I was one of the keynote speakers at the Web 2.0 conference in New York in October, 2011. Here’s a transcript of my talk on how the Internet is changing the fashion industry and the transition of offline behaviors to online.
Retail is a huge industry. According to the US Census Bureau, just in the US, retail spending (excluding food and automotive) amounted to $3.1 trillion in 2010, of which almost 80% was done by women.
Morever, online shopping is one of the fastest growing sectors, with the average growth of 19% a year for the last few years even despite the recession.
Fashion has been a bit slow to get disrupted by the Internet, in contrast to music or news industries. However, that is quickly changing.
Many consumers feel more confident about online shopping, with recent data from the Wall Street Journal suggesting that an overwhelming majority (over 90%) prefers online to offline sources.
Perhaps the most interesting observation about fashion and the Internet is that we are not seeing entirely new consumer behaviors. Rather, it is the transition of offline behaviors to online that uses the revolutionary powers of the Internet, and the innovative companies that are enabling that transition.
Most of you have probably heard of Gilt Groupe – a high-end online retailer that sells designer brands at a steep discount. It’s hugely popular because it taps into everyone’s desire to buy designer goods for a bargain.
Gilt also makes you feel special, as if you are attending an exclusive sample sale – an offline behavior that was until recently only available to a very select group.
Another e-commerce company with an interesting business model is Rent The Runway. As their name suggests, you can rent – rather than buy – the latest fashions.
Rent the Runway is also capitalizing on a very popular offline behavior of borrowing a dress from a girlfriend – so you don’t have to spend several hundred dollars on an item you’ll only wear once to a special occasion. A less realistic – but far more glamourous example of this behavior – is a celebrity being lent a designer dress to wear on the red carpet.
Tumblr – a blogging platform – is one of the hottest Internet companies around, with over 13 billion monthly page views. It allows users to save and share inspirational images and other content, just like tearing out pages of a magazine In an offline world.
Tumblr also often serves as a fashion diary, with many models, designers, and brands using it as a platform to post looks and latest fashion trends. What did Hilary Rhoda – this is her actual tumblr – or your fashionable friend wear today? No need for glossy magazines or lengthy phone calls – we can easily find out with one click of a button.
Pinterest is another company that allows users to both save – or pin, thus the name Pinterest – and share beautiful images, recipes, and any other sources of inspiration. Again, no need to tear out pages or clip recipes from a magazine – it’s all online.
Pinterest also appeals to a huge community of scrapbooking enthusiasts. You can create boards – or scrapbooks – for your wedding, baby shower, a trip, or simply to share with friends.
A somewhat different take on inspirational moodboards – a perennial favorite with the fashion set – is executed by Polyvore. Rather than just collect images, users combine them in collages – usually done offline with polaroids, push pins, tape, and cork boards.
Polyvore also allows aspiring fashionistas to mix and match items to create outfits. Users can browse an extensive database and pick styles and trends they like.
Clothia is a company I am a bit partial to. It’s a fashion technology platform that allows users to create virtual closets and outfits and share them with friends to give and receive style advice.
Clothia also allows users to virtually try on clothes via a webcam – a very typical offline behavior of trying clothes on, or holding a garment on a hanger and looking in the mirror, now available online.
And what I consider one of the most interesting applications of offline to online behavior is YouTube videos. Shoppers love to tell friends about their amazing fashion finds. Now imagine sharing them with a community of tens of millions of friends – like Dulce Candy, pictured here, is doing. Her videos of “style hauls” got over a hundred million views.
Another hugely popular YouTube star is a makeup guru Michelle Phan. She went from doing friends’ makeup to videotaping her makeup lessons to international stardom. Michelle’s videos got more than 400 million views and she now has more than 1.6 million followers on YouTube – that’s a small country.
There are many ways in which the Internet is helping consumers enjoy the same behaviors online as they have historically exhibited offline. So, what trends can we expect to see in the next five years?
First of all, online shopping will grow significantly to become close to 20-25% of overall retail spending.
We will see deeper connections between offline and online – merchants and companies will be integrating in-store, mobile, and online experiences. For example, you’ll be able to come to a store, virtually try on an item, and buy it on your phone, to be shipped to your house overnight.
The Internet will pave the way for truly immersive, social, and interactive fashion experiences – whether that is shopping via Kinect or mobile, social sharing, group buying, or enabling consumers to open up their own storefront with a click of a button.
Finally, there will be a new wave of amazing technology companies that will tap into existing offline behaviors to transform the way that we shop today. We are truly at the forefront of a fashion technology revolution and I am excited to be a part of it.