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Selling online: the rules

As online fashion sales continue to rocket, many brands are restricting their web distribution to avoid overexposure

Online retailing is the fastest- growing category in the UK clothing sector, with its market share set to hit 10% in the next five years, according to research firm Mintel. In its latest clothing report, Mintel expects more players to enter what is still a relatively young online market. It adds that there is much potential still for retailers and brands to exploit this channel and grow sales.

But with a seemingly infinite reach and no legislation in place to govern the distribution of brands online, the internet has its snakes as well as its ladders. While retailers with an online offer want to maximise their selling channels by putting their bricks-and-mortar ranges onto their websites, some brands are reluctant to have their collections so widely available, fearing they will be over-exposed and lose some kudos.

Julian Dunkerton, owner of independent chain Cult Clothing and young fashion brand Superdry, says the online distribution of the brand, which has just over 300 bricks-and-mortar wholesale accounts, is tight and closely monitored. “We don’t allow a carte blanche for Superdry’s online distribution,” he explains. “It’s written in the contracts that the brand can’t be put on a retailer’s website. The only retailers we allow to distribute online are Ark, Asos.com and House of Fraser. It’s important to protect your brand’s profile and not over-distribute. You don’t want it on eBay, for example.”

Dunkerton adds that his chosen online channels add value to Superdry by targeting another customer base. “Asos is the market leader in internet fashion and we have a close relationship with HoF via our concessions. The HoF customer is different from the Cult Clothing shopper. Anybody who is interested in keeping their brand status would be foolish to allow unmanaged proliferation.”

Mark Ashton, sales manager for young fashion brand Ichi, closed several wholesale accounts after they launched transactional websites because he was unhappy with the look and feel of the sites. “They didn’t look professional,” he says. “We’re now drawing up a list of criteria for retailers to adhere to when they distribute our brand online. For example, we’ll insist on sitting alongside other brands. The internet is an area that could get out of control, so we’ll ensure our distribution is well monitored.”

But the British Retail Consortium believes that brands should not try to restrict their distribution. A spokesman says: “It is always in the customer’s interest to have as much competition as possible, therefore brands should not restrict their offers. By doing so, they are trying to maintain high prices and exclusivity, which is not in the interests of a free market.”

Mark Bage, owner of York independent Sarah Coggles, which recently launched a transactional website, insists his suppliers allow him to put their collections online and that, bar a few initial exceptions, all of the brands are happy to comply and impose no restrictions.

“You have to treat your online offer the same as your bricks-and-mortar business, whether you are a brand or a retailer,” he says. “A couple of our brands were initially reluctant to have an online presence, but we reassured them with our strategy and business plans, and showed them by how much they could increase their sales – it’s another channel to market.”

Bage suggests that the reason some brands are reluctant to extend their distribution online is that, historically, the internet has been seen as a channel to sell discounted goods or imitations. He says luxury brands in particular sometimes view the web as a downmarket channel for selling fashion and fear it will tarnish their brand.

“French Connection used to think that shopping centres were downmarket, but then we encouraged the brand to supply our store at Lakeside in Essex and it made a fortune. It changed the brand’s perception of shopping centres. A similar thing needs to happen with the luxury market’s opinion of the online channel,” says Bage.

Luxury brand Mulberry says its online distribution is “very selective, with each account’s website treated as another door”, according to a spokeswoman. The brand is available via selected outlets, including Net-a-porter.com, London boutiques Start and Matches (from spring 08), as well as Middlesbrough independent department store Psyche.

Psyche owner Steve Cochrane says he discusses online distribution with his suppliers, but adds that he has no specific clause in the supplier contract. The majority of the brands he stocks are happy to have an online presence on Psyche’s website, and Cochrane thinks those that do object have a “dinosaur” attitude to trading.

“The web is here to stay and it’s an important route to market,” he says. “Brands make money when they sell to us, and should let us do the selling – were the retailers,” he says. “Provided it’s not a discount website and looks similar to the store, it seems silly to object.”

Both Bage and House of Fraser ecommerce director Peter Callaway agree that retailers have to give something back, to ensure their websites mirror the environment of their stores. Callaway says: “We view our site as an online store and it is treated in the same way as our bricks-and-mortar shops. The web is a huge opportunity and we are investing heavily in it. We have very good relationships with each of our brands, all of whom are viewed as our partners. We have spoken directly with all those involved and they are happy about being online with us.”

The online environment is relatively new for Tommy Hilfiger, whose online offer is limited to two accounts – Asos and USC – both of which stock its denim range. It also has its own ecommerce site. “These retailers have national coverage and smaller independents have not yet come to us with an internet business,” says Tommy Hilfiger managing director David Pyne. “We have a strict distribution policy and if our web distribution grows, we’ll ensure that the brand is protected by insisting it sits alongside complementary brands and that the website’s marketing message is in synergy with ours.”

In contrast to Tommy Hilfiger’s tight online control, one retailer, who wishes to remain anonymous, cites young fashion brand Bench as a label that has been over-exposed and, as a result, has lost its appeal. “It got to the stage where if you walked into a shopping mall, you’d see the same Bench product in every store that could possibly stock it,” he explains. “The same has happened online. So the customer becomes disillusioned and the brand loses its cool factor.”

But even Julian Dunkerton, who keeps a tight grip on the online distribution of Superdry, admits the internet can nurture a brand while maintaining its unique profile, provided the retailer adopts the same selective distribution process for its bricks-and-mortar store. “Cult Clothing’s internet sales are up 250% on last year because we’ve managed the profiles of all the brands we stock, in the same way we manage Superdry,” he says. “We have a history of selling online. Cult is perceived as a nurturing place, a place for brands to grow. Every brand we stock in the shop is happy to be stocked online.”

Maximising sales while retaining brand identity is the answer to satisfying both retailers and brands. But Bage says online brand distribution should not be restricted, as long as a few simple rules are followed. “I would call on retailers and brands to have appropriate clauses in their contracts.” he says. “I also think the industry could clean up its act a bit more. We take the trouble to ensure our website looks professional and is in line with our store environment, but then another retailer with a poor website sticks the same brand on their site, undoing everyone else’s good work, with the brand’s profile being damaged.”

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