How can smaller fashion companies compete online when they’re up against powerhouse retailers like Amazon? As it turns out, there are quite a few ways. Yesterday morning Third Wave Fashion teamed up with Women Innovative Mobile and Women In Wireless to host a founders breakfast panel entitled “Inspiration-Based E-Commerce: Getting Customers To Buy Things They Didn’t Know They Wanted”.
Moderated by Veronika Sonsev, CEO of InSparq (a Third Wave Fashion client), panelists Deborah Jackeson, CEO of Plum Alley, John Burbank, President of Nielsen Strategic Initiatives, Tanja Omeze, E-Commerce Director of Marketing & Business Development at Verizon Wireless, and our founder Liza Kindred, came together to discuss the ways in which Amazon is reshaping the online commerce landscape and give advice on how brands and retailers can compete against a company using inspiration-based commerce.
Veronika kicked off the discussion by first supplying the audience with some interesting facts: 74% of retailers are concerned with Amazon’s growth, and currently 35% of online transactions take place on Amazon.com. Veronika asked the question we were all eager to get an answer to: how can brands and retailers compete against Amazon? Not surprisingly, one by one, the panelists spouted the undeniable powers of the commerce giant. The general consensus appeared to be that while Amazon leverages significant price and logistical advantages, as Liza put it they are “missing the editorial point of view that inspires consumers to explore new personalities and find new products.”
When the question arrived to John Burbank, he asked the audience, “Who here knows Fab?” All hands in the room went up. He began to speak about how if one online startup could generate widespread awareness in a little over a year, others could do the same. Curation would be the key to competing with Amazon.
Deborah Jackson advised brands to look at Amazon and evaluate where they can fill a gap in the market that Amazon has not yet filled. She went on to explain that inspiration-based e-commerce platforms distinguish themselves from a one-stop marketplace simply on the basis of curation. These sites tell a story and help customers understand the value of the product.
Liza agreed with this idea, making the point that curated sites have the ability to become free showrooms for Amazon. She shared a story about how a friend regularly goes to Fab.com for inspiration but at the end of the day only loosens her purse strings for Amazon. Whether it is the competitive price point or the incentivized loyalty system, Amazon Prime, Amazon appears unable to do wrong. (Except for maybe the unattractive Amazon Fashion ads Liza pointed out.)
Merging into the next topic, Veronika asked the panelists to discuss alternative but successful business models for online commerce. Eyes went to Liza, as just a moment before the question had even been asked she had listed ten of the thirty five business models from our Fashion Tech Database: algorithmic, discovery, preorder, showroom, subscription, virtual closets, sharing, content and commerce, and marketplaces.
Tanja Omeze was quick to cite how two relatively new online companies, Birchbox and Blue Apron, are utilizing subscription based models very effectively. Liza piggybacked off this explaining how the subscription based revenue model can be highly effective simply because high margins and loyalty are built right in.
The next model that was brought up was rental services. Deborah explained how rental sites such as Rent the Runway popped up out of sheer necessity at a time that the economy hit everyone hard. Commodities and services that we once thought were out of reach or impossible to share are now being enjoyed by the masses. Companies like Airbnb, Zip Car, even Citi Bikes, are pioneering this new mode of commerce.
The conversation moved into the topic of influncers. Liza Kindred stated that in this day and age with the new generation, “Generation Me“, anyone can be famous. People intuitively seek out the opinions and recommendations of others so it makes sense for platforms to rise where people are reached from a one to one level. This has resulted in the rise of a multitude of recommerce apps and websites such as Poshmark and Threadflip.
Wrapping up the panel, Veronika asked one final question: how big of a share of the market do you believe Amazon will grow to in the next coming years? The three women on the panel turned to John immediately. Laughing, he stated it was hard to say. Amazon is launching a new service that for around $300 a year consumers can get same day deliveries. He explained how across the river from Manhattan, Amazon is preparing a massive warehouse for this unique distribution. With these new features in place, John hedged that it would be more than 35%, Deborah rapidly fired back50%.
As technology continues to expand into new areas that we may never have once imagined, the line between what is an online purchase and an offline purchase begin to blur. The conclusion of the panelists came to be that inspiration-based commerce will become the basis for all shopping platforms as we continue to demand a higher level of service and customization from the retailers and brands we interact with.
Third Wave Fashion has been your fashion tech think tank since 2011. We publish the first ever printed fashion tech magazine, Third Wave. Follow us on Twitter or subscribe to our newsletter to stay on top of the latest in fashion tech + wearables. Christi Reid is an Editorial Intern for TWF.
Image via WIM Accelerator