Why It Took So Long for Many Retailers to Embrace E-Commerce
When TJX Cos., parent of TJ Maxx, Marshalls and Home Goods, announced it would acquire off-price internet retailer Sierra Trading Post for $200 million, it was more than a smart buy. The purchase signified something much bigger: The company was finally taking e-commerce seriously. CEO Carol Meyrowitz declared to investors the company would use Sierra Trading Post's web savvy and infrastructure to build out its own e-commerce sites.
It might seem crazy that we're still talking about brands launching e-commerce in 2013. After all, most retailers are now focusing on mobile. Mobile transactions are growing almost twice as fast as desktop transactions, said James Gardner, founder-CEO of Create the Group, which recently launched Marc Jacobs' mobile site.
But discounters like Marshalls and fast-fashion players like H&M on the low-end and ultraluxury labels like Hermes and Givenchy on the high end have neglected a channel projected to reach $256 billion in sales this year.
"If a brand is unable to deliver a multiscreen e-commerce experience that matches the quality of their brick-and-mortar experience, then yes, it makes sense to forgo," said Paul Dalton, senior VP-media at Digitas, one of the agencies that brought Uniqlo's long-awaited U.S. e-commerce portal to life in October. "Well, at least until [it's] ready to roll out a worthy solution."
For off-price brands, the main challenge has been sourcing enough of one item, as stores often carry just a few units of each piece. Then Gilt Groupe proved it could be done.
Meanwhile, fast-fashion brands "offer a brick-and-mortar shopping experience that thrives on constant change," said Mr. Dalton. "Digital replication of this experience for e-commerce can require the building of a new operating model, platform and expertise that takes time."
Zara, before it launched U.S. e-commerce 18 months ago, cited the country's varied climates as its biggest barrier. Unlike its store locations, the e-commerce warehouse would have to hold inventory for all kinds of weather, all year long. And H&M, now slated to open up shop later this year, has repeatedly pushed back the launch date for U.S. e-commerce as it fixes problems related to security issues, payment solutions and logistics.
As for pricey, exclusive fashion brands, they've been afraid marketing their wares online could damage the brand, as well as negatively affect sales at brick-and-mortar locations, said Mr. Gardner, who counts among his clients Oscar de la Renta, Tom Ford and H&M.
But he says that type of thinking is rare in 2013. "There is not one brand that I know of in this stage that is not aggressively looking into their direct-to-consumer business," he said. "Digital commerce is a very, very powerful way for these brands to both sell directly to consumers but also communicate with these consumers." In a year's time, Mr. Gardner predicts there won't be any luxury holdouts left.