Online-Only Brands Expand Markets
06 May, 2019
Online-only brands and goods are finding an ever-expanding market.
They mainly target millennials who prefer online shopping to shopping in stores, and the advantages include cutting the cost of running offline stores and being able to react more quickly to changing market trends. Some brands start off as both online and offline but later ditch their offline operations.
Products have expanded from clothing to frozen food, cosmetics, furniture and audio equipment. Even if manufacturers sell their products both online and offline, they give exclusive online discounts to lure customers.
The biggest reason to launch online-only brands is to save costs. Manufacturers have to pay 30 to 40 percent of sales to distributors to sell their products in large supermarkets or department stores.
"In order to establish a sales network offline, you have to open at least 10 outlets in department stores, and it takes at least six months to negotiate your deal with them," a fashion brand staffer said. "You can save a lot of initial outlay with online-only brands."
It is also a marketing strategy targeting young customers. "People used to think you should try clothes on first, but young people today are much more comfortable with online shopping and simply return them if they don't fit," an industry insider said.
Another advantage is that manufacturers can respond to changing trends with greater speed and flexibility. "Online customers are very active in leaving feedback, so you can reflect that quickly," said a staffer at Samsung C&T. That is why some manufacturers launch their products online first to see how they will fly.
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