How the Fashion Industry Can Stay Resilient in 2020

How the Fashion Industry Can Stay Resilient in 2020

While analysts expected fashion growth to slow down in 2020, none could have predicted a disruption that would contract the industry’s global revenue by nearly 30%. Store closures and shifts in consumer priorities impacted this decline, but eCommerce offers a lifeline for merchants looking to recoup lost revenue. Fashion retailers and brands must adjust their digital strategies to accommodate new volumes, new buying patterns and new preferences of online shoppers. 

Our latest fashion report, Digital Resilience During a Global Pandemic, discusses the key trends impacting the fashion industry and how merchants can address them by adapting omnichannel strategies and empowering spending through new technologies. It includes insights on the expansion of delivery options; the introduction of new payment options; tactics for leveraging online marketplaces; and how to build a brand that consumers can stand behind. In this blog, I’ll share some of the report’s key findings. 

Adapting Omnichannel

As consumers want goods delivered sooner or options to have contactless delivery, more fulfillment methods are becoming mainstream. Buy Online, Pick-Up In Store (BOPIS), expedited shipping and drop-point delivery have all experienced an uptick in order volume, but some options are riskier than others. Fraud risk for fulfillment methods are consistent between high-end and mid-tier fashion. BOPIS is one of the safer options, followed by expedited delivery which has moderate risk. It’s likely that drop points and reshipments are the riskiest for high-end and mid-tier fashion because these merchants typically don’t sell goods cross-border. Instead they maintain country-specific sites which remove the need for these services. 

Multiple delivery options at low to no cost is another growing expectation from consumers. Free two-day shipping from big-box retailers has put pressure on fashion merchants to offer similar complimentary services. As a result, some high-end fashion brands offer expedited shipping at no extra cost. Whether it’s the result of changes in retailer standards or growth in popularity, Riskified data shows that expedited shipping has become the standard in more than 40% of online orders within high-end fashion. As the volume of orders increase, the fraud attempt rates are decreasing: the risk of fraud for expedited high-end orders decreased by 33% from January 2019 to May 2020, though they are still riskier than standard shipping orders. 

Building The Brand

Part of building a strong brand is taking it global. When you establish a core identity that consumers cling to, it makes entering new markets easier. But operationally, expanding internationally exposes the business to new fraud risks. 

Merchants become too dependent on legacy rules-based systems that over-decline legitimate international orders just because billing and shipping addresses do not match. Many tourists place online orders when they travel and have the orders shipped to their hotels, but since it’s placed on an international credit card, they get automatically declined. They also deny reshippers because they’re unsure how to handle them, but many international customers leverage these services. 

But according to Riskified insights, many cross-border markets are much safer than merchants might assume. South Korea, Taiwan, China and Japan are among the top ten countries with the highest approval rates across fashion. China has the highest approval rate of any country for sneaker orders and Japan leads approval order rates in Asia for high-end fashion.

Trusting Consumers

Many fashion merchants have relied on unprecedented promotional offers during lockdown to encourage online shopping. While some are cause for concern, promotional code use generally indicates that a fashion order is safer than orders without one. Riskified insights found that when no promo code was used during the first five months of 2020, fraud attempt rates were on average 2x higher for mid-tier fashion, 3x greater for high-end, and about 17x more fraudulent for sneakers. 

Promo codes aren’t just safer, they also usually lead to more order volume and can even create higher value orders. While promo codes are typically used to encourage shopping, some consumers will actually spend more than usual in order to hit the threshold required for the discount. Riskified insights show that during the first five months of 2020, fashion shoppers spent 1% more on high-end orders and 11% more on mid-tier fashion orders when they used a discount code. Sneakers are the exception – while shoppers may be willing to add an extra shirt or accessory to hit a discount requirement, adding an additional pair of shoes isn’t worth the discount to sneaker buyers. 

Download The Full Report

These are just some of the insights included in our latest report about online fashion in 2020. For more insights and fraud prevention best practices, download a complimentary copy of the full report.