5 Key Questions Facing Fashion Brands Looking to Harness Alt – Commerce

By Jie Xue, Worldline’s Head of Innovation.

As a rule, the fashion industry must be exactly that…fashionable. As an industry rooted in trends, it must stay attuned to the preferences of the upcoming generation – aka, Gen Z. This generation lives and breathes social media and finds immense excitement in innovative advancements within that realm. To resonate with both Gen Z and Millennials, fashion brands must not only have a fashionable and stylish appearance but also adopt innovative approaches to connect, engage, and sell to consumers. Fashion businesses of today now have a unique opportunity to create a competitive edge. One that is grounded in a deep understanding of changing consumer behaviours and needs.

Enter Alt-Commerce. 

The Alt-Commerce trend represents a transformative change in how people buy and sell products. It encompasses innovative technologies and the need for closer customer relationships, leading to the emergence of new selling channels. Social platforms like TikTok and Instagram are now becoming the primary platforms through which young consumers explore and purchase fashion products. Brands have moved away from traditional ads, opting for more entertaining and less promotional content. Furthermore, concepts like live shopping, autonomous stores, conversational platforms, and the metaverse offer retailers unprecedented opportunities to engage with and sell to customers. 

The most exciting part of Alt-Commerce, in my opinion, lies in innovating the existing business models. Here, retailors challenge the assumptions of the traditional retail models by looking into new possibilities like reselling, rental, subscriptions, and innovative ways of community and social buying and selling. 

So, let me pose and respond to 5 key “how can I” questions that fashion brands might have about harnessing this Alt-Commerce trend.

How can I…

1. Develop a resale focused business model?

The resale industry is experiencing rapid growth, outpacing overall commerce by five times according to the Ellen MacArthur Foundation. The global market for pre-owned goods was valued at $100 billion in 2022 and is projected to reach $250 billion by 2027, accounting for 23 percent of retail sales. Resale platforms like eBay, Vinted, ThredUp, and Depop have gained popularity in the west over the past few years, while the Asia-Pacific region’s fashion industry is also embracing resale. The increasing interest in resale reflects changing consumer attitudes towards sustainable consumption. To serve these new preferences, brands should consider providing resale, rental, and repair options (if they don’t already do so). Trove, a certified B Corp, offers branded recommerce solutions that allow brands and retailers to integrate resale into their own operations. 

Alternatively, brands can choose to partner with an established resale provider to lower their operational investments. Burberry is partnering with RealReal to offer their customers a resale option through a third-party marketplace. The sustainability of a resale program depends on its circularity, shifting revenue away from new production and emphasizing the sale of pre-owned items and therefore creating new revenue streams for retailors. While consumers are primarily motivated by value and affordability when engaging with resale, leveraging the trend appropriately can contribute to sustainability goals by reducing the manufacturing of new products and mitigating the environmental impact of the fashion industry.

2. Create a subscription or rental fashion model?

The global market for online clothing rentals is projected to reach $1.96 billion by 2023. Companies such as ByRotation – which enjoys 550% year upon year growth, offers peer-to-peer social rental, allowing people to rent clothing items from strangers. Traditional retailers and brands such as Urban Outfitters and H&M are entering the rental market to stay ahead of the evolving retail landscape. This model provides an affordable alternative for consumers with limited budgets to wear high-fashion brands and reduces the need for purchasing disposable items from fast-fashion retailers. The pressure of not repeating outfits due to social media documentation has contributed to the rise in waste, making clothing rentals an appealing option.

The subscription model is no stranger to the tech industry, and now it is coming to fashion. Sportswear brand On launched a circular subscription service for their fully recyclable running shoes Cyclon. Combining a subscription model with a sustainability angle could be the next great catch. 

3. Give more purchase power to my customers?

Consumers are increasingly using their purchasing power to demand progressive change and take greater control over the buying process. A price-led, community group buying model allows consumers to place group orders and secure better deals, often directly from manufacturers. In China, the group buying model has gained huge traction in recent years by the pioneer Pingduoduo. Recently, it also saw the rapid popularity of the community buying trend of a community leader, such as a friend or neighbour, recommending and collecting orders from other local consumers, as well as using an app to arrange the procurement. The community leader then distributes the products to local consumers. 

Similar examples of group-buying led by reseller agents can be found in Southeast Asian countries. While this model has yet to catch on outside of China, other forms of local/community group-buying are emerging in Europe. These initiatives involve communities pooling their resources to buy items together and is almost certainly a trend to watch.

4. Sell my products through creators?

Fashion brands can effectively sell their products through creators to leverage the influence, creativity, and personal connection they have with their audience. Collaborating with popular creators in the fashion and lifestyle space allows brands to tap into their dedicated fan base and reach a wider audience. By showcasing their products through creators’ content, brands can benefit from the authentic and relatable endorsement that creators provide. Powerful recommendation algorithms on platforms like Tiktok, Instagram, and Xiaohongshu help brands precisely target and reach their customers through creators. 

A new area worth paying attention to is the concept of “Creator Storefronts”, where established creators curate products and sell to their fans through their own online boutiques. Shipping and fulfilment is done by the retailors and the creators receive a share of the transaction revenues. A sophisticated back office and payment facilitation is there to ensure its success. New market entrants like Flagship wants to tackle this new challenge. 

Additionally, brands can provide creators with exclusive access to their collections, enabling them to create engaging and visually appealing content that showcases the brand’s products in a unique and compelling way. Through strategic partnerships with creators, fashion brands can tap into the power of influencer marketing and effectively drive sales while building brand awareness and loyalty among their target audience.

5. Adjust my payments strategy to fit the requirements of Alt-Commerce? 

Alternative buying methods require updated payment processes to accommodate transactions between individual sellers, perform verification for non-business sellers, handle deposits and refunds, and support recurring payments for rental and subscription services. However, investing in new business models alone is not sufficient. Brands must also invest in the right channels to establish strong and enduring relationships with customers, which is the essence of Alt-Commerce—combining transformative business models with deeper customer connections.