Many processes in the fashion industry are considered as particularly inefficient. Ivan Herjavec, Managing Director of the new wholesale platform Buying Show, is of the opinion that especially outdated structures and workflows have to be overcome. These are the ten most serious problems in the fashion industry.
1. Outdated planning process
According to Herjavec, too high lead times in particular, whether it may be at ordering or at the production sites, are widespread in the fashion industry. Therefore, brands need better planning processes that are linked to active communication with consumers. Manufacturers should also adapt to new delivery processes and work more closely with brands.
2. Inaccurate information
Most brands do not know what the market actually needs. Knowing this at the right time is of essential importance. According to Herjavec, brands and retailers have to cooperate closely, but in fact both sides often act isolated from one another.
3. High product development costs and missing digitization of sales channels
The result of outdated communication channels between brands and manufacturer are very slow and, above all, expensive product development processes. The process of “product testing” takes several months and offers few possibilities for a continuous exchange between the dealers and brands.
4. Delayed ordering process
The selection and ordering process of the retailers is complicated and lengthy. It often takes weeks before a final order of the retailers arrives at the brands. Inadequate communication between brands and manufacturers often delays the production, which in turn leads to a delay in delivery to the stores. The late delivery ultimately results in less sales and less profit.
5. High costs in sales
The B2B sales process is also too short and too expensive. At the beginning of the year, all orders for the coming season must be recorded in a short time frame. Personnel, samples, expenses for showrooms as well as customer trips create high costs. Brands could, instead, sell their collections during the season to their customers, the retailers. There is a lack of efficient procedures and technical support. The selling of goods is becoming increasingly expensive.
6. Credit risk
According to Herjavec, the process of obtaining orders is too slow and ordering periods are too short – brands have big problems to get information about the credit insurance of retailers.
7. Risk of order cancellations
Half a year can pass between the order transfer and the delivery of the ordered goods. This results in a high risk: Retailers could cancel their orders, which were already passed on to the production by the brand. There is also the risk that the brand could cancel orders for various reasons. Both sides, therefore, carry a high risk. In case of a cancellation, retailers have to find an alternative brand or product category.
8. Lack of money
A major problem in the fashion industry is the time gap between ordering, delivering and the selling of goods. Brands sometimes finance their business for 30 to 120 days and thus carry a high risk.
9. Lower competitiveness due to liquidity problems
After a weak season, many retailers have a problem with unsold stocks and the result is a lack of liquidity. If stocks persist, retailers cannot buy new products. This makes them less competitive and lowers their profitability.
10. Management in the traditional way
Opportunities, such as digitalization, are not fully or not at all being exploited. Some other problems and difficulties are external, uncontrollable circumstances such as the weather or political as well as economic crises.
According to Herjavec, help and solutions for these main problems of the fashion industry are found by brands and retailers at the digital wholesale platform buying show. It links brands and retailers together, makes a wide range of different collections accessible and enables uncomplicated and fast ordering as well as payment at one-stop.
Source: Luna Journal