5 Online Fashion Retail Lessons From Fashion Connect

By Charles Scherer - Deputy Editor at IMRG

Last week One America Square hosted IMRG’s Fashion Connect 2017 - featuring some of the best and brightest in online fashion retail for a day of thought leadership, discussion, debate, and a networking drink or two.

We had speakers from online fashion retail, and solution providers in payments, merchandising, and marketing, who took to the stage against the dramatic backdrop of Londinium’s original wall.

If you made it, thanks for coming. It was great to have you.

1. How to define and determine Lifetime Customer Value

Our own Andy Mulcahy shared some thoughts about what Lifetime Customer Value means (and what it doesn’t).

Lifetime Customer Value = the value provided over the time of being a customer (not the lifespan of the individual).
Value = cumulative sales – costs (delivery, marketing etc)
Active customer retention rate in online retail is around 35%. In fashion, it’s 23%.
A happy customer does not necessarily mean a happy retailer. They may have purchased from you, but:
- Do they return a lot of items?
- Do they complain a lot?
- Do they share their experiences?
- What was the cost of conversion?
There is no such thing as an average customer. Figures and statistics might deal in averages, but no individual’s habits or preferences can be predicted using datasets.

During our Big Debate, hosted by Kristoffer Ewald, CIO at Netbooster, we heard from Steve Roberts, VP retail at MPP global; John Redman, director at Summit; Anoop Vasisht, VP Europe at Dynamic Yield; Michel Koch, ecommerce and M&A consultant Time Inc.

Kristoffer pointed out: “Lifetime Customer value is meaningless unless it takes into account distribution of re-purchase. I bought a car. My Lifetime Customer Value is great. But I’m not going to buy another car next year.”
Aroop warned against silos and poor communications between teams. “There’s no single source of truth.”
John reminded us to “focus on the basics” of user experience, to keep customers coming back with beautiful and functional online retail websites.
Steve commented on the balance that online retailers need to strike between using “creepy data and collected data”. That is, data the shopper volunteers, and data the retailer acquires through cookies and similar. The important thing is not to become irritating or disconcerting to the shopper, but to make their experience easier.
Michel warned that “Retail businesses tend to forget there is a life before and after the purchase” and that loyal customers can feel cheated: “You incentivise disloyalty with acquisition offers.”

2. The chemistry of customer satisfaction

Paddy Earnshaw, Chief Customer Officer at Doddle, spoke about click and collect, retailer efficiency, and customer satisfaction. He explained the two key chemicals at play in a purchase and a delivery.

Dopamine is triggered by making the purchase. It’s the short-term reward, the rush that comes from clicking ‘Order Now’. It offers a brief but delightful thrill. The downside is that it leaves you wanting more.

Oxytocin produces the feeling of satisfaction. It’s the post-coital chemical — which should give you an idea of its power. In the context of online retail, oxytocin is released when your order is in your hands, when you get to open up the parcel and take possession of your purchase.

Oxytocin also inspires feelings of generosity and loyalty. That’s handy from an evolutionary perspective, and also from that of online retail.

By harnessing the same instincts that make us go all cuddly, online retailers can even more effectively build relationships with their customers.

A well-placed offer, cross-sell, or just ‘thank-you’ note can inspire more purchases, or simply a feeling of good will, at a time when a customer is most apt to feel positively about a brand.

It’s certainly not an opportunity to be wasted. By capitalising on the successful fulfilment of a purchase, retailers have an opportunity to create and maintain loyal customers.

3. Even a room of online retailers is full of serial returners

Physician, heal thyself.

In a straw poll conducted by Jonathan Haseler, Director of Corporate, Barclaycard, a hefty number of audience members raised their hands when asked to admit to the practice of serial returning. That is, the habit of deliberately over-purchasing with the intention of returning some of the items in the order.

Everyone in online retail knows that a purchase is not a purchase until the customer decides to keep it.

It’s a phenomenon mainly of online fashion retail. Shoppers don’t have a fitting room, but they want to try on the clothes. So that happens at home.

It’s a tricky trade-off. Free returns eat into the profit margin, but making returns difficult or costly will put a lot of people off purchasing.

So, if frictionless returns facilitate serial returning, what can be done about it?

Well, first, as Jonathan demonstrated, retailers mustn’t forget that they are in their turn customers too. They shop online, and they’re just as likely to over-order and return the surplus.

With the benefit of that empathy, perhaps it’s best not to see the serial returning as a behaviour to stamp out, but a legitimate component of the online path to purchase. It’s just part of how online fashion retail works.

Perhaps it can be discouraged with thorough measurements, fitting guidance, and extensive images (video is even better). That will remove some of the mystery. The shopper will far more clearly know what he or she’s ordering.

Ultimately, since it’s essentially unavoidable, online retailers would be advised to factor returns into the business model. The starting assumption that items from an order may be sent back allows you to structure the fulfilment and re-stocking processes accordingly.

4. The importance of advocates (and how to create them)

John Buss, Managing Director of Yext, and Andy Harding, former Chief Customer Officer at House of Fraser, spoke about building brand advocates.

In Andy’s words, “How you deliver on your promises is how you build advocacy.” Far better to deliver (or overdeliver) on your simple promises than make extravagant claims.
When there are customer complaints, invest in turning that bad experience into a good one.
A sure way to create a passionate advocate is through an ‘edge case’. Get an umbrella to someone who’s standing in the rain. The cases in which a retailer goes above and beyond for one customer are widely shared.

Advocates are more important than ever.

59% of their survey respondentsUK over 18s say their fashion purchases are informed by online reviews.
76% of local searchers go into a retail store. 28% of those make a purchase. (See this post (point 3) about customer experience and the online and in-store experience.)
Of those, 87% said they don’t even consider a business with a low number of reviews.
Google rates online reviews highly in its algorithms, and the priority they give pages with reviews when it comes to local search. Distance, relevance, and prominence, are key — the latter involving the amount of fresh content. So (particularly for multichannel retailers) encouraging a steady flow of reviews is important.

A search for ‘The best pub food near me’ made from the IMRG office.

5 The online fashion retail landscape

Jamie Merrick, Director, Strategic Solutions, SalesForce provided some data about the developing mobile and online retail landscape in fashion.

2.6% of online fashion orders are made using Apple Pay.
6% of online fashion orders made on iOS are made using Apple Pay.
There has been a 27% improvement on conversion rates through devices with Apple Pay.
SalesForce’s research suggests that the majority of online fashion shoppers expect a free delivery option.

In the words of Ruth Ballett, Industry Manager, Fashion & Luxury Retail, Google: “We’re not going online, we’re living online.” She offered three tips for online fashion retailers:

Wise up on data. Gather it, learn from it, use it. (See this post on personalisation and building customer loyalty.)
Speed up your website. 40% of shoppers will abandon a page if it takes longer than three seconds to load.
Show up. Reach your audience at moments that matter.