Setting up and ecommerce is easy, making it profitable it’s a completely different story.
In this article we cover all the activities that generates value for a fashion ecommerce and the potential pitfalls that fashion companies need to be aware of before the start setting up their ecommerce.
What is the fashion ecommerce value chain
The fashion ecommerce value chain is the set of processes that need to be implemented in order to run an ecommerce, in other words the value chain is made of all the activities that need to be managed in a fashion ecommerce business
- Sourcing the product and the Cost of Goods Sold
- Ecommerce Business Model decision: in house or outsourcing
- Product digitalization and content production
- Traffic acquisition, brand awareness and digital marketing
- Ecommerce platform requirements and development
- Store management activities: commercial plan, returns management
- Logisitics & Shipping
- Customer Service, multilanguage, in house and outsourcing
- Payment systems
- Ecommerce team organization
Sourcing the product and the Cost of Goods Sold
The very first thing you need to bear in mind when you plan your ecommerce is the cost of the products you sell.
If you are the manufacturer of your product you will probably sustain a lower cost than if you need to buy your product and then resell online.
This is the case of fashion brands that run their own ecommerce.
If you are a retailer and you buy the products at wholesale price, and then you resell them on your website, you will generally sustain higher cost for sourcing the product and therefore your gross margin will decrease.
The advantages for retailer are that they can source their products from a variety of brands and suppliers, thus creating a richer assortment; and the second advantage is that you may have less stock in your warehouse as you can source the product based on the demand.