Discover how marketplaces are revolutionizing the online fashion and beauty industry, and how PostNord can support ecommerce fashion companies in the Nordics.
The growing online fashion & beauty market
The online fashion & beauty market is poised for continuous growth over the next five years. With the increasing popularity of online shopping, more and more consumers are turning to the internet for their fashion and beauty needs. This trend is expected to continue, making the online fashion & beauty market an attractive opportunity for retailers.
Marketplaces play a significant role in driving online fashion & beauty trade, accounting for nearly half of all online fashion transactions. These platforms connect consumers with countless sellers, manufacturers, and brands globally, offering various products and competitive prices. Marketplaces provide a convenient and efficient way for consumers to discover and purchase fashion and beauty items from the comfort of their own homes.
In this rapidly growing market, it is crucial for e-commerce fashion companies to stay ahead of the competition and capitalize on the opportunities presented by marketplaces.
The role of marketplaces in driving fashion & beauty trade
Marketplaces have become the go-to destination for fashion and beauty enthusiasts. They offer a wide range of products, from high-end designer brands to affordable, fast fashion items. Marketplaces provide consumers with a one-stop-shop experience, allowing them to browse and compare products from different sellers and brands in one place.
Marketplaces also play a vital role in driving fashion and beauty trade by facilitating seamless transactions. They provide secure payment options and reliable shipping services, ensuring that consumers receive their orders in a timely manner. Additionally, marketplaces often feature customer reviews and ratings, allowing shoppers to make informed decisions and build trust in the platform and its sellers.
Overall, marketplaces have revolutionized the way fashion and beauty products are bought and sold, offering consumers convenience, choice, and competitive prices.
Two large international low-price giants have been leaders in the past year's development on the market; Shein and Temu.
TEMU: Empowering consumers and connecting sellers
One of the emerging contenders in the online fashion & beauty market is TEMU (tee-moo). TEMU operates as an online marketplace, connecting consumers with countless global sellers, manufacturers, and brands. The platform's mission is to empower individuals to lead their best lives through affordable, quality products, fostering an inclusive environment.
TEMU offers heavily discounted goods, primarily shipped directly from China. By connecting consumers with sellers from around the world, TEMU provides access to a wide selection of products at competitive prices. This enables consumers to explore and discover new fashion and beauty items that may not be readily available in their local markets.
TEMU's inclusive approach also benefits sellers, particularly small businesses and independent brands. By providing a platform to showcase their products to a global audience, TEMU helps these sellers reach new customers and expand their businesses.
TEMU's emergence in the online fashion & beauty market poses a direct challenge to existing players like Zara and H&M, particularly with its focus on affordability and inclusivity.
In 2023, the shopping platform Temu's app was the most downloaded in the USA. In July, the app was launched in Sweden and the following month it was also at the top of the lists in the Swedish App Store and the Google play store. Through the very low prices, a marketing budget of over 21 billion Swedish kronor and widespread gamification in the app, during its short lifetime, Temu has already had time to make a big impression on e-commerce in Sweden and internationally.
In Sweden, a significant 48% of consumers have cited the low cost of products as the primary reason for choosing e-retailers, while 38% are driven by the wide range of choices in terms of products and brands. These factors have played a crucial role in the popularity of platforms like TEMU and Shein, as they offer affordable options and a diverse selection to cater to the demands of fashion and beauty enthusiasts.*
The rise of TEMU and its impact on Shein
As TEMU gains popularity and establishes itself as a major player in the online fashion & beauty market, it poses a direct challenge to Shein, another prominent player in the industry. Both TEMU and Shein offer heavily discounted goods and prioritize affordability.
In 2023, Chinese products dominated the recent purchase trends in Sweden, accounting for 40% of cross-border transactions. This trend was similar in Norway, where China accounted for 37% of the most recent purchases. If you look at Denmark, then Germany, and China shared the top spot, representing 27% of the latest purchases each.*
TEMU's unique selling point lies in its marketplace model, which connects consumers with a wide range of sellers and brands globally. This allows TEMU to offer diverse products at competitive prices, giving consumers more options and flexibility in their shopping experience.
Shein is an ultra-fast fashion company that has made a huge impact in the fashion industry in recent years. Shein offers thousands of items at very low prices, and every day between two and ten thousand new items are released on the platform. Shein uses AI technology to create new designs and collections at an extremely fast pace, making the company especially popular in the fast-moving TikTok generation. As recently as the beginning of January 2024, information claimed that the company is betting on being listed on the American stock exchange. If successful, Shein will be the highest-listed Chinese company on the New York Stock Exchange.
While Shein has been successful in capturing a significant market share, TEMU's rise has prompted Shein to adapt and innovate to maintain its competitive edge. The emergence of TEMU highlights the dynamic and ever-evolving nature of the online fashion & beauty market.
In 2023 Shein accounted for 13% of most recent purchases in Sweden, followed by TEMU, which accounted for 12%. In Denmark, Shein accounted for 15% of the market share, while TEMU, which is not yet well-established, accounted for only 2%. When looking at Norway, when numbers are different, Shein only accounted for 5% and TEMU 1%*.
1 in 3 spontaneously buy goods because they are cheap
According to the latest e-barometer report in Sweden, one-third of consumers made impulse purchases in the past few months, despite tough times. It is common to do spontaneous shopping once in a while, but younger women are likely to do it more frequently; 1 in 10 have bought goods on impulse several times in the past few months.
Spontaneous shopping is driven by both need and desire. 43% of young women in Sweden have spontaneously bought an item because they needed it. In these cases, it is not necessarily the item itself that accounts for the spontaneity but the time when the purchase was made. An almost equal proportion, 38 percent, shop spontaneously because they find something interesting at a very low price. Low-price players such as Shein and Temu work actively to capture this type of consumer.
It is mainly women who spontaneously buy goods because they are cheap, and it is particularly common for these purchases to take place in clothing and footwear stores. The third most common reason is also driven by desire. 31% stated that they purchased because the product was unique or fun. There is a big difference between older women and other groups, where 44% of women between the ages of 65 and 79 spontaneously bought the product because it was unique/fun.
Source E-barometern 2023
As personalized marketing increases and the interest in low prices grows, there is reason to believe that spontaneous purchases in online shopping will become more common in the future. When the consumer wants to continue spontaneous shopping but can no longer afford to do so at full price, the importance of the discount giants will increase.
As these two contenders continue to compete, it will be interesting to see how they shape the future of the online fashion & beauty trade.
PostNord: Enabling growth for e-commerce fashion companies in the Nordics
In 2023, PostNord was the leading delivery provider for items purchased from the Top 3 e-retailers selling to Sweden. PostNord delivered 43% of Amazon's cross-border purchases, 38% for Shein, and 49% for TEMU*.
PostNord, a leading logistics company in the Nordics, is well-positioned to support the growth of e-commerce fashion companies in the region. With our extensive network and expertise in shipping and delivery services, We can offer tailored solutions to meet the specific needs of fashion retailers operating in the Nordics.
PostNord provides reliable and efficient shipping services, ensuring that e-commerce fashion companies can deliver their products to customers on time. Our advanced tracking and tracing capabilities enable transparency throughout the shipping process, giving both retailers and customers peace of mind.
Furthermore, we understand the unique challenges and opportunities of the e-commerce fashion industry. We can provide valuable insights and guidance to help fashion companies navigate the rapidly changing market landscape and optimize their operations.
By partnering with PostNord, e-commerce fashion companies can leverage our expertise and infrastructure to expand their reach in Nordic countries, enhance customer satisfaction, and drive growth in the competitive online fashion & beauty market.
*IPC CROSS-BORDER E-COMMERCE SHOPPER SURVEY 2023
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