By Alexander Otto, Head of Corporate Relations at Tradebyte

Fashion leaders are bracing for another year of uncertainty as continued economic, environmental and geopolitical headwinds weigh heavily on consumer confidence. 2024 has already proven itself a tricky customer as retailers attempt to navigate a number of challenges, from soft pricing to supply chain complexities and sustainability concerns. Not only this but significant changes in technology have pushed an already competitive landscape to a fever pitch as retailers clamour to keep pace with emerging trends and rising consumer expectations. 

Despite the hurdles, however, I see the remainder of 2024 as promising substantial gains for those who take heed of early trends and warning signs, and respond with speed and agility. This is the year to harness the power of direct-to-consumer platforms and marketplaces for instance, embrace the rising customer demand for sustainable practices and kick off social selling strategies.

Soft pricing, supply chain and sustainability challenges 

As economic unpredictability continues, prompting fluctuations in customer demand and expectations, soft pricing remains a central concern for the e-commerce market. However, our experience working with the likes of TB.International tells us that this can be managed by strategically maintaining a responsive shopping environment. Leveraging real-time market data and conducting competitor analysis means e-commerce brands can understand customer behaviour and stay ahead of the curve to enhance competitive advantage. However, as consumers have more and more access to information on other brands, their reviews and comparative pricing, pricing strategy that includes transparency becomes even more important.

We will also see pricing become more dynamic as digital platforms allow adjustments based on real-time data relating to market conditions, helping businesses set competitive and profitable prices, but also attracting and retaining customers.

When it comes to competitive differentiation, timely deliveries and accurate order fulfilment are more important than ever for online shoppers, especially during peak seasons. However, with a significant increase in transport costs, primarily due to rising energy and wage prices, I know that the fulfilment challenge is not easily met. Fashion brands and marketplaces are reassessing their logistics and supply chain management to discover more efficient solutions. 

Adopting a Multi Channel Fulfilment (MCF) model is one answer to this, ensuring streamlined processes, from inventory management to shipping, to provide a comprehensive solution for meeting customer demands. Amazon is a great example of this. Marketplace fulfilment is also gaining popularity as a means of elevating efficiency. This is, in part, due to the ongoing global supply chain disruptions, but also in response to a need for more sustainable, centralised and local solutions. 

Indeed, eco-conscious consumerism is more important than ever, influencing purchasing behaviours with demand for ethically sourced products, transparency within the supply chain and eco-friendly packaging. The new EU legislative framework for digital product passports (DPP), collecting and sharing product data from raw materials sourced to production, shipping and delivery, will be a key initiative for online brands to work towards when it comes to their sustainability efforts. Nobody’s Child is already doing a great job of rolling this out in the UK.  

Although collecting, storing and regularly updating all the data that is required for a digital product passport is a resource intensive project, the outcome not only helps brands make sure materials are verified, but also offers an opportunity for increased customer trust. With sustainability being an increasingly important factor for consumers when choosing online retailers to purchase from, I fully expect more initiatives and regulations like these to emerge – presenting challenges for the fashion industry, but also new opportunities.

Silver linings: social selling and the digital transformation of luxury online retail

Speaking of opportunities, I anticipate social selling and luxury online retail to experience a real boost this year. Consumers’ shopping patterns are changing, and social media has a powerful impact on purchasing decisions, making social presence more important than ever. Not only can social media visibility drive sales, brands and retailers can also use the platforms to collect important information on what users want and how to best engage with them. This helps inform social experiences for cut through, and to encourage users to come back for more.

The emergence of social platforms’ own shopping capabilities is creating further opportunities for creators to collaborate with different brands and reach the right audience based on audience insights, interests, demographics and much more. TikTok Shop is a great example, introducing shoppable videos and live streams. According to TikTok, four out of five users are likely to make a purchase through social media if they have participated in a live stream. 

Luxury brands will also benefit from the power of social, particularly as younger generations gain more spending power, so I expect to see more digital transformation ahead for them. According to McKinsey, nearly one fifth of luxury sales will be online by 2025, reaching about $75 billion. Marketplaces will be on the lookout for luxury brands to add to their portfolio in the coming year, expanding their target group and online reach even further. This creates an opportunity for luxury brands to cover wider ground, and for marketplaces to expand their offerings and cater to a whole new audience.

But it’s not just brand new luxury products that are set to gain traction online. The market for second-hand luxury products is also growing. Despite the fact that the preloved luxury market was worth more than €30 billion in 2022, and could end up accounting for 20 percent of the overall revenue of luxury brands in 2030 according to Bain & Co, many luxury brands have not yet fully embraced the second-hand market. I suspect that this will change in 2024 as many brands strive for more sustainable sourcing.

This popularity offers new possibilities for retailers to collect and resell pre-worn luxury items. As this proves to be a highly favourable market moving forward, we will see e-commerce retailers incorporating sales of second-hand products on marketplaces. eBay and Vinted have been at the forefront of this trend, but more are coming to join the party with the likes of Farfetch, Depop and Reluxe. Working with a centralised platform with access to multiple sellers will enable brands to tap into this potential – all alongside other e-commerce efforts.

While 2024 presents its share of obstacles, it also offers abundant opportunities for fashion industry leaders to innovate and thrive. By embracing technological advancements, sustainability initiatives, and evolving consumer preferences, businesses can navigate the uncertainties ahead and emerge stronger in the dynamic landscape of the fashion market. I for one, am very excited to see the results!
Alexander Otto is Head of Corporate Relations at Tradebyte with more than five years’ experience in leading strategic communication, project management, and leadership for the global collective of the movers and shakers of fashion retail and platform businesses. Tradebyte empowers fashion and lifestyle brands and retailers to digitalise retail and drive growth. Its innovative software solution and modern ecosystem for digital commerce help more than 1,000 leading brands and fashion retailers enable platform operations that drive seamless direct-to-consumer (DTC) experiences.