U.S. FASHION ECOMMERCE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The U.S. fashion ecommerce market size was valued at US$ 108.10 Bn by 2023 and is expected to reach US$ 248.07 Bn in 2030, growing at a compound annual growth rate (CAGR) of 12.6% from 2023 to 2030.. Ecommerce fashion includes the online sale of apparel, footwear, accessories, jewelry, bags, and other fashion products. The growth is driven by factors like increasing smartphone and internet penetration and growing influence of social media and digital marketing in shopping decisions.

The U.S. fashion ecommerce market is segmented by product type, end user, price range, category, distribution channel, and region. By product type, the market is segmented into apparel, footwear, accessories, beauty products, jewelry, bags, and others. The apparel segment accounted for the largest share in 2022. The growing adoption of online shopping for clothes due to benefits like ease of return policies and discounts is driving the apparel segment’s growth.

U.S. Fashion Ecommerce Market Regional Insights:

• The Southeast region is the leading market for fashion ecommerce in the U.S., with a market share of over 27%. This is due to a number of factors, including the high level of population growth in the region, the increasing number of internet users, and the popularity of online shopping.
• The West region is the second-largest market for fashion ecommerce in the U.S., with a market share of over 23%. This is due to the high level of affluence in the region, the large number of tech-savvy consumers, and the popularity of online fashion brands.
• The Midwest region is the third-largest market for fashion ecommerce in the U.S., with a market share of over 20%. This is due to the large population of the region, the increasing number of online shoppers, and the popularity of major department stores and retailers.
• The Northeast region is the fourth-largest market for fashion ecommerce in the U.S., with a market share of over 20%. This is due to the high level of education and income in the region, the large number of fashion-conscious consumers, and the popularity of online shopping.

Figure 1. U.S. Fashion Ecommerce Market Share (%), By Region, 2023

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U.S. Fashion Ecommerce Market Drivers:

• Growing Internet and Smartphone Penetration: The increasing internet and smartphone penetration in the U.S. is a major factor driving the growth of the fashion ecommerce market. As per statistics, internet penetration in the U.S. stood at 90% in 2021, with 300 million internet users. Smartphone adoption is estimated to be around 85% of the population. The high connectivity is enabling consumers to conveniently browse and purchase fashion items from online platforms anytime, anywhere. Online retailers are developing user-friendly mobile apps and mobile-compatible websites to tap into this customer base. The easy availability of affordable mobile internet plans is further supporting the growth of m-commerce in fashion.
• Influence of Social Media and Digital Marketing: Social media and digital marketing are playing an influential role in driving U.S. fashion ecommerce growth. Social media platforms like Instagram, Facebook, Pinterest, and TikTok have become inspirational platforms for fashion discovery. Retailers use social media for promotions and digital marketing through targeted ads, influencer campaigns, etc. Tools like social commerce and click-to-buy are helping simplify the purchase process for consumers. A virtual try-on based on AR is providing enhanced shopping experiences. The millennial and Gen Z cohort, who are highly active on social media, are an important target segment for online fashion brands.
• Omni-Channel Retailing: Retailers adopting omni-channel strategies combining online and offline presence provides flexibility and convenience to consumers. Customers can browse products online and also try out at physical stores before purchasing. Options like click-and-collect and return in store for online purchases improve consumer appeal. Retailers are integrating inventory and CRM across channels to create a unified brand experience. Omni-channel presence is becoming critical for fashion brands to engage and retain customers. Department stores and retail chains are accelerating their investments in omni-channel capabilities.
• Contactless Payments and Fintech Innovations: Seamless digital payment options and fintech innovations are supporting fashion ecommerce growth. Solutions like one-click checkout, e-wallets, UPI, BNPL, QR codes, etc. simplify the payment process on online fashion platforms. They provide security, speed and convenience to customers. Retailers are integrating diverse payment methods on websites and apps to provide flexibility. Fintech innovations like virtual cards, EMI options are increasing affordability for price-sensitive segments. Buy now Pay-later options help drive higher cart values and order volumes. Thus, the ease of digital payments is an important enabler of online fashion retail.

U.S. Fashion Ecommerce Market Opportunities:

• Leveraging Augmented Reality and 3D: The utilization of augmented reality (AR) and 3D modeling in fashion ecommerce provides major growth opportunities. AR-powered virtual trial rooms allow customers to digitally try clothes and accessories. 3D product modeling enhances visualization. Solutions like virtual foot measurement for shoes improve fit and size recommendations. Interactive experiences boost engagement and intent to purchase. Retailers can curate realistic product catalogs without photoshoots. The COVID-19 pandemic has accelerated AR adoption in fashion retail. Innovative startups like Zeekit, 3DLook, TrueFit, etc. provide AR and 3D solutions for fashion ecommerce. Their wider integration can elevate customer experiences and sales.
• Deployment of Artificial Intelligence: Artificial intelligence (AI)-led innovations present significant opportunities for advancing fashion ecommerce. AI capabilities in visual search, product recommendations, inventory management, logistics, etc. can drive operational efficiencies. Powerful algorithms analyze consumer behavior to provide personalized engagements across channels. Chatbots and virtual assistants enhance customer service. Demand forecasting, dynamic pricing help optimize sales and reduce waste. Automating mundane tasks through AI and ML solutions allows human talent to focus on more meaningful work. Retailers can utilize AI startups and cloud solutions from technology leaders to build their AI capabilities.
• Leveraging Big Data Analytics: In-depth analytics of consumer behavior and market data provides valuable customer and product insights to fashion retailers. Big data analytics reveals trends, demand patterns, and market gaps that can inform better business and inventory planning. Granular segmentation helps in targeted marketing and effective consumer engagement based on purchase history and demographics. Predictive analytics enable accurate demand forecasting and inventory optimization. Data mining provides a better understanding of internal operations and external markets. Fashion brands can build dedicated data science teams or leverage analytics consulting firms to harness big data for strategic advantage.
• Growth in Online Customization: The provision of mass customization and personalization in fashion ecommerce provides new growth avenues. Consumers increasingly seek unique products aligned with personal styles and fit preferences. Digital printing and on-demand manufacturing enable small-batch production of customized apparel and accessories. Retailers can provide user-friendly customization platforms to co-create products with customers. Custom boxes, labels, and wrapping paper add a personal touch. Curated product recommendations based on individual tastes improve engagement. Custom clothing generates higher margins and lower returns due to fit satisfaction. Targeting this demand potential can help fashion ecommerce brands differentiate.

U.S. Fashion Ecommerce Market Trends:

• Movement towards Sustainable Fashion: Sustainability is an emerging trend in the U.S. fashion ecommerce market driven by environment-conscious consumers. Shoppers are increasingly looking for eco-friendly materials, ethical production, transparency, etc. Retailers are promoting their green credentials and partnering with sustainable brands. Product labeling helps identify organic, recycled, or upcycled items. Guidelines for responsible disposal of clothing are being provided. Clothing rental allows reuse of apparel. Resale through peer-to-peer platforms like Depop and Poshmark is gaining popularity. The use of eco-packaging signals commitment to reducing fashion’s carbon footprint. Sustainability efforts can help build brand image and customer loyalty.
• Live Video Commerce Gaining Traction: Live video shopping enabling real-time interactions between customers and influencers and retailers is rising in popularity. Platforms like ShopShops, Popshop Live, and NTWRK provide vibrant video commerce experiences. Viewers can purchase featured products instantly with link integration. User-generated content through livestreams is perceived as more authentic. Live events like fashion shows, store tours, and AMAs build engagement. Gamification elements like limited-edition drops and real-time offers prompt impulse purchases. The interactive nature provides valuable consumer data. Chinese retailers have achieved major success with livestreaming. U.S. fashion brands can further leverage live video commerce across social platforms.
• Launchpad for D2C Emerging Brands: Ecommerce provides a launchpad for direct-to-consumer (D2C) fashion brands without dependence on intermediaries. Digital platforms enable building awareness and community around new brands. Lower launch barriers allow niche brands to target specific consumer segments. Data-driven insights help refine the product portfolio. Individual social media accounts of founders or designers create strong brand personalities. Virtual fittings and customization attract customers. Exclusive, limited-edition drops build buzz. D2C brands focus on storytelling and representing diversity and inclusivity. The D2C model will gain further prominence, driven by entrepreneurial designers and continued consumer interest in new brands.
• Retail Media Advertising Growth: Retail media advertising is an expanding marketing avenue for fashion brands. Retailers provide sponsored ad spaces on ecommerce sites/apps to promote products. Search ads, native ads, and banner ads on product pages increase visibility. Advertisers receive real-time performance data. Trust in the retailer’s ecosystem drives conversions. For retailers, ad revenues compensate lower margins and enable investments. Amazon now dominates retail media in the U.S. Other retailers, like Walmart, Target, and Kroger, are also strengthening their retail media offerings. The channel provides a measurable impact on sales along with consumer insights. Fashion brands are allocating higher media budgets to retail advertising.

U.S. Fashion Ecommerce Market Restraints:

• Delivery Challenges and Operational Costs: The logistics costs related to shipping, deliveries, and returns are a major challenge for U.S. fashion ecommerce retailers. Providing faster and more flexible delivery options comes at a price. Delayed deliveries due to inventory or warehouse capacity constraints create a negative consumer experience. High rates of returns and exchanges of apparel because of improper size or fit also impact profitability. Operational investments required in fulfillment infrastructure, technology, and data management weigh on margins. Supply chain disruptions like shortages of labor and raw materials further complicate operations. Addressing these pain points requires major investments and process improvements by online fashion retailers.
• Organized Retail Expansion: The expanding omni-channel presence of big box retailers and department store chains poses competition for online-only players. Giants like Walmart, Target, and established fashion retailers are aggressively growing their ecommerce channels. Their brand reputation, scale, and network of physical stores provide advantages. Private label pushes by retailers also targets price-sensitive fashion shoppers. Smaller niche brands have less room to compete on pricing or promotion budgets. However, innovative business models like social commerce, curated assortments, and community engagement provide differentiation opportunities for pure-play fashion ecommerce retailers.
• Evolving Privacy Regulations and Tracking Restrictions: The implementation of data privacy regulations like General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) limits certain customer targeting and data collection practices of fashion ecommerce brands. Restrictions applied by tech platforms to third party cookies and ad IDs impact digital media performance. This makes targeted ads and personalized recommendations more challenging. Compliance requirements also add operational overheads for retailers. However, privacy-focused marketing based on first-party data and contextual techniques still provides growth opportunities. Retailers need to balance personalization with responsible data usage in line with evolving regulations.

U.S. Fashion Ecommerce Market Analyst Viewpoint

The U.S. fashion ecommerce market is driven by the growing preference of millennials and Gen Z shoppers for online shopping. The widespread use of smartphones and ease of online payment options has boosted the adoption of digital shopping. Changing lifestyle patterns where people have less time to visit brick-and-mortar stores also works in favor of online retail. Moreover, the presence of exclusive online brands and the large variety of products available only on fashion ecommerce platforms is fueling sales.

However, high return rates and shipping costs pose challenge to the margins of online fashion retailers. Customers return a significant portion of apparel and footwear bought online since physical validation of fit and feel is not possible. Navigating the complex state-level taxation also increases overheads. The fragmented market structure makes it difficult for retailers to achieve economies of scale.

The West coast, especially California and Washington emerge as major hubs for fashion ecommerce companies. The region already has a vibrant startup culture and access to tech talents. This encourages many new brands and DTC companies to launch operations from here. Meanwhile, Texas and Florida witness rising popularity due to lower costs of business and absence of state income taxes. Furthermore, customization and live streaming could unlock new opportunities by enhancing customer engagement on digital platforms.

Recent Developments:

New product launches:

• In March 2022, Amazontechnology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence launched "Try before You Buy" for fashion, which allows Prime members to try on clothes before paying to keep items. This provides more flexibility and reduces returns.
• In January 2022, Walmart, retail Corporation that operates a chain of hypermarkets acquired the technology platform Zeekit to enhance virtual apparel try-on capabilities on its website. This will improve the customer experience.
• In April 2021, Gap, clothing and accessories retailer launched Gap Teen, a digital-first vertical targeting Gen Z. This expands its ecommerce product range.

Acquisition and partnerships:

• In September 2022, Farfetch, e-commerce company focused on luxury clothing and beauty products acquired luxury sneaker and streetwear retailer Stadium Goods to expand its premium offerings in the US.
• In April 2022, Sephora, retailer of personal care and beauty products announced a long-term partnership with Zalando, online retailer of shoes, fashion and beauty active across Europe to create a prestige beauty experience on the latter's ecommerce platform. This expanded its distribution.
• In June 2021, Authentic Brands Group, American brand management company acquired ecommerce retailer Reebok to accelerate its digital commerce business.

Figure 2. U.S. Fashion Ecommerce Market Share (%), By Type, 2023

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Top companies in U.S. Fashion Ecommerce Market:

• Amazon
• Walmart
• Ebay
• Macys
• Gap
• Nike
• Target
• Nordstrom
• JCPenney
• Kohls
• Wayfair
• Best Buy
• Home Depot
• Sephora
• Ulta Beauty
• Forever 21
• H&M
• Zara
• Urban Outfitters
• ASOS

Definition: The U.S. fashion ecommerce refers to the sale of fashion products, including clothing, footwear, accessories, jewelry, bags, beauty products, etc., through online channels in the United States. Ecommerce platforms like company websites, marketplaces, mobile app,s and social commerce facilitate online fashion shopping. The U.S. fashion ecommerce market has shown robust growth in the last decade, driven by factors like increasing internet and smartphone adoption, time savings, discounts, and promotions offered by online retailers.

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