Fashion Marketing: Fashion Stores Meet Niche Marketing, Pareto, and the Long Tail

Fashion Marketing News: A plethora of studies, data, and articles seem to point to the growing success of niche sites, especially in the fashion industry. Hype or reality? How can big online retailers and local fashion stores benefit from internet niches?

I like to read about pragmatic ideas for boosting online sales of fashion items, from clothes to accessories. I think too much time is wasted theorizing about internet marketing and not acting on it.

However, I am going to talk about hard statistical studies and exaggerations. Why?

Because I found in this month’s INC. magazine an article on niche marketing that made me connect many issues facing local clothing stores as well as large online fashion retailers.

Earn money online by having no bestsellers

First, the article titled “A World Without Bestsellers” delves into the specific buying patterns of Internet consumers.

These patterns form the long tail. You may or may not know. For a concise explanation, go to the Long Tail page on Wikipedia. Let’s say consumers can find and buy products online that a regular store might not be able to offer. For example, it is reported that 40% of Amazon.com’s book sales consist of unknown titles that your regular Barnes and Noble can’t afford at the bookstore next door.

The same seems to apply to fashion items. For example, at the INC. article, Tony Hsieh of Zappos says that:

“Today, the company sells more than three million products across 1,000 brands. The top 20 percent of products account for half of revenue, the bottom 80 percent the other half.”

So at Zappos, the top 20 selling items make up just 50% of revenue. This is a far cry from the usual 80/20 rule that usually applies offline, when the top 20 sellers account for 80% of revenue. The 80/20 rule is drawn from the works of the Pareto economist.

Online sales of fashion items make the Pareto principle redundant

This is the gist of a February 2007 study called “Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on Product Sales Concentration.” It was written by researchers at the MIT Sloan School of Management. Better yet, this study is based on “several years of sales data at a private-label womenswear company that offered the same merchandise through its catalog and online store.”

Fashion products are really at the forefront of this trend. Think of all the niche sites that have sprung up, from sites that sell discontinued lines of products to sites that sell only to a sub-demographic. Shoppers will flock to the web for hard-to-find eyewear or styles regular retailers would deem too funky to wear.

A company called Niche Retail specializes in doing just that. The company says it actually avoids selling the best-selling products, as big box retailers usually manage to liquidate business by discounting the most sought-after items. By the way, the Niche Retail logo represents the Long Tail graphic.

Style is a personal matter. Fashion professionals did not wait for the long tail theory to launch niche product lines. But the Internet offers interesting additional niche opportunities:

– established brands and large online retailers can find relevant niche sites for some of their product lines

– local fashion stores are, in fact, niches in themselves; they can use the internet to get more exposure

Big brands and retailers go after niche consumers

This very site spends time introducing you to new fashion blogs, new fashion sites, and new fashion communities (see Fashion 2.0). Because fashion can get very personal, it has always been a good topic of conversation. Now, the Internet allows you to become a fashion critic in the blink of an eye. Big fashion players may go after these niche sites to get their attention.

For example, niche TV channels are popping up on the Internet due to low barriers to entry, as reported in this Wall Street Journal article. The newspaper gives the example of the Express clothing chain sponsoring the Ford Models web tv. I’d add the example of “Ask a Gay Man,” the colorful and popular fashion review show on YouTube (see my previous note on the subject), which landed founder William Sledd a TV deal with Bravo.

But you don’t have to be big to go after these niche sites. For example, Ujeans, a custom-made jeans company, sponsors contests on the StyleMob social network (“a new community for street fashion inspiration”).

Local fashion stores are her niche

I see an opportunity here for local clothing stores as well: a niche can be geographical.

A local store owner may be the best person to know what seniors in the Boca Raton area like to wear. Why not put up a website, where you can share your experience? When local people use Google to find information about clothes they like, they will find your website, enjoy your experience, and visit your store.

Marketers are encouraging local stores to go online and advertise online. A book called Marketing Your Retail Store in the Internet Age does a great job of providing pragmatic and economical advice to local store owners. Meanwhile, Google is pushing local ads heavily. Your AdWords system allows you to show your ad only to people searching from your zip code. Plus, Google Maps lets you list your store on the popular map system, so when people search for “women’s fashion, 97108,” your store will show up.

It’s no wonder local internet advertising is booming. According to eMarketer, local online advertising spend in the US will reach $2.9 billion in 2007. Local search is great for a local fashion store or geographic niche site. One of the best resources on the subject, with instructions and tips, is Clickz’s local search column.

Fashion sales are booming online and online fashion marketing may be one of the hottest topics right now.