Multichannel Customer Purchase Behavior And Long Tail Effects In The Fashion Goods Market

The long tail theory suggests that e-commerce platforms enable a wider variety of niche products to be offered to consumers, resulting in a more evenly distributed sales pattern. However, the applicability of this theory to fashion retail, where products often require physical examination and consideration, remains unclear.

The main objectives of this research are as follows:

a) To analyze the impact of e-commerce growth on the concentration of overall sales for fashion retailers.

b) To explore whether consumers buy a greater variety of products online compared to offline or if they sort their purchases based on product characteristics.

c) To offer recommendations to fashion retailers on curating their online and offline assortments and optimizing inventory management strategies.

Literature Review

The long tail theory posits that with the growth of e-commerce, sales become less concentrated on the top-selling products and extend into the tail of the sales distribution, creating a more diverse marketplace. Fashion goods typically require physical examination and consideration before purchase. This aspect of fashion retail introduces unique challenges in applying the long tail theory to product assortments.

Methodology

Detailed individual and transaction-level panel data were collected from two multichannel fashion retailers. The data encompassed consumer purchases both online and offline, allowing for a comprehensive analysis of the impact of e-commerce on product assortments.

- Overall Sales Concentration: The concentration of overall sales was measured to determine whether the long tail theory is applicable to the fashion retail sector.

- Online and Offline Assortments: The product assortments offered online and offline were compared to identify any differences or patterns in consumer purchasing behavior.

Results

The analysis indicated a decrease in the concentration of overall sales for both multichannel fashion retailers with the growth of e-commerce. However, this change was driven more by consumers buying different products online rather than an increase in variety in online purchases. Contrary to previous recommendations from long-tail literature, the study found that fashion retailers do not necessarily need to offer broader assortments online compared to offline. Instead, consumers sorted their purchases into channels based on product characteristics, leading to a different product mix online and offline.

Discussion

The findings of this study challenge the conventional wisdom of offering a broad assortment of products online. Fashion retailers should consider consumer preferences and product characteristics when curating their online and offline assortments to maximize customer satisfaction and sales.

Conclusion

This research highlights the impact of e-commerce growth on product assortments in the fashion retail sector. Contrary to traditional long tail theory assumptions, the study reveals that fashion retailers need to focus on sorting their assortments based on product characteristics rather than simply offering a wider variety of products online. This insight can help fashion retailers optimize their inventory management strategies and deliver a more tailored shopping experience to their customers.