When I ask people to imagine what the world will be like in 20 years, I hear a variety of answers, from flying cars to people living on Mars. But when I think about the future, I get excited to imagine the future of the fashion industry.
As CEO of a fashion-tech company, I constantly search for technology innovations that will impact my sector. The way I see it, the roots of what will be the future of fashion are already growing with artificial intelligence, machine learning and advances in blockchain and cryptocurrencies. The question is not how to utilize these advances within the fashion industry, but instead who will use these technologies to create and implement new systems to bridge the gap between manufacturers, wholesalers and retailers.
The reality is that wholesalers are shutting down and some of the biggest fashion conventions are shrinking. With less room for wholesalers, I have noticed the market is dividing into either high-end fashion or fast fashion. Let’s look at the current problems plaguing the fashion industry, and the technologies of the future that can fix them.
1. The Inventory Problem
In March of 2018, The New York Times reported that H&M had $4.3 billion of unsold inventory on hand. Four months later, Business Insider revealed that Under Armour possessed over $1.3 billion in unsold inventory.
One of the reasons offloading excess inventory is such a big problem is the lack of industry-wide standardization when it comes to buying and selling in bulk. When inventory is sourced through multiple supply chains with multiple vendors in an unstandardized industry, it creates huge inventory and logistical problems that, globally, cost billions of dollars a year.
2. The Transparency Problem
Companies like H&M and Gap use multiple manufacturers in various countries, many from India and Bangladesh. They order massive volumes from multiple vendors, and reporting by Quartz journalists uncovered that some of the manufacturers use unethical practices in attempts to cut costs and increase profits. Such practices should have no part in the future of fashion, and I believe that blockchain can help keep it that way.
If used, blockchain would make companies like H&M and Gap accountable for where their apparel and fashion is being manufactured. It would also help consumers ensure that brands do not engage in unethical business practices.
3. The Fees And Costs Problem
I know firsthand that the current fashion industry is a wasteland of paperwork and transactions (contracts, purchase order, invoices, supplier manuals, code of conduct, audit certifications, supply chain logistics, proof of delivery documentation, import and export declarations, etc.) that cost companies massive amounts of time and effort as they work to track orders through multiple stages in the manufacturing and distribution process.
In the future, I believe we will see more smart contracts replacing the antiquated paper trail that is now being used. This will not only cut costs, but it will help businesses build better trust among one another. A smart contract is “a computer protocol intended to digitally facilitate, verify or enforce the negotiation or performance of a contract.” This allows the performance of credible transactions without third parties. A blockchain-based smart contract for fashion will save time and money across the multiple contracts that manufacturers must make with retailers. This type of contract would also eliminate many of the problems caused by invoicing data and tracking across multiple vendors worldwide.
4. The Supply Chain Problem
Currently, the fast fashion sector is built on supply chains delivering bulk items quickly, with styles and inventory being created weekly. The challenge for both online and brick-and-mortar stores that sell fast fashion is that they must have quick turnaround in styles and items and, as a result, are often left with excess. The unsold inventory must then be sold to final discount centers to help offset losses. An indication that this inventory problem is growing can be seen by new companies entering the market specifically to sell excess inventory.
Blockchain technology can help make fast fashion more efficient by shifting the industry to a demand chain versus a supply chain. This can and will reduce the waste of unsold inventory. The result would be a more streamlined industry with reduced end costs to the consumer. The ability for retailers to become part of a demand chain will help them carry the right amount of premium selling items in stock as the demand cycle shifts from season to season.
5. The Pricing Problem
Consumers want quality fashion at affordable prices, and this means that companies need to become smarter in learning buyer preferences. For example, StitchFix offers a low subscription fee for clothes delivered to your door each month and Zulily moves most of its products in the range of $19.99-$24.99.
In order to keep costs so low, these companies are gathering and analyzing data to ensure they create clothes that their customers want to buy. Using customer buying data along with artificial intelligence and machine learning, companies are able to better predict fashions that will sell. In doing so, they can also leverage low-cost final inventory purchases to keep pricing so low that customers will buy on impulse and buy more often.
The future of fashion is closer than you think. The question now is, what will you do to leverage these innovations?
https://www.forbes.com/sites/theyec/2018/10/01/how-technology-is-shaping-the-future-of-the-fashion-industry/
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