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How Global Fashion Group brings brands to the world

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Co-chief executives of international etailer Global Fashion Group Christoph Barchewitz and Patrick Schmidt are bringing 10,000 fashion brands to shoppers in the far-flung corners of the earth.

“Our mission is to be the number one international fashion and lifestyle ecommerce business,” says Christoph Barchewitz, co-CEO of Global Fashion Group (GFG), over breakfast at the retailer’s modern London head office on Regent Street. “Only 1% of the 1 billion consumers in our markets are shopping with us, so there is opportunity for growth.”

This is an ambitious but by no means unachievable goal considering the phenomenal growth of the business since it was founded in 2011 by a consortium of investors called AB Kinnevik.

Only 1% of the 1 billion consumers in our markets are shopping with us, so there is opportunity for growth

Christoph Barchewitz, Global Fashion Group

Stockholm-based AB Kinnevik brought together five fashion ecommerce businesses that were operating in developing markets at the time and created a new global fashion ecommerce group under the GFG banner. 

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Dafiti

Over the last eight years GFG has expanded to 17 countries through its four ecommerce platforms: The Iconic and Zalora, which focus on the Asia-Pacific market; Dafiti, which is based in Latin America; and LaModa, which services the Commonwealth of Independent States of former Soviet republics.

All sites feature men’s and women’s wear brands targeting the young fashion-obsessed consumer aged 18 to 45 who is largely underserved by competitors in the often remote or difficult-to-service locations of GFG’s markets.

The business works with 10,000 brands, including Levi’s, Adidas, Nike, Tommy Hilfiger. It has 10 fulfilment centres, 20 offices and more than 10,000 employees worldwide.

In the Philippines alone we deliver to 1,600 islands. That is a big task for a brand to do on its own

Patrick Schmidt, Global Fashion Group

As of the first quarter of 2019, GFG reported 11.5 million active customers, half of which were under the age of 30 and two-thirds were female.

In 2018 it shipped 28 million orders and delivered a 18.7% rise in revenues to €1.16bn (£1bn). It cut its adjusted EBITDA loss to €49.8m (£43m) from €98m (£84.68m) in 2017, following operational improvements and marketing efficiencies, and, although the overall business’s adjusted EBITDA was negative, Dafiti and The Iconic were in the black. Exact figures were not disclosed.

Reaching out

Giving brands access to hard-to-reach and difficult-to-service markets has been key to GFG’s growth and success to date, explains co-CEO Patrick Schmidt, who joined in 2013 from discount website Groupon to develop and lead its Australian arm: “The markets we are in are growing quickly and they are not easy to access, which makes working with us appealing to brand.

“In the Philippines alone we deliver to 1,600 islands. That is a big task for a brand to do on its own. It took a long time to build the infrastructure and learn how to do things in many [of our] markets.

Our teams are our customers. We have people on the ground in buying and tech to think about the day to day

Christoph Barchewitz, Global Fashion Group

“We had to build our own delivery systems in Russia, Singapore and Malaysia, and we have more than 35 payment solutions available across our platforms, tailored to each market.”

Each of its online platforms sells a mix of big international names such as Gap and Calvin Klein, local brands like womenswear label Kodz, which sells on Zalora, and own-label brands. There are 40 GFG own brands altogether, which are designed to “fill any gaps” in the offer. They make up just a single digit percentage of sales.

Louis d’Origny, founder of men’s sportswear brand, Ohmme, says being stocked on The Iconic has given it a wider global footprint: “We decided to work with GFG because of its reach across markets that are in our scope, but for the time being are too far removed for us.

 

LaModa

LaModa

“As with all platforms, there were some teething issues at the start, but our teams managed to get all the issues fixed in time. Working with The Iconic has been an exciting opportunity, [and has given us insight into] things to come in Asia for Ohmme.”

Emily Bendell, founder and CEO of lingerie brand Bluebella, which has been sold on The Iconic and Zalora since 2018, agrees: “It is a great retail partner for us as we are focused on that fashion girl. With Zalora, particularly, it has opened up new markets that we couldn’t deliver to ourselves. It is a great way to understand what works and what doesn’t in a region that is difficult for us to service.”

Local heroes

Having a local approach to each individual market has given GFG an advantage over its competitors, argues Barchewitz, who joined from Munich-based lifestyle etailer Westwing Home & Living in 2015 as a board member and became CEO along with Schmidt last year.

“On a global basis we have the London team connecting with the big brands, which tend to be based in the UK and the US,” he says. “There is a broader relationship when it comes to deciding which products go in to which market. The local teams decide what would work best in the local markets, as they are the customers.

We have more than 100,000 SKUs. No one wants to shop all of them – they want 100 max

Patrick Schmidt, Global Fashion Group

“It is a big opportunity for us because not every player has a local office on the ground in every market in which they operate. Our teams are our customers. We have people on the ground in buying and tech to think about the day to day, as they understand the market, they grew up there, they have a local approach. We then inject learnings from the global group. We exchange data and see if a new service or tool serves each individual local market.

“The easiest way for us to understand our customer is to have that diversity, we have different people across the business that are brought together to create a diverse environment.”

Tech world

One key focus for the business is a continued investment in technology.

“Technology is a huge part of what we do,” explains Schmidt. “It is so complex now – there are so many more opportunities to invest. It isn’t easy to make the right decision – AI, AR, voice – the list is endless.

 

Zalora

Zalora

“Not every trend is going to be relevant. We only learn when we test and it may only be relevant for a particular market as not all customer behaviours are the same in different countries.

“The question is what is going to be the next big thing, the next disruptor,” he adds. “I think the next change is virtual reality sizing. It is fascinating. Personalisation is only starting. There is a lot more to come with AI and fit technology. It is something we are following closely.”

To personalise its offer GFG launched a “follow the brand” feature on its Australian platform The Iconic last year, which is now being rolled out globally. It makes shoppers’ homepages look like a social media feed. They can choose the brands they want to “follow”, and similar labels or styles are recommended.

“We have more than 100,000 SKUs,” says Schmidt. “No one wants to shop all of them – they want 100 max. This tool curates the shopping feed so we are only showing shoppers’ product that is relevant to them. We want to make life easier for our shoppers.”

Greener options

In April The Iconic launched a filter to allow customers to search for sustainable products. The “Considered” edit is divided into five categories: animal friendly, community engagement, eco-production, fair production and sustainable materials. It currently features 6,400 products from more than 300 brands, all of which are made using at least one material or process that is better for humans, animals or the environment than conventional alternatives, or makes contributions to the environment or communities.

“Fashion has a huge footprint in terms of labour and carbon emissions. We are very mindful of that,” says Schmidt. “The Considered edit was inspired by our customers who were asking for sustainable brands. It is not a marketing ploy. We have an obligation in the fashion business to give the customer more information, and the tools to find and identify products that are suited to them and their beliefs.”

Fashion ecommerce will be reinvented in five years’ time, and our markets are going to be the most interesting

Patrick Schmidt, Global Fashion Group

Sheriden Baxter, principal consultant in ecommerce consultancy Practicology’s Australian office, believes The Iconic is responding to an increasingly demanding Australian consumer: “Since The Iconic launched in Australia [in 2011], it has continued to anticipate and exceed consumer expectations, contributing to pushing the industry to lift the bar to meet global standards when it comes to customer experience.

 

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The Iconic

“[It] recently topped the rankings in our Australian fashion report research, scoring full marks for customer service, offering multiple contact touchpoints such as live chat, and responding to customer queries within 24 hours.

“However, no retailer can afford to be complacent, and continual investment in improving the customer experience will be crucial to remain competitive and maximise online sales. Investment in SEO will drive more consumers to [their sites], and great customer service will help to convert them into paying customers and retain them too.”

GFG said the biggest challenge now facing the business is keeping up with demand and growth.

“In the past the biggest challenge was building a relevant assortment and setting up the logistics. Payments is a big issue as only 10% of the population of our markets have credit cards. We had to set up cash on delivery and digital wallets, that all took time,” says Barchewitz.

Payments is a big issue as only 10% of the population of our markets have credit cards

Christoph Barchewitz, Global Fashion Group

“As we look ahead, we don’t have the challenges that UK retail has – luckily. The greatest challenge is how do we continue to grow the business at a fast pace of 20%-plus? The bigger the numbers, the bigger the complexity of the business. [We’re focusing on] how we handle that growth and stay focused on our core mission.”

And what is that mission?

“Our core ambition is to support growth with innovation in technology, size and fit,” says Schmidt. “We think fashion ecommerce will be reinvented in five years’ time compared with what we know today, and our markets are going to be the most interesting.

“In our markets only 6% of fashion is bought online, but in the US it is 25%. Our markets are big today, but they are going to be a much bigger opportunity. It is still early days.”

 

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