Can fashion retailers leverage Programmatic Commerce™?
Programmatic Commerce is the automated purchase of products by devices, and it effectively takes away the pain from boring tasks and regulates regular purchases. As a concept its most obvious appeal is in the grocery and FMCG sector - our research confirms it*. However, there is potential for both application and success within the fashion industry.
Whilst Programmatic Commerce makes sense for habitual purchases like washing powder, the customer benefit is less evident for fashion. The buying of apparel is a more impromptu, discretionary spend based on occasion, trends and desire. But there are fashion categories (e.g. hosiery) and customer segments (e.g. males) to which programmatic could have huge potential, and this is something that must be considered by fashion retailers when they look to Apply programmatic Commerce.
Programmatic Commerce has inherently been applied to the grocery or FMCG sector - Amazon Dash deepens the pathway - but there is potential for it to succeed in fashion.
Fashion is a little trickier, however, as different shoppers will tailor their habits according to personal preference. For example, men might benefit more because they are more likely to know their sizing, whilst women may prefer to shop around and choose different styles, even when it comes to basic purchases.
data is the key to unlocking the programmatic commerce door
The value of data in unlocking the success of programmatic should be no surprise. A retailer's ability to gather and analyse data - as well as the customer's willingness to share this data - is core to maximising the potential of programmatic. Retailers need to combine the different data sources together in order to meet customer expectations. There is also a significant trust issue with fashion - would a customer trust a retailer to spend money for them based on their budget threshold, behaviour and preference data? This is a particular challenge for luxury fashion, where the value of an order can amount to hundreds, if not thousands, of pounds.
Personally, a fair chunk of my monthly disposable income is spent on fashion. Aside from letting Marks & Spencer send me regular automated orders of tights and socks, there are only a handful of retailers I would trust enough to place orders on my behalf. Perhaps others like me would be open to setting a maximum budget with a multi-brand retailer like ASOS, for example, consenting to them sending a monthly machine-curated order with a variety of items based on sizing, previous purchase/returns history and pre-defined style and brand preferences.
Not all customers treat shopping for clothing as a hobby. Where a customer sees shopping as a chore, or they are habitual purchasers (such as men buying the same shirt from the same brand every month), they may also be more open to a retailer's technology placing a regular automated order on their behalf.
could programmatic commerce be the customer's personal shopper?
The challenge in fashion is that very few products are bought with enough frequency and regularity to make typical Programmatic Commerce viable. This means the concept could be broadened to include automated order based on a maximum spend, rather than specific products.
If cross-channel customer behaviour and preference data and merchandising data is tied together, could a system learn which products go best together, would it match a customer's body shape and then place an order on their behalf?
This would be akin to the kind of service currently offered by personal shoppers in many retailers.
Taking this one step further, well integrated software, such as an app, could sync with the customer's phone calendar, deduce any important upcoming events (such as parties or holidays) and suggest products based on these future occasions.
One of the biggest potential hurdles for this type of "fashion subscription" service is the high value for each order and associated hassle of returning unwanted items and waiting for a refund. There may be a reluctance from customers to commit to a regular spend with one retailer.
Deferred payment could play its part in helping retailers overcome this. For example, Yoox Net-a-Porter have launched a "you try, we wait" service for their EIPs (Extremely Important People). This premium offering enables EIPs to try on their order in the comfort of their home while the delivery driver waits, and anything to be returned can be collected immediately. The customer is only invoiced for the items they choose to keep.
Whilst this is unrealistic for most retailers, there may be segments of their customer base for whom deferred payment or "free home collection" services might be valuable.
Programmatic is still in its infancy, even in categories where there is a more evident benefit for both customers and retailers. For fashion brands and retailers, the first step towards this is considering the potential for their business and assessing if and how their data strategy supports this growing trend.
Here at Salmon, we work with retailers and brands such as Ted Baker and Selfridges - contact us to find out how we can help grow your ecommerce business.
*54% of consumers claimed to be most comfortable ordering household supplies via Programmatic Commerce. The same percentage aligned with food and drink, whilst 34% cited beauty, healthcare, personal hygiene products (Source: Rise of the Machines - Programmatic Commerce™ and the retail revolution 2016)