Like many destinations around the world, Bali’s shopping scene has seen robust demand for the designs of its local fashion designers as tourists spend their dollars in the island’s many gorgeous boutiques. With the increasing digitization of the retail industry worldwide, driven by easily accessible low-cost technology, increased demand from customers and improvements in the e-tail infrastructure, Bali and Indonesia are undergoing a digital retail revolution. As a leading centre for manufacturing especially in areas such as textile design and jewelry manufacturing, the island has been able to attract brands like never before often relocating to Bali to be close to their manufacturers.
All together this has meant a few things. Firstly, that traditional retail-only players have had to make the move toward an omnichannel business model, combining their physical storefront with an online store. Secondly, a growing generation of Bali-based brands have emerged that sell exclusively online. Others blend the best of both worlds, manufacturing in Bali and working with a network of stockists and distributors while also using the internet to promote their brand and interact with customers.
Regardless of where brands have come from prior to embarking on their digital journey, the digital path represents a new set of challenges. For the bricks and mortar players, combining retail operations and inventory management operations becomes a key consideration; as well as having to learn the new rules of the online retail game. The pure-play digital players, while lighter on their feet as they don’t have the burden of maintaining a physical storefront, still need to build a brand. As their customers are unable to touch and feel the items before buying it, some marketing dollars are needed to overcome the lack of a fitting room. Here we discuss what are some of the common challenges all designers will face and our tips for being successful online.
The shift toward a digital fashion storefront
Going digital, despite the abundance of plug-and-play solutions, is not something that can be embarked upon at the drop of a hat. It is an equally complex business requiring a different knowledge and skills-set to running a physical store. It requires new skills in IT infrastructure, marketing and customer management. It requires mixing the soft-skills of the existing workforce with the processes and policies set-up on the online storefront; which are often quite different. For the physical store operator it will also mean real-time inventory management of two seperate sales channels. An understanding of returns and shipping policies which are of less consequence to the running of a physical store, are a vital component of having a successful online operation and the communication and customer management skills needed to resolve issues.
The pure-play online fashion brand might seemingly have it easier, as they can manage their design and manufacturing operations and can focus on running just the online channel without having to synchronize back-end operations of an omnichannel set-up. Afterall, the reach of an online store is much greater than that of a physical store right? In theory perhaps yes, in practise it is not so easy. The physical storefront has the benefit of customer intimacy and immediate feedback; vital information that is difficult to capture online. And the digital pond is large, with every kind of player trying to capture their own corner of the world wide web. Any digital strategy will still require a more focused skills-set to drive those all important digital KPIs: traffic, conversion and retention. Therefore whether entering as a pure-play digital player or as a bricks and mortar retailer, each will be faced with a unique set of challenges.
Spending money to make money
The old adage that you need to spend money to make money also holds true in the online space. Fortunately the cost of entry has come down tremendously. Plug and play online platforms like Shopify have democratised e-commerce and allowed smaller players to have an online retail presence for a small monthly fee. A fast way to start which explains its popularity to designers in Bali. Larger content management systems such as Drupal, Magento and Prestashop are available for free, but require investment into customization and development. Furthermore, the plethora of Software as a Service (SAAS) solutions covering almost every imaginable aspect of running an online business are available for reasonably priced subscriptions. In fact there is such an abundance of solutions, that it is quite overwhelming for any digital newcomer.
Now that the digital operations are set-up, next is marketing. Social Media has certainly brought down the cost of having an online presence, however some marketing investment- from banners, to rich media and amazing online collaterals are needed as well as investments in actual paid media to drive brand awareness, traffic and conversion. This is even more so for the pure-play online players who can’t rely on real-life customer interactions to build their brand. Balancing scarce resources are every business owners main task and perhaps headache. Ramping up digital operations can divert important resources from other parts of the business, and if the expected results don’t materialise, then the question arises whether to change strategy prematurely or to press ahead. The balance between investment and returns will always be a delicate one, depending on the resources available and the time-frame of the business.
Digital solutions are not solutions in themselves
A digital solution is really only a sales channels and a way to reach customers and track their shifting buying habits and preferences. The real engine of the business however is the operational back-end that drives customer fulfillment. The beauty of ecommerce is its ability to automate so many processes that previously required a physical person hours to complete- such a transactions, orders and invoicing. Nevertheless having a digital sales channel will not mask issues in production, supply chain, the quality and desirability of your products or the ability to provide good customer service. Therefore a digital solution represents nothing new, one’s success is reliant on running a good business from the front end to the back-end.
And yet going digital presents so many opportunities to fashion designers seeking to expand the brands’ reach to their potential customers. While we have discussed the potential pitfalls of embarking on a digital strategy, what can you do to ensure that it pays dividends? Instead of ramping up digital operations rapidly, only to ramp down again, we would propose instead to keep every step granular, incremental and steady. The options can be overwhelming when starting out, so try these steps to build a sustainable online presence.
Our top tips for a succesful digital business
Leverage your customers- Much marketing spend is focused lead and traffic generation with complex metrics measuring sales funnels and conversions. While this represents a cost to the business, the hope is that the conversion rate would be sufficiently healthy to pay back those investments; and the cycle repeats itself with more marketing spend. The larger question is the loyalty and how qualified these customers are if significant investment is needed to achieve each and every transaction. While customer acquisition will always have a cost regardless of the type of customer who buys from you, a better strategy would be to consider whether chasing conversion of potentially unqualified customers who respond to tactical promotions and may never return are the recipe for long-term success.
It’s well known that your biggest source of future revenues and growth are your existing customers. Much research has gone into the cost of acquiring a new customer compared to maintaining an existing one and their value to your business during their customer life-cycle. Customer retention and loyalty would be a better metric than simple conversion and a recipe for stability and long-term success. Especially as these same customers become promoters of your business to their networks.
Quality by design- With so many merchants trying to sell online, you may think it is impossible to stand out, but small changes can put you ahead of the pack quite quickly. Often this means adopting a fully online business model which will often clash with what is traditionally considered best practice in other offline businesses. Don’t be afraid to have a progressive returns policy. It is understandable that many merchants feel that this is a cost for their business, but it is an investment in their long-term brand equity as well as in the loyalty and repeat buying of customers. While in a retail setting to a certain extent you may not see the customer again as they will need to physically return to the store.
An unhappy online customer however is a click away and you will see them again on your customer service surveys, on chat rooms, blogs, customer reviews and then finally impacting your rankings. Therefore it pays to take a small loss on a single transaction to maintain a trusted presence online and grow the overall volume of revenues through good customer service, repeat purchases and word of mouth marketing. Think of it in terms of the net promoter score. As we mentioned above, your existing customers are your best source of future revenue, so are your existing customers being net promoters, or are a few bringing down your overall score? Any reasons given why a designer cannot stand behind their product and adopt a progressive policy will often look a bit suspect to customers.
Products made to the highest quality standards, that are exactly as presented, with a detailed sizing guides and a progressive returns policy, inspire confidence in customers and generate conversion. Furthermore, quality imagery, creatives and amazing presentation all add up and is worth the investment in order to showcase the aspirational lifestyle and product positioning that appeals to your shoppers. Instagram engagement pops, content sharing and subscriptions go up as the visual identity becomes a core pillar of your brand positioning, differentiation and customer focus.
Work with partners- If the quality of your relationships represents the quality of your business, then working with the right partners who share the same customer focus and market positioning can give a boost to your digital revenues at little additional cost. More specifically, working with marketplaces will give you numerous benefits that you are unable or only at great cost, able to access. The benefit of marketplaces is that they simplify and centralise the shopping process for customers, leveraging their scope and range of products to allow customer to shop, compare, check prices and build shopping lists all in one place.
They provide information to customers in one location, allow multiple purchases and play a role in defragmenting specific categories or markets preventing customers from getting lost in the digital wilderness. As a budding online digital fashion entrepreneur, partnering with marketplaces provides you many immediate benefits; you are getting the digital operations for free, you can leverage their marketing capabilities and will be selling to customers which on your own you may not be able to reach. All this for a fee which means that larger investments are not necessary.
As a marketplace, Black Book Fashion looks to work with brands that share its values and customer focus in an effort to provide customers the best destination shopping experience, and its partners a robust sales channel. As entrepreneurs running digital ecommerce operations, in our experience the best advice is to to take everything a step at a time. It is tempting to ramp up quickly and spend big only to ramp down again and start again. There are many bandwagons to hop onto and it’s easy to try everything and up up an endless tinkerer. If you commit to one strategy, go slow not fast and ensure it becomes a key bedrock of your strategy. Every successful business however requires time and attention, no less a digital business, a focus on customer service and yes, a robust online infrastructure. We strongly believe that through partnerships the digital journey can be a successful one, so contact us and let’s see how we can work together.