2010, they have now over 7 billion products online and have now paired with Tradebyte so they can manage their commerce centrally, from a single software.
2. Have you tested the demand in your target market?
Entering new markets is no easy task. A brand that resonates in its domestic market may not do so in its target market. Paul Alger reminisces, “In the good old days, a brand would design a line of fashion and sell the collection”. Then, a retailer or marketplace would then put them “on the map”. That’s it. Whether you were a new brand or established brand, getting online was easy. Paul Alger from UKFTA insists there are many factors that have now complicated things for logistics and trade for the UK and EU Markets. Now any one new brand must push it via a multitude of channels. This all sounds great, but for smaller, newer brands this could prove difficult, when there is little to no startup capital to implement such a transformation. The great news is, with the latest developments of social media, smaller retailers will take on a new brand as well as explore services that could enable cross market exploration.
3. Do you operate with your customers in mind?
At the outset of an internationalization strategy, one should focus on one foreign country, in order to realize sustainable and steady growth. Brands can make a solid impact on a new uncharted market and build sustainability but it may be time to go back to basics. Aimé suggests that any sized brand must take a leap of faith in providing better transparency with customers. By educating your cross-border customers on your products, they will be readily available in markets that previously might have required a localization strategy, providing an environmental approach to digital retail during unstable times. It may sound simplistic to tell your customer “what your product is, what it’s made of, how it’s made, and how they can get it in their country”, stated Aimé. With that, Paul added, “Wholesale brands should not undercut the contributors like agents and retailers who start up your journey.” With unpredictability now the norm, it’s time to step up with the disclosure and create a more transparent business relationship.
4. Supply Chains creates a ripple effect
We are constantly looking to optimize our supply chain for speed and cost. It’s no surprise that with the gas and energy costs rising quickly, due to the Russian-Ukrainian crisis, we are creating more costs and making poorer decisions. Aimé encourages that we could potentially look at the environmental angle. Production, logistics and your manufacturing may be saving you a buck, but may be affecting your end-user or other countries along your route. Have you further explored efforts to avoid unnecessary wastes, carbon emissions that destroy certain regions and essentially the actual globe? With that, let’s go a bit deeper. Where do we draw the line on manufacturing? As an example, is the preferred method to send everything to China which offers flexibility and low overhead costs? Or does one produce closer to home, for more quality control? The latter could deem more costly due to the economic demands that keep rising.
5. Make your marketing strategy a priority
You have a marketplace, to some it is passive income and the EPR does most of the heavy lifting. There is a lot of money to be made. But are you investing this financial gain back into exploring newer markets? This is more about making better educated decisions as far as your digital strategy using the power of marketing to gain more reach and drive traffic. Foreign markets also need to be considered, such as the translation of the webshop, data processing, legal notices, and trading terms and conditions. Furthermore, a new, country- specific localization strategy has to be optimized, additional services offered, such as client services and shipping. Possibly, you might also need another IT system including ERP and CRM. Aimé suggests that the goal should be to get it up with those multibrands, proper ecomm website, your own retail shop, and of course, the marketplace, so you could reach out to new customers. With the speed of consumer consumption, nothing is more important than having a regularly updated website as well as updated content of your online store to reflect local and global trends. Investing in marketing strategy (on any budget) can accelerate the overall performance for e-commerce business growth.
6. The complexity of EU and UK Customs and Export regulations
With the inevitable effects of Brexit, as well as turmoil of the Ukraine-Russia conflict, as well inflation costs, the effects have led to a constant rise in production costs and shameless complexity in overall trading policies. EU markets are being extreme in the details of import export guidelines. Countries like Spain, Italy, and surrounding are checking every bill of lading, shipment form, and logistic policy in order to import or export from the UK. For example, British based companies are forced to now invest in infrastructure and logistics to get into the EU instead of using their capital to build their platform or work on marketing campaigns. Paul laments, “For the UK, the largest supply chain is more expensive and complicated within the EU. Despite the US, a major market responding well along with Korea for London based luxury items, the hope that Russia and Ukraine (currently excellent markets for Europe) would pick up on UK brands has been disappointing. As far as trade policies between countries in the European Union, and of course due to political vs business choices, the relationships between each particular country is now becoming a delicate territory.
The takeaway from asking tough questions is that there are bountiful markets outside of the norm to pursue. There is money to be made, in cross markets, no doubt about it. However, proper internalization is not a race but a marathon. There is much to mindfully consider before taking any steps. Also, it’s important to stay optimistic during difficult times. During global challenges, there is always an opportunity for success.
Watch the whole expert panel discussion here.
Find more trends and topics in the ECD expert interviews.