Marketing and Supply Chain Management in the Fashion Industry

Marketing and Supply Chain Management in the Fashion Industry

The internet has revolutionized industry, including the fashion industry. The internet’s communication system has completely changed the way businesses operate. Although some consumers may still purchase merchandise in the traditional manner, the web has changed how that product is marketed and how people shop. For example, in 2017, revenue generated through e-commerce in the United States grew by 16 percent, and consumers spent more than $453 billion in online purchases. Part of the reason for the growth is how such sales are executed and these figures reflect how companies manage product and inventory.

Pull versus Push Inventory

Traditional retail models of inventory generally revolve around a “push” system. What this means is that establishments will order products and push these products to consumers by displaying the items in shelves and marketing the merchandise by traditional means. These systems require that businesses create accurate forecasting models to predict what the product demand will be. The main issue with the strategy is that errors in prediction models will lead to inventory inaccuracies where quantity does not satisfy demand, thus creating missed sales opportunities. Alternatively, demand can also be miscalculated where companies carry too much product, thus having an excess supply. In the fashion industry, the push model is responsible for many closeout promotions to liquidate old collections. This excess is exacerbated by the fact that fashion trends change quickly and radically. So, either opportunities are lost and sales are missed or excess inventory leads to lost profits because the product can’t be sold at intended price levels.

Pull inventory systems order or make product based on actual demand. As customers order, companies produce the product to satisfy the demand. Less capital is required because it is not spent on holding large amounts of product. However, this type of strategy requires a tight communication system within a company’s supply chain and vendors who can handle fluctuations in demand to avoid stock-outs in all supply chain partners that can result in loss of sales. With the advances in communication technology, such as the internet and the increased use of collaborative inventory techniques, this type of inventory system provides businesses with leaner alternatives that have the potential to maintain high customer service levels while keeping capital requirements low. For example, as the top fashion brands launch their seasonal collections, online retailers like Reign seek to capitalize on the demand by serving this hyper-specific target audience through their Reign releases program for fashion-forward consumers. Overall, customers respond to the marketing strategy and the businesses must quickly adjust their offerings and manufacturing to respond to these increases in demand.

The Internet and Marketing

E-commerce is enabled by the power of communication technology. The internet made online selling possible. More so, the ability to handle product demand is not possible without collaboration among supply chain partners. The fact that internet sales consistently grow each year is possible, in part, to how members of a supply chain share critical sales data in an upstream and downstream manner. This way, the best of pull and push inventory strategies are combined to provide the efficiencies in managing inventory needed to handle the fluctuations in supply and demand traditionally seen in the market.

In the fashion industry, these systems are illustrated in how sales influenced by Instagram personalities are accounted for by upstream vendors that have access to the information generated by the social media accounts. Furthermore, as e-commerce companies use PPC advertising firms to promote product, the activity generates data. All this information feeds into the supply chain, and all partners can adjust their forecasting models to accurately predict demand. Therefore, marketing in the fashion industry relies greatly on data.


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