We work with a number of international fashion advertisers in the US and provide them with a hands-on, boutique service which focuses on best-in-class compliance, quality and content. Our market leading technology allows us to engage with publishers, with new features including Influencer Payment Model (Assist), Cross-Device-Tracking and link automation tool, Convert-A-Link.
Aside from the fashion sector performing well domestically, there has also been strong growth globally, especially within the APAC region. Understanding global marketing calendars including key trading dates such as Single’s Day have been a major driver of this growth.
In 2016, we expect the sector to expand further by focusing on understanding how consumers interact across devices and also on the role affiliates can play in influencing sales.
Overall Growth
The chart below looks at the performance of key advertisers within the sector since 2013 based on sales volumes. Strong growth has been seen year on year and there are noticeable peaks throughout the year. As with retail in general, fashion sees purchases peak considerably over the November and December holiday periods. This growth has been fueled further in 2015 with key trading periods such as Black Friday shifting further online, Cyber Monday and the very recent emergence of China’s ‘Single’s Day’ becoming more established events on the US retail calendar. Post-Christmas sales have seen solid January performance before sales experience a drop off later in the month and into February. As we move into the spring and summer seasons, sales begin to pick up once again ahead of the peak trading period in Q4.
Internationalization
While growth within the US has been impressive, internationalization has also played a key role. The chart below considers the top sales drivers in Q4 2015. The size of the circle represents the volume of sales within that country.
The fashion brands the network partners with have seen strong growth from outside of the US with the UK and APAC seeing impressive growth. As mentioned above, Single’s Day was a key driver of sales within China and is covered in more detail later in this document.
Devices Driving International Growth
The chart below considers the top sale driving countries within the sector over Q4 2015 and the split of sales by device. It is evident that customers purchasing from the UK and Ireland are most likely to purchase from a mobile device. Around 45% of transactions are through desktops compared to 70% through the same platform in the US.
Despite being less inclined to purchase via a mobile device than their UK counterparts, when they do, US customers are spending considerably more. Average order values were $114 through mobile handsets and $124 through tablets.
US customers are also spending considerably more through desktop and have the highest AOV of the top ten countries the network tracked across all devices:
Key dates
In 2015, US in-store sales slumped ten percent while digital revenue spiked by 13 percent year on year, eroding the traditional pattern of Black Friday sales occurring offline. This online activity has accelerated in the past couple of years, with Cyber Weekend (incorporating the Monday after Black Friday), driving a significant volume of sales within the sector.
Additionally, Single’s Day which falls on November 11th, has started to become a fixture outside of China. Single’s Day is the single biggest online shopping day in the world and US retailers have been able to benefit from more interest in their brands from China. Fashion and health & beauty have been two sectors where demand from China has been strong as availability of the products, delivery options and price all play to Western retailers’ strengths. Given how online retail events, driven by major brands, can cement themselves in consumers’ consciousness within a very short space of time, it’s imperative brands remain agile and flexible in responding to these fast developing trends.
Cyber Weekend also saw significant activity across the affiliate channel in general demonstrating strong year on year growth. These key trading periods have been highlighted in the chart below.
This graph highlights the impact of these key dates for an advertiser within the fashion sector. Traffic on Single’s Day outstripped that of Black Friday although sales performance was significantly stronger over Cyber weekend.
The rise of mobile and the role of influence
Mobile has played a significant role in the growth of the sector. Consumer behavior has evolved over time and the share of traffic and sales that have originated from a mobile device has increased over time. Around 50% of traffic across the entire network is now mobile. The fashion sector has also seen strong mobile growth.
The size of the bars in the charts below are representative of the volume of traffic, while they are split by the share of each device type.
Traffic:
Mobile has been a key driver of an increase in traffic across the fashion sector. Mobile traffic is additional rather than replacement traffic and smartphone clicks in particular have seen a steady increase. In Q4 2014, 20% of traffic originated from a smartphone, and by Q4 2015 this had increased to 31%.
Transactions:
While the share of mobile traffic has increased over time, the proportion of transactions has remained fairly static over the past year. In fact, desktop has increased its share of sales from 66% in Q4 2014 to 69% in Q4 2015.
This disconnect between the growth in traffic and sales seen through mobile devices points to a conversion issue. However, this thinking neglects the role of mobile as an influencing device. While they may convert at a lower rate than desktop, there is no denying they play a key role in customer journeys. The launch of the network’s cross-device tracking solution last year has enabled us to better understand how consumers switch between devices, the impact this has on the length of customer journeys as well as the role smartphones play as an influencing device.
Affiliate Influence
With a greater level of insight into how consumers are interacting across devices, it is possible to start to understand the role of influence within the affiliate channel. The chart below considers the additional influenced sales that currently go unrewarded within the sector. This is one of the limitations of the last click CPA model in that traffic contribution and early funnel influence rarely have a reward attached to them.
Advertisers can now look at additional payment models such as ‘payment on assist’ to further engage with content sites who are valuable at influencing customers in the early stages of the purchasing funnel, yet are not rewarded for this value on a standard last click CPA model.
Rewarding for influence will play a significant role for the sector over the coming year and will help advertisers attract an increasing number of the most relevant content sites.
Summary
The US fashion retail sector has gone from strength to strength over the past few years. As well as performing well domestically, there has also been strong growth in internationalization – especially within the APAC region. Key trading dates have been a major driver of this growth and the emergence of Single’s Day as an event for US advertisers has had a significant impact.
Understanding how consumers interact across devices and the role affiliates can play in influencing sales will further drive the sector forward throughout 2016.
.
