Matthias Schulte talks to the online fashion magazine Fashionunited.de about digital commerce in the future, its challenges and opportunities and why online traders are going to continue having an important position in the world of commerce.
Fashionunited: Where do you see the challenges for fashion brands and traders in the next two years?
Matthias Schulte: We see a trend which is dramatically changing the world of commerce we are used to. From the point of view of the brand, the classic types of distribution such as wholesale, retail, e-commerce have to be changed and lead into the modern era. We’re already seeing a strong trend from traditional wholesale to digital sales channels, such as marketplaces (e.g. Amazon, eBay) or partner platforms (e.g. Otto, Zalando). Therefore, the strategic orientation is an important factor for brands that want to reach consumers through different touch points in the future. From the point of view of the retailer, the same is happening in the opposite direction. Here, traditional shopping is complemented by digital methods of procurement and partly even replaced by them. The new digital processes enable more attractive, wider product ranges, fast reaction times, e.g. with top sellers, and more availability. Retailers have to face these new opportunities.
Fashionunited: Do you think the fashion industry is prepared to tackle these challenges?
Matthias Schulte: To be honest: Apart from a few exceptions, we’re pretty much at the start of our journey in this industry and its strategic and process requirements. Distribution routes and commercial strategies, which people have used for decades, cannot be changed in a day; that’s a long-term process. Furthermore, the new opportunities come with many challenges regarding IT and systems architecture, which can’t be solved overnight. But if we compare the situation with 5 years ago, the need for change has clearly been recognised and is not being discussed anymore. The question now is how fast and how effectively a digital strategy can be implemented.
Fashionunited: What do you see in practice: Dynamic action or rather people burying their heads in the sand?
Matthias Schulte: We see dynamic action. As soon as a brand or retailer has recognised the great potential and has made the first experiences, the topic is promoted with great speed and a lot of effort.
Fashionunited: Tradebyte has just been bought by industry leader Zalando. Why?
Matthias Schulte: Through the strong partnership with Zalando, we have won Europe’s leading online fashion platform as a strong companion on our further way into expansion. We profit especially from Zalando’s technological infrastructure and profound knowledge of the industry. As part of the Zalando family, we can continue to undertake important steps as an independent enterprise in order to further develop our positioning in world-wide digital commerce.
Fashionunited: Traders/manufacturers sell on Amazon, on Zalando, on eBay, etc. Isn’t there a danger that the same products are everywhere and competition is reduced to a price war?
Matthias Schulte: Considering the extremely great diversity in the fashion and home furnishing industry and the exceedingly specialist desires of consumers, we don’t think this is a danger. Just at Zalando, there are more than 1,500 brands, which have a high level of relevance in their niche or for their target group. And depending on the target group and orientation, traffic on the internet develops in many different places. Even if the comparison with bricks-and-mortar commerce is not exactly right: A city also has several shopping centres and shopping districts, which have partly overlapping products, but still, each one has a high level of relevance.
Fashionunited: More and more manufacturers are “verticalizing” and entering the B2C business. Will we still need the retailer as we know it in the future?
Matthias Schulte: Of course! Especially the diversity and width of product ranges offer enormous opportunities for shops which curate and, for example, cater for special wishes and target groups in connection to social marketing. Looking at the sports market as an example, there is a range of specialist shops which enjoy great loyalty amongst their customers.
Fashionunited: In your opinion, how will commerce look in the future? Who will win online and who offline?
Matthias Schulte: In all areas, the winners will be companies which offer good products and services with passion and great customer centricity and have the shopping experience in the focus of their strategies.
Fashionunited: Tradebyte enables retailers to extend the product range in their own shop with suitable products of other brands. How well is this service received and why does it make sense?
Matthias Schulte: There’s a simple formula for this: A wider product range leads to more conversions and higher shopping basket values. But a connection also makes it possible to make existing articles better available, which also increases customer loyalty. Speed also plays a role here, as the traditional re-order principle has lead times, which bring decisive disadvantages compared to digital procurement due to the shorter cycles and fluctuating demand. Today, there’s hardly an important retailer that does not think about a brand or supplier platform or already has them on its roadmap.
Fashionunited: The cycles in fashion are getting shorter and shorter and the seasons are shifted more and more. Can online commerce deal with that better than bricks-and-mortar shops can?
Matthias Schulte: At the moment, bricks-and-mortar commerce often still has the lead as new goods can simply be presented in the shops. In online commerce, an efficient and fast process for content creation is the decisive competitive factor, which not all companies have mastered in the form it is necessary today. Therefore, we have launched our TB.PIM this year, which simplifies and speeds up workflows through to the finished digital product.
Fashionunited: Thank you very much for the interesting conversation!
The link to the interview at Fashionunited: