Catherine Hou (侯曉珊) is a busy 38-year-old mother of three children between the ages of 8 and 12 who does not have a lot of time to even think about fashion. Every day, she is occupied with housework, running errands, sending her children off to school and picking them up later in the day. “When I finish all the things I’ve got to do for the day, it’s often 10 p.m. So it’s not until after then that I can do what I like and focus on my own needs,” Hou says. “One of my favorite things during that time is shopping for clothes online because it’s convenient and saves time and energy compared with shopping in stores.”
Hou’s Internet searches have led her to the many online clothing stores operating in Taiwan, most of which offer a wide selection of merchandise at reasonable prices. “I’ve got to say that online stores generally do a good job in showcasing their products in a visually appealing way,” she says. “For instance, the websites’ pictures of beautiful, slim fashion models wearing different combinations of clothes often catch my interest. They also provide a lot of options as far as styles and colors, and they organize their merchandise into specific categories, which makes it easy for customers to choose and order.”
Of course, Hou is well aware that buying clothing online can be a bit risky, as one cannot take a close look at or touch items to check their quality, nor is it possible to try them on to check the fit. Still, given the relatively inexpensive prices of most articles of clothing sold online and generally friendly exchange or refund policies, she considers such risks acceptable. “Due to their [low] prices, I don’t have high expectations about quality. What I’m concerned with most is the style,” Hou says. “I normally spend only NT$500–$1,000 (US$17–$33) for a piece of clothing sold online. When I want very high quality wear, I go to department stores or boutiques to make a purchase.”
Surveys show that Taiwanese shoppers like the convenience of purchasing clothing online. The Bureau of Employment and Vocational Training under the Council of Labor Affairs, for example, conducted a survey of online shoppers from December 1, 2011 through January 17 this year. Among the 671 respondents, clothing and accessories tied with books and magazines as the most popular categories for online purchases, with an identical 15.21 percent of respondents buying items in both categories. In April 2011 professor Wu Ming-yi of California Lutheran University released a similar survey of the online shopping preferences of 226 women and 129 men in Taiwan. Wu’s results showed that 46.6 percent of the respondents most wanted to buy clothing online, easily dwarfing the 21.6 percent that wanted to buy books, the second most popular category.
Sales figures from local online retailers also indicate Taiwan’s growing affinity for purchasing clothing on the Internet. Tokyo Fashion Co., one of Taiwan’s leading online clothing businesses, for example, boasts of selling an article of clothing every 10 seconds on average and more than 3 million items a year. The company, established in 2004, saw its revenues surpass NT$300 million (US$10 million) in 2009 and NT$600 million (US$20 million) in 2010. Tokyo Fashion currently employs around 350 workers.
Tokyo Fashion employs professional photographers and fashion models to make its product web pages stand out. (Photo Courtesy of Tokyo Fashion)
Dose of Fashion Sense
Possessing a huge dose of fashion sense and having a knack for choosing the clothes that people will want to buy are the keys to building a successful online clothing business. Mayuki Chou (周品均), 30, is the founder and brand director of Tokyo Fashion. Chou ventured into the online business when she was still a university student. “My initial intention was to introduce the clothes that I thought were beautiful and at budget prices to people who love to be dressed nicely like me,” she says. “Personally, I like lovely and feminine styles of clothes. It seems that many women share my taste.”
Currently, Tokyo Fashion sells apparel through six online channels in Taiwan and five in mainland China. The company’s target customers are women between the ages of 18 and 35. To serve them, Chou operates three brands—Tokyo Fashion, MAYUKI and YOCO—with each tailored for different age groups and occasions. At any given time, customers can select from around 2,000 items on offer, including blouses, coats, dresses, pants, skirts, tops, T-shirts and accessories. Most of the company’s items reflect modern Japanese fashion styles and sell for prices ranging from NT$190 to $450 (US$6.30 to $15).
Tokyo Fashion’s in-house designers work with around 20 garment manufacturers, most of which are located in mainland China. Chou and her team also travel frequently in Taiwan, mainland China and South Korea to stay on top of the latest fashion trends, which show up in the nearly 500 new clothing items the company launches on a monthly basis. Some of the new items are derived from existing designs, while others are entirely new.
“Our whole process from design and pattern making to manufacturing takes only 14 days. And customers can get the goods in three to seven days after they place an order with us,” Chou says. “Today’s fashion market is marked by ever-changing consumer preferences and competition. To top our rivals, we must move faster on new product launches, as well as offer well-rounded service, the best prices and fast delivery.”
To ensure quality customer service, Chou says her company has set up 15 toll-free service lines to answer customer inquiries and give suggestions on putting together an outfit from different articles of clothing. Tokyo Fashion has also compiled frequently asked customer questions regarding clothing sizes and measurements, order processing procedures, payment methods and delivery and listed them with answers on its website.
Although some online retailers also have brick-and-mortar stores, most rely on product web pages that are easily navigated, attractive and well designed to reach the vast majority of their customers. Online shoppers tend to click through web pages quickly and there is always a multitude of competing products just a search away, so good web page design is essential. To grab the customer’s attention and hold it, Tokyo Fashion works with professional photographers and visual designers to ensure that photos, graphic design and layout are of high quality. Chou also works hard to make product pages reflect the “sweet candy” style of the company’s clothing lines. In order to keep customers coming back from time to time, Tokyo Fashion offers sales promotions such as discounts and premiums for purchasing multiple items.
Tianmu GoToBuy sells affordable women’s wear that reflects the latest fashion trends in Taiwan, Japan and South Korea. (Photo by Huang Chung-hsin)
Having the right products in stock and delivering them in a timely manner are other key elements of online retail success. Tokyo Fashion addressed logistics and inventory management issues by building a large warehouse in Chiayi, southern Taiwan. For shipping, the company relies on President Transnet Corp., a subsidiary of the Uni-President Group, one of Taiwan’s largest conglomerates, to provide door-to-door express delivery services. Uni-President also owns the rights to the 7-Eleven franchise in Taiwan, and Chou’s company has paired up with the ubiquitous convenience store chain to allow customers to pay for and pick up Tokyo Fashion items at 7-Eleven stores in their neighborhood.
On an average day, around 40,000 people visit Tokyo Fashion’s website. “Online shopping has become more established now and the e-business environment is becoming increasingly mature,” Chou says. “In particular, women’s wear has emerged as the bestseller among all the categories of products sold online. That shows many customers have gotten accustomed to buying clothes online and have developed trust and loyalty toward bigger brands.”
Tianmu GoToBuy Online Shop is another Internet-based clothing retailer that was established in 2004 and has become well known to consumers in recent years. Zheng Wan-ting (鄭婉婷), 32, is one of the three investors in Tianmu GoToBuy as well as the company’s operations director. During her senior year as a university student, Zheng got a firsthand look at the apparel business by working a part-time job at a clothing shop located in Taipei’s Tianmu area. After graduation, she broadened her skill set by working for an Internet company for a few years.
Given Zheng’s work experiences and keen interest in marketing, it was perhaps inevitable that she would start an online clothing business. She did not go it alone, however, but asked the two owners of the clothing store where she had moonlighted previously to become partners. Their involvement in Tianmu GoToBuy has given the company an essential source of experience to rely on in terms of marketing and selecting clothes that will sell well.
Tianmu GoToBuy largely competes in the same market space as Tokyo Fashion, selling affordable women’s wear that reflects the latest fashion trends in Taiwan, Japan and South Korea. Zheng’s company also introduces about 500 completely new or modified items every month under four brands: Tianmu Yanxuan, Melissa, Yumi and Reiko Ladies in styles that range from chic and sexy to trendy and urban. The target customer group is women between 20 and 40 years old, while prices begin at NT$188 (US$6) and top out at $500 (US$17).
Online clothing brand illori emphasizes casual, comfortable fashion and provides women’s, men’s and children’s wear at prices ranging from US$10–$17. (Photo by Huang Chung-hsin)
Tianmu GoToBuy’s emphasis on service can be seen in its guarantee to match prices of other online retailers and its policy of accepting returns and exchanges up to 10 days after delivery, compared with the seven days offered by most other online shops. That approach has evidently been successful, as Tianmu GoToBuy stood out as the largest retailer for women’s wear on the Yahoo! Taiwan shopping website for five consecutive years from 2006 to 2010. Zheng’s company was also selected as the portal’s fastest-rising brand in 2009.
To make its clothing stand out and strengthen its niche in a competitive market, Tianmu GoToBuy established its own design department in 2011. The new designs are tailored specifically for Asian physiques and are available in sizes from small through extra large. The company also began offering men’s wear that year, but women’s wear still accounts for the majority of sales.
In March this year, Tianmu GoToBuy unveiled the Double series, its first collection of clothing designed entirely in-house. The company plans to introduce 300 to 500 such items every six months. “Seeing the fashion business develop toward original design is my ultimate dream,” Zheng says. “Given that Taiwan no longer has an edge in manufacturing, we’d like to join the ‘designed in Taiwan’ movement to sustain and grow the local fashion industry.”
George Chiang (江侑錩) is the owner and managing director of Everbooming Textile Co., which was established in 1983 and is headquartered in Taoyuan County, northern Taiwan. In Taiwan’s manufacturing circles, Chiang is known for being an ambitious entrepreneur who constantly pursues ways to upgrade his company’s business practices. For much of its history, Everbooming focused on contract manufacturing and supplied clothing to large international brands including Adidas, Levi’s, MUJI and UNIQLO.
In 2006, however, Chiang decided to change his business focus by creating his own clothing brand, illori. “Everyone has a dream and mine is to have my own brand and design, rather than working for other branded firms. I also want to provide the Taiwanese public with high-quality clothing without the high price tags that most top brands usually carry,” he says. “So I shifted my business focus back to Taiwan and to the Internet in 2007.”
Everbooming Textile Co. focuses on researching and developing functional textiles for illori to differentiate its products from those made by other vendors. (Photo Courtesy of Everbooming Textile Co.)
Chiang says that in his experience, most online clothing retailers have a good understanding of e-commerce or marketing, but few have textile manufacturing experience. “Online businesses do have immense development potential, but many people are aware of that and have entered the market, which means that competition is getting stiff,” he says. “Still, my nearly 30 years of manufacturing experience and professional knowledge about fabrics and garments should give me a competitive edge.” Chiang’s experience appears to be paying off, as illori is seeing online sales of about NT$10 million (US$333,300) per month and an annual sales growth of 50 percent.
Everbooming Textile has concentrated on researching and developing functional textiles for illori that feature anti-bacterial, temperature moderating, moisture transferring and ultraviolet protection properties, among others, Chiang says. While Taiwan’s variable climatic conditions provided the impetus for developing and manufacturing such utilitarian textiles, doing so has enabled illori to differentiate its products from those made by other vendors.
Meanwhile, Chiang says illori pays attention to not only the properties of fabrics, but also their safety. There are many chemicals available to clothing makers for use in the manufacturing and dyeing processes, but some are suspected of causing harm to the human body. Accordingly, the managing director requires his contract manufacturers (80 percent of which are located in Taiwan) to sign a guarantee testifying that their whole manufacturing process is in line with the country’s environmental regulations. He also applies to the Industrial Development Bureau under the Ministry of Economic Affairs for made-in-Taiwan (MIT) product certification. As a result, most of illori’s clothing lines have obtained the MIT Smile Logo, which certifies the safety and quality of locally made products.
Created by an in-house design team, illori’s product lineup emphasizes casual, comfortable fashion and encompasses women’s, men’s and children’s wear at prices ranging from NT$300 to $500 (US$10 to $17). The brand launches new products on its website on a monthly basis and maintains 200 to 300 styles at any given time for customers to choose from.
“By offering good design, functionality, textures and pricing, I am hopeful that our apparel will continue gaining customer recognition and a larger foothold in the online marketplace,” Chiang says. “Despite higher production costs in Taiwan, it’s my goal to prove that domestic textile manufacturers can still survive and prosper by emphasizing research and development, branding, design and quality certification, as well as by relying on the popular online shopping channel.”
Around 80 percent of illori’s clothing has secured the made-in-Taiwan product certification from the Ministry of Economic Affairs. (Photo by Huang Chung-hsin)
In 2009, illori branched out by selling apparel at a boutique shop at the Howard Plaza Hotel Kaohsiung in Kaohsiung City, southern Taiwan. Chiang decided to open a physical shop to give customers a chance to see and feel illori’s clothes, while the location was chosen to boost the brand’s image through its association with the prestigious hotel.
Tokyo Fashion set up its first brick-and-mortar shop in Shilin District in Taipei City in 2009. Given the higher costs of operating a physical store, Chou says she did not expect much in the way of earnings and would have just been content with having the business break even. Sales at the Shilin store turned out to be surprisingly good, however, which encouraged her to establish two more in Taipei and another in Kaohsiung.
After running both kinds of operations, Chou has a good handle on the respective strengths and weaknesses of online and brick-and-mortar shops. One important advantage of online shops is that the reach of the Internet gives a retailer the ability to serve a much larger customer base, both at home and abroad. On the other hand, she notes that online stores have a competitive disadvantage because customers cannot alleviate quality concerns by touching products or trying them on. “When they see photos of our products on the web, some customers don’t believe that it’s possible to get such a quality piece of clothing for only NT$290 [US$9.70]. I wanted them to actually see and believe it!” Chou says. “So I decided to open a brick-and-mortar shop to let customers examine the fabric and sewing quality of our products in person. That way I can remove their doubts about online purchases.”
From Virtual to Physical
Chou says the brand name that her company has built through Internet sales over the years has helped drive traffic into her brick-and-mortar shops. Currently, the online channels account for 90 percent of the company’s overall sales while the brick-and-mortar shops take in the remainder.
Looking ahead, Chou says Tokyo Fashion will continue developing new brands and sales channels, and will also expand its product lines to include men’s and children’s wear. Perhaps the company’s biggest goal, however, is to go public on the Taiwan Stock Exchange (TSE) within three years. There are currently no other local online clothing businesses listed on the TSE, which means that a listing for Tokyo Fashion would likely break new ground and demonstrate the growth and maturity of the sector.
Meanwhile, the border-hopping power of the Internet continues to pull in new customers for Tokyo Fashion. “We’ve seen a number of international tourists who’ve printed out the web pages for the items they like before they visit. After they arrive in Taiwan, they come to our stores to look for them,” Chou adds. “Just like many Taiwanese women buy ZARA, H&M or UNIQLO clothes when traveling overseas, I hope to see more foreign tourists opting for our clothes during their visits here.”
Write to Kelly Her at kher@mofa.gov.tw