New World of E-Tailing for Small Businesses
Selling apparel online can be an expensive proposition for small businesses, but a growing number of technology providers are trying to change that.
Using new technologies, formats and pricing plans, Web providers are making e-commerce more accessible to small and midsize apparel companies. After all, there’s money to be made. Online shopping is exploding, with an annual growth clip of 14 percent, according to Bostonbased technology- and market-research company Forrester Research. The market currently stands at $172 billion and is expected to expand to $329 billion by 2010, according to Forrester.
“If you’re a new company today, you have to be on the Internet,” said Alicia Estrada, president of Los Angeles– based Stop Staring! clothing. “Advertising is expensive. The Internet is open 24/7 and is the cheapest way to sell and promote yourself.”
Estrada launched her vintage-inspired label about eight years ago and almost immediately started up a Web site. With limited resources, except for a tech-savvy husband, she introduced www.stopstaringclothing.com. She used her sister to model her swing-era dresses and designed the site inhouse. Through the years, the site has become a major part of the company’s business, helping it to attract bricks-and-mortar accounts as well as famous pin-up models volunteering to wear the company’s dresses.
“Even if I didn’t have my husband, who helped me, I would have found a way to do it myself,” said Estrada, noting the availability of outof- the-box software on the market.
Using another low-cost approach based on lots of do-it-yourself know-how, Los Angeles–based ApparelLink (www.apparellink.com) has recently carried over its B2B wholesale solution to the retail sector. The company provides a template-based system, in which subscribers can upload their own product images, pricing information and other content via a self-service administrative console without having to deal with a lot of the backoffice maintenance technology, which is handled by ApparelLink.
“We empower the designer to have complete control,” said company President Arnie Wachman. The cost is $180 per month. Members of the incubator trade group Fashion Business Inc. get a 25 percent discount.
Wachman, a former apparel retailer and wholesaler, said getting online is simple, but growing a business takes work.
“We don’t view the Web as replacing a bricks-and-mortar store. It’s building out from there. The store owners already know what sells. They still have to understand the inventory and customer-service aspects of business. If they can do all that and use the Web, there’s a good chance they will become successful.”
So far, ApparelLink has attracted some rising stars, such as Tummy Tuck Jeans, a company that in seven months has grown from zero pairs shipped to shipping 5,000 pairs per month. All ApparelLink clients are searchable via the ApparelLink index, which is linked to all the major search engines, Wachman said.
The giants of cyberspace Yahoo and eBay have also made room for the little guy. Yahoo Stores has grown to 35,000 merchants in just a few years. The cost of getting a shop starts at $39.95 per month and runs up to $299.95, plus transaction fees of .75 percent to 1.1 percent.
“It goes from ’Mom has an idea and wants to sell something’ to major retailers,” said Yahoo’s Jimmy Duvall of Yahoo Small Business. Like ApparelLink, Yahoo Stores provides site builders that require little technological know-how.
“We’re a comprehensive solution that will grow with you,” said Duvall.
Yahoo’s neighbor across the Silicon Valley, eBay, has also targeted smaller-business owners, especially apparel companies. Apparel accounts for $3.3 billion in annual merchandise volume and grew by 49 percent over last year. The online auction site now has 173,000 storefronts and has become a growing source for selling excess merchandise. Getting online with eBay can run from a few cents to $499.95 for an anchor store. EBay gets a cut of all transactions as well as fees to place items on the site. Although apparel merchants have a lot of competition to deal with on eBay, they also have a growing fashion resource. The site partners with many of fashion’s heavy hitters. Next month, eBay will help raise money for AIDS organizations by sponsoring the return of “7th on Sale.”
“We’re a great barometer for trends and have an enormous selection,” said eBay’s Maria Reiling.
Companies that don’t want to deal with Internet-based businesses on their own are seeking out turnkey solutions like the ones provided by Secaucus, N.J.–based eFashion Solutions (www.efashionsolutions.com), which handles everything from Web-site construction to customer service, marketing, merchandising and shipping. The company receives 35–40 percent of each transaction. In addition to the mechanics of online transactions, the company also provides valuable customer analysis.
“You have to understand the different customer segments. Why aren’t they happy about this product? Or why do they read this magazine?” said eFashion principal Ed Foy Jr. Such information is continuously gleaned through a variety of methods. “Sure, fulfillment is important, but data is going to be the driver. It will help with return on investment, making business more measurable and for brand positioning.”
Turnkey-solution providers like eFashion Solutions typically deal with larger clients that do wholesale volumes of about $50 million and more. EFashion’s client list includes Judith Lieber, Baby Phat, Rocawear, XOXO and others.
