Shopping in the COVID Era... Live Commerce and Funding Are the Trend in the Fashion Industry

[Asia Economy Reporter Yujin Cho] As the contactless (non-face-to-face) consumption culture takes root due to the impact of the novel coronavirus infection (COVID-19), fashion companies are intensifying their efforts in digital marketing.

The total lifestyle brand National Geographic Apparel joined the KakaoTalk Gift platform last month. KakaoTalk Gift is a shopping platform within the messenger app used by 45 million people, where users can purchase desired products immediately. It is very popular among young people in their 20s and 30s who seek convenience, as it does not require moving to external sites or signing up anew. Not only can gifts be sent and received in a contactless manner, but users can also easily purchase products for themselves through the ‘Gift to Myself’ feature.

As more consumers open their wallets due to KakaoTalk Gift’s excellent accessibility and convenience, National Geographic Apparel ranked among the top 5 in ‘brand clothing’ sales within just one month. Luxury fashion brands are also entering KakaoTalk Gift one after another. Chanel recently opened the first luxury brand specialty store within KakaoTalk Gift, and Prada and Gucci placed their bags and watches priced in the 1 million KRW range at number one in the ‘luxury gift’ category.

With the expansion of homebound consumption due to COVID-19, ‘live commerce’ is also emerging as a major shopping channel. The convenience of communicating directly with brand representatives through real-time comments and purchasing products without visiting offline stores is a key factor in its popularity. Viewers can request hosts to try on desired products on their behalf or participate in various events such as discounts and quizzes during the broadcast.

In April, Lotte Shopping held a ‘Adidas Warehouse Clearance’ live broadcast with Naver, recording the highest number of views for a Naver live broadcast at 46,000 views. On that day alone, sales exceeded 240 million KRW, achieving the highest single-brand performance at Lotte Outlet.

The ‘crowd funding’ method, which allows consumers to trust and purchase cost-effective products, is also popular. Crowd funding is a ‘pre-order, post-production’ method where products to be sold are disclosed on the platform in advance, and production begins once the target quantity is reached. From the perspective of fashion companies, it reduces offline store entry fees and inventory burdens, and securing funds in advance by pre-financing production costs is easier. Although it is a major innovation in the domestic fashion industry, where it can take up to a year to recover production costs, it is very popular among young people because they can trust and purchase cost-effective products.

The representative online fashion platform operating the crowd funding method is Hagoda. Hagoda’s exclusive product, the ‘Hagobag,’ was a huge hit through the crowd funding method. Due to soaring popularity, funding was conducted 93 times, and it is recording an almost ‘zero’ return rate (0.8%). The pre-order, post-production method removed price bubbles, and the quality, which is absolutely comparable to high-end brands, is the secret to its popularity.