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Fashion brands are always in pursuit of multiple online sales channels because, in many markets, a consumer’s first point of search is typically through an online platform. But diversification in retail channel distribution isn’t a guarantee of success, and often, fashion brands experience lower sell-outs and higher costs.
Due to the lack of visibility of competitor’s activities in different sales channels, merchandisers and planners often adopt a ‘one-size-fits-all’ approach, allocating the same assortment across all channels.
But in doing so, sales channels are not optimised based on their strengths, which leads to missed opportunities and excess stock. There’s also the issue of cost efficiency, as the same assortment across different channels supports deeper quantity, which brings down overall costs.
To stay competitive in the market, you must allocate stock tactically to drive optimal performance in different channels.
One of the ways to do this is by performing a thorough review of your competitor’s distribution channel strategy, which includes:
- Identifying the right online channel or marketplaces by gaining deep insights into their performance.
- Analyse how to allocate assortments to different online channels
- Pinpoint how to tailor the right assortment down to subcategory-level and colour to the right channel
Reviewing your competitor’s product distribution strategy by sales channels allows you to spot potential opportunities for your brand, to position better and to drive cost optimisation per SKU.
Here are the key steps:
1. Study the Competitor’s Assortment Mix and Performance Across Different Sales Channels
In order to optimise sales, it all starts with the assortment mix. This is why it’s crucial to compare the competitor’s assortment offering across different distribution channels, and to understand their strategies in each of the platforms and analyse the categories that are performing (or underperforming).
From the chart above, we can see that Topshop allocated more Women’s apparel to Selfridges & Co. than Asos. Both platforms shared the same top three categories which were dresses, tops and outerwear.
Upon diving deeper into the performance of the categories, there are distinctive behaviours of Topshop products within the two different channels.
Based on the chart above, Selfridges had a better sell-out rate at 75%, compared to Asos at 35%. However, sell-outs at Selfridges were driven by discounted products, whereas at Asos, it was mostly driven by full-price products. The same pattern was reflected across the other categories as well.
2. Analyse the Competitor’s Price Strategy in Different Sales Channels
Once you have analysed how each category performs, the next step is to identify the optimum price range for each of the categories in the different distribution channels. This allows you to not only spot the opportunity gaps in assortment range but in pricing as well.
To further analyse the Topshop dresses category, it’s important to analyse the pricing. The average price spread that performed better at ASOS ranged from GBP37 – GBP40. Whereas for Selfridges, the category traded better at a lower price spread which ranged from GBP22 – GBP31.
This explains why Topshop allocated its products below:
Based on the chart above, it’s clear that Topshop offered higher price point products (above GBP30) at Asos, whereas at Selfridges they focused on lower price point products (below GBP25).
This means Topshop allocated different strategies for its distribution channel, based on the price ranges that performed best for each platform.
3. Identify the Competitor’s Top-performing SKUs in the Different Retail Channel Distribution
Now it’s time to understand allocating the right styles within the category for the distribution channel. One common mistake brands make is allocating the same styles across all distribution channels, which leads to stagnant sales growth.
Take the time to study and analyse the styles that work best. Different distribution channels attract different types of audiences, and they will have varied preferences. Here is a good example from Topshop:
Asos:
Selfridges:
The dress styles that performed well at Selfridges were floral or ditsy printed midi dresses.
4. Analyse the Competitor’s Discount Strategy
Brands often set immediate high markdowns to liquidate stock quickly. Not only does this bruise the profit margins, but it also tarnishes the brand’s image.
One method to optimise revenue with markdowns is analysing your competitor’s discount strategy. In strategising discounting metrics you gain an upper hand.
From the chart above, we can see that Topshop implements a different markdown strategy for both distribution channels. Markdowns implemented at Asos were less aggressive, with a maximum of up to 50% off. However, at Selfridges, the markdowns were spread more broadly with up to 70% off.
Key Insights
Topshop allocates its assortment based on the price range that works best for each of the platforms in order to optimise its sales across different distribution channels. With Asos showing positive performance at full price, it is no surprise it offers products at higher price points compared to Selfridges, which performed better at markdown.
By looking into your competitors’ retail channel distribution strategy, you are can better decisions in allocating the right products to the right distribution channel.
