ECommerce' retail clothing market

Part
01
of two
Part
01

ECommerce' retail clothing market- growth

There are clear indications that the Direct-to-Consumer (D2C) eCommerce strategy "is causing a seismic shift" in the retail clothing market. Traditional clothing and apparel retailers are making D2C much more a key part of their strategy and smaller players are having a disruptive effect on the market by bypassing traditional retailers. That said, the only preexisting information that is publicly available combines all eCommerce data under one umbrella for the entire apparel and accessories market. I was not able to find any data that separates the D2C market from these overall numbers or that would allow me to triangulate an accurate estimate of the D2C market specifically. Please see below for an outline of my research methodology, as well as a deep dive into the key findings I uncovered about the eCommerce retail clothing market in general.

Methodology

A thorough search of the publicly available information revealed no sources that break out D2C data from the overall eCommerce retail clothing market. This is primarily due to the fact that the D2C business is nearly impossible to differentiate from the general e-commerce data without limiting the analysis to specific companies known to engage primarily in the D2C model. Large and established retailers like Nike are increasingly using the direct-to-consumer model in their own eCommerce businesses, so their sales that come from this channel are included in overall eCommerce numbers. This, combined with the lack of available data about smaller companies that primarily rely on a D2C model, made it impossible to provide an accurate estimate of the D2C market growth specifically.

Helpful Findings

While I couldn't find data that specifically shows the growth of the D2C market, I was able to find data showing the growth of the eCommerce retail clothing market in general. I also found indications that the D2C model is becoming increasingly important, and seeing rapid growth in adoption, within the eCommerce retail clothing market.

Here are some key insights from what I found:

1. Overall retail sales performance (not just in clothing) is strong in the U.S., but the retail market's growth is primarily driven by online retail sales, which grew 7% faster than the retail market as a whole in 2016. In 2017, U.S. online retail grew faster than it has since 2011, representing 13% of total retail sales and 49% of the growth.

This is causing traditional retailers to adjust to more online tactics, while online retailers like Bonobos are experimenting more with physical "showrooms" to bridge the gap between virtual and real-world experiences of their products. In short, the lines are being blurred more and more between online and traditional retail.

2. Online apparel sales represent a growing proportion of overall apparel sales and are growing faster than eCommerce sales in general. Online apparel sales represented 19% of total apparel sales in 2016, up from 11% in 2011. They also grew 19% from 2014 to 2015, faster than the growth rate of overall eCommerce sales, "which rose 14.6% YoY in 2015." A 2016 Statista report estimates "the online penetration of the apparel and accessories category will reach 25% in four years." Another report notes that the online penetration was 15.5% of total apparel sales in 2015, meaning if estimates are correct, that online apparel sales could see a growth of nearly 10% over five years (2015-2020)

3. eCommerce retail clothing competition is increasing and large retailers are looking more and more to a Direct-to-Consumer model. Nike plans for D2C sales to grow in five years "from $6.6 billion in fiscal 2015 to $16 billion by fiscal 2020." Under Armour's D2C sales made up 30% of its revenue in 2015. If these large retailers are any indication, the D2C model and market is only going to increase in relevance and influence.

Conclusion

Despite the limited available data on the D2C eCommerce retail clothing market, specifically, I was able to uncover data and insights that show the eCommerce market is growing rapidly, in general, and the D2C model is a key driver of that growth. Traditional clothing retailers and smaller companies are both placing a big emphasis on using D2C to drive their eCommerce sales now and into the future.

Part
02
of two
Part
02

ECommerce' retail clothing market-overview

We have provided an overview of the D2C eCommerce retail clothing market in the U.S., specifically by identifying companies operating in this space and providing specific information about each, and have noted the software used to manage production in each of the companies we identified. We have presented this information in the form of case studies, which have specifically focused on the following companies and software programs:
-- Apparel manufacturer, RYU, who uses the WFX software.
-- Apparel manufacturer, Fanmail, uses the Zedonk software.
-- Apparel manufacturer, Tommy Bahama, uses the BlueCherry software.

Since this information was not readily available, we triangulated this information by analyzing the customer a client lists of product management software designed for the apparel industry in order to locate those which featured apparel manufacturers operating in the e-commerce D2C space.

Below, you will find a deep dive of our findings.

methodology

In order to locate companies and software to use for your request, we first used software review site, Capterra, to locate production management software used within the apparel industry. We first located a list of apparel management software on Capterra, and then used Capterra's filtering tools to isolate software that is for production management specifically. Since you noted Allbirds and Everlane as examples of DTC companies in this space, we located their employee numbers on LinkedIn (11-50 and 51-200 respectively), and then used Capterra's number of users filter feature to look for software meant for companies of those sizes. As a result, we populated these two lists (list one, list two) of production management software intended for use in the apparel industry.

Next, we analyzed the software provided on these lists and looked at their websites to determine if there were any lists of customers or clients who use these software products. Next, we examined the customers to identify those who were DTC apparel manufacturers operating in the e-commerce space. From there, we conducted research on these DTC apparel manufacturers and provided specific information about each company. This research method allowed us to craft several case studies of DTC apparel manufacturers operating in the e-commerce space, while also understanding which production management software they are using.

For the purposes of this research, we have defined 'direct-to-consumer' as a manufacturer who sells their apparel "online, directly to a consumers" (i.e. has their own e-commerce store).

overview of findings

According to a recent Forbes article, the number of manufacturers participating in the DTC space grew by 71% in 2016, which represented a total of "40% of all manufacturers." We have presented a case study of three such manufacturers: RYU, Fanmail, and Tommy Bahama. While this is obviously not a comprehensive set of case studies, including additional case studies would be out of scope for a single Wonder response.

ryu

Company Overview:
RYU is an apparel company that operates three business segments: manufacturing, marketing, and distribution. Their product verticals are apparel, bags, and accessories. RYU's product lines are centered around "tailored urban athletic apparel," designed for and targeted at athletes with regard to training and fitness. RYU is headquartered in Vancouver, Canada, where their designing, development, and product testing take place. The production segment of their business is located in factories in Asia and North America. They sell their products "through retail, e-commerce and wholesale channels." RYU had a revenue of $1,367,043 in 2016, with a gross profit of $627,866 according to their annual report. Based on RYU's e-commerce site, they are operating in the DTC space. We were able to confirm that RYU is in fact an apparel manufacturer and not merely an online retailer. RYU is operating in the U.S. market, as evidenced by the 36% of their web traffic which is coming from the U.S., according to SimilarWeb.

Production Management Software Used:
RYU uses WFX for their production management software, as evidenced by RYU's appearance on WFX's customers page. WFX operates in 30 countries and serves more than 21,000 users. According to the WFX website, "WFX’s cloud software automates product development, sourcing and production operations of apparel companies and enables collaboration and scalability."


fanmail

Company Overview:
Fanmail is an apparel manufacturer located in New York, NY. Fanmail is operating in the DTC space, as evidenced by their e-commerce site. Fanmail has a revenue around $1.8 million, according to Owler. Fanmail is a private company, and therefore more detailed financial information was not found to be readily available. However, according to their LinkedIn profile, Fanmail makes sustainable apparel and focuses on providing transparency in manufacturing. They stated that every piece of their apparel "is cut [and] sewn in Manhattan's Garment District at factories [they] visit regularly." The company was founded in 2013, and has between 2 and 10 employees, according to their LinkedIn profile.

Production Management Software Used:
Fanmail is using Zedonk for their production management software, as evidenced by Fanmail's appearance on Zedonk's client list. Zedonk offers a suite of features designed for business management in the apparel industry. With regard to production specifically, Zedonk can analyze order books, hand production orders, produce reports, and optimize distribution.

tommy bahama

Company Overview:
Tommy Bahama is an apparel manufacturer operating in the verticals of "men's and women's sportswear, denim, swimwear, accessories, footwear and home furnishings." Tommy Bahama, based out of Seattle is a brand owned by apparel manufacturer, Oxford Industries, headquartered in Atlanta. Oxford Industries acquired the brand in 2003. Oxford Industries, via Tommy Bahama, is operating in the DTC space, as evidenced by Tommy Bahama's e-commerce site. Tommy Bahama has a revenue of $45.5 million, according to Owler, and has 430+ employees. The company was founded in 1993.

Production Management Software Used:
Tommy Bahama uses BlueCherry as their production management software, as evidenced by the BlueCherry web page. BlueCherry offers a suite of business management features, among which are a set of features specifically designed for manufacturing. BlueCherry's apparel manfuacturing software is "award-winning," according to their website. Furthermore, their website states that BlueCherry will "enable manufacturers and brands to effectively identify and fulfill current and future materials demand, supply and inventories," and that "manufacturers can automate and schedule purchases to align with production schedules to minimize costs and inventory positions while automating inventory control of materials and goods."

additional software being used in this space

While we have provided a few case studies here, you may also be interested in reviewing the lists we used to research suitable software products in this space (list one, list two), as we assume it is highly likely that there are DTC manufacturing customers who are using all the software products listed here, given that these lists are tailored specifically for the apparel manufacturing market, as noted in the methodology section.

conclusion

In closing, we have provided an overview of the D2C eCommerce retail clothing market in the U.S., specifically by identifying companies operating in this space and providing specific information about each, and have noted the software used to manage production in each of the companies we identified.

Sources
Sources

From Part 02