For many years now, it's been reported retail is amid a direct-to-consumer (DTC) takeover. However, as we navigate trading in the COVID-19 era, it's the third-party titans reigning supreme.
Just take a look at some of the heavy hitters covered in this report. Farfetch's revenue in 2020 increased 64% to $1.7 billion with plans to expand into China and beauty. Zalando's latest financial report in Q3 reported a revenue increase of 21.6% to €1.8 billion with plans to triple the size of connected stores in 2021. ASOS achieved 10% growth per quarter over 2020 and added Arcadia brands to its ever-expanding portfolio.
These are some pretty impressive figures to boast, especially when operating in the most challenging period retail has ever faced. So while wholesale channels may look more attractive to brands now than a few years ago, it's not without its risks.
This makes data critical to provide visibility on how brands' retail partners are stocking, pricing and discounting competitors, as well as empowering negotiation and giving insight into new platforms.
Whatever your strategy, we are here to empower it with real-time data and analytics. Get in touch to speak to one of our Retail Specialists today.
Case study: The fast fashion brand
River Island's home site spans menswear, womenswear and childrenswear, while the third-party sites primarily stock products for adults. Tops are 33%-39% of the total assortment at River Island and ASOS. However, there is a more even weighting at Zalando given to the top three categories.
Accessories make up 14% at the home site and Zalando yet is less than 5% of ASOS' offering. Swimwear makes up 8% at ASOS compared to less than 2% on the home site and Zalando. However, the majority of these styles are over two years old and 93% are on sale.
Products command the lowest and highest advertised full price on River Island's home site, with consumers paying £3 for a pair of socks upwards to £165.00 for a leather biker jacket. On average, River Island products at Zalando are £9.00 more expensive than on its home site as it holds more products landing in the £40-50 bucket.
Discounting differs across all three retailers, with River Island currently advertising the most profound reductions on its own site at 54%. At its wholesale partners, Zalando is discounting a greater proportion of the brand than ASOS at 80%. However, it offers the shallowest reduction across the three at 30%. It also protects footwear, its second most invested category, from heavy markdowns, while ASOS and River Island avoid discounting bottoms too deeply. Despite ASOS stocking a high amount of River Island swimwear compared to the other sites, all in ones is the category warranting the deepest discount.
Analyzing products selling out of majority SKUs at full price over the past six weeks reveals the different types of River Island products consumers favor on each site. ASOS credits its quick pivot into loungewear as a factor in its successful sales, making it an ideal platform for brands to sell comfort-led products. At Zalando, the products selling out are dressier, indicating Brits are preparing for June 21st’s end of lockdown celebrations. Here’s a comparison of River Island’s Top Movers at ASOS compared to Zalando:
Case study: The sportswear brand
On Puma's UK site, tops are given a similar weighting to footwear. This is mirrored at Zalando; however, ASOS prioritizes bottoms, driven by investment in sweatpants - harking back to its dedication to comfort.
Breaking down the tops category further also backs this up. T-Shirts and hoodies are the most stocked product across all sites, yet 14% of tops available at ASOS are sweatshirts vs. 8% at Zalando. The third-party sites hold on to more underwear stock, where there is a greater emphasis on outerwear and accessories on the home site.
Similar to River Island's analysis, the advertised entry-level is the lowest on the home site. Puma achieves this by offering football sock stoppers and then exits at £272.00 with a technical puffer jacket. ASOS commands the highest exit price, stocking a waterproof jacket from Puma's 2020 collaboration with Helly Hansen, which appeared on the latter brand's site, but not the former.
ASOS is currently promoting the most aggressive discounting strategy of Puma products, with the greatest proportion of products reduced and the deepest markdown. Zalando has a similar reduction rate to the home site; however, it's discounting slightly more items. All retailers are dedicating the deepest discounts to fringe categories that aren't heavily stocked and have the lowest sell out - dresses, all in ones, product sets and swimwear.
The tops category experienced the highest number of full price majority SKU sell outs over the past six weeks. Digging deeper reveals various T-sShirt options drove this. Top moving products at ASOS were categorized by trend-led products leaning towards athleisure silhouettes and lifestyle sneakers instead of performancewear, which saw success at Zalando. Here’s a comparison of Puma’s Top Movers at ASOS compared to Zalando:
Prada's highest priced goods are also housed on its own site instead of through its wholesale partners. This way, it can invest in ecommerce innovation and tailor its services to its high-income consumers now shopping for luxury goods online with the role of bricks-and-mortar stores forever changed.
Having this kind of information at your fingertips is golden if you’re experiencing pushback from a wholesale partner suggesting your product is priced too high or too low for their site. Arm yourself with knowledge of the market and have the data to back it up!
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