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Apparel has become the largest and fastest growing component of internet product sales. Combined online sales of apparel, footwear and fashion accessories, excluding jewelry, moved ahead of computer hardware and software in 2006. Their share totaled $18.3 billion, according to "The State of Retailing Online 2007," a report sponsored by Shop.org and conducted by Forrester Research.

The same study projects that online sales of this fashion trio will increase 21 percent this year to reach $22.1 billion. That is despite other studies that say most consumers prefer to buy clothing and shoes in stores.

A recent study by Accenture, a global consulting company based in New York City, found that 66 percent of internet users prefer to buy clothing offline. In the rating of online versus offline preferences, clothing was preceded only by groceries with 81 percent of consumers preferring to shop at the store, and home furnishings, with 69 percent citing stores as the preferred source.

A May 2007 "Shopsmart Online Shopping Poll" by Consumer Reports indicated that 14 percent of women cited clothing as the number one item they would not buy online. It was preceded only by food, which 18 percent of respondents said they would not buy online.

"What is truly amazing about the rise of online apparel sales is the overwhelming majority of online shoppers who still prefer buying in stores where they can touch and try on clothing," said Jeffrey Grau, senior analyst at eMarketer Inc., which is based in New York City.

Grau is the author of that firm's "U.S. Apparel E-Commerce" report. While predicting the internet will continue to take an increasing share of apparel sales, he says retailers are missing opportunities.

"Apparel is a big cross channel shopping category," he said. "Traditional retailers who understand the purchase process will develop strategies for driving online shoppers to their stores."

Although apparel, accessories and footwear are making big gains online, the web accounts for just eight percent of their total sales, according to Forrester. By contrast, even though the total spent online for computer hardware and software fell behind at a total of $17.2 billion in 2006, it accounted for 41 percent of that category's total sales.

Within the fashion trio, apparel led the pack with total online sales of $9.6 billion in 2006. Accessories were next with $5.8 billion followed by footwear at $2.9 billion. Forrester predicts, that this year online accessories sales will increase 25 percent. Footwear will gain 21 percent, and apparel 18 percent.

Events conspire to account for the rise in online sales for all three fashion components, according to these various studies. Among the contributing factors are women's increased use of the internet, expanded adoption of broadband, increased confidence in buying online, and online retailers' generous return policies and websites that contain improved product visualization.

According to eMarketer studies, a decade ago, boys and men made up three quarters of internet users. By 2005 the tide had turned and 51.6 percent of internet users were female, a proportion that has been inching up slightly since then.

Although broadband adoption has recently slowed down, according to a recent study from the Pew Internet and American Life project, 47 percent of all adult Americans now have a high speed internet connection at home. Adoption grew 40 percent in 2005/2006, but slowed to gain just 12 percent the following year. Yet, the population of broadband users represents the most profitable segment of consumers.

Online merchants' contributions to the rise of apparel, accessories and footwear sales have increased shoppers' confidence in buying those products online. The pure player, Zappos.com, is an example. It began with footwear and has expanded to apparel, accessories and jewelry.

The company provides free overnight shipping, free returns and lets buyers print out the return mailing label from its website. The site shows each product in all color choices, a variety of angles, and includes shopper reviews. The latter give shoppers important clues, such as an indication that a certain style runs large or small. Tony Hsieh, CEO, likens Zappos.com to Netflix: "If you don't like it, you send it back." The ease of trying on lots of items before selecting approaches an in-store experience in which shoppers try on many pairs of shoes before making a choice.

While this practice encourages online shopping, it also carries risk for online merchants. According to a Shop.org study, the return rate for clothing bought online is 14 percent or about double the return rate of other online purchases. "Apparel becoming the top category really is a milestone in evidence of online retail becoming mainstream," concluded Scott Silverman, executive director of Shop.org, which is the online affiliate of the National Retail Federation. According to Forrester, online sales, excluding travel, rose 29 percent between 2005 and 2006 to reach $146.5 billion and represent six percent of total 2006 retail sales.

Article ID: 409