The Enthusiast’s Guide to Fintech in Fashion
It’s all about the money but its also a lot about how you pay for the clothes you wear while spending it ;)
[ This is a featured article in The Closet On The Cloud, a Fashion Tech Newsletter.] Check out the latest edition here!
Why Fashion needs Fintech (PayTech)
Fintechfutures very rightly said,
“The fashion industry has long been operating on a push model; centred almost entirely around what designers and brands want to sell rather than what consumers want to buy.”
Taking, therefore, the consumer POV:
In 2020, the average millennial consumer has an abundance of choice but what it lacks is an abundance of resource to acquire it.
If they have the resource, they don’t have the time.
And IF by chance, they have the time and the resources, there’s little to none attention span. If the journey between “Add to Cart” and “Pay Now” is more than a few seconds, god forbid a whole minute, you’ve lost the sale.
That’s where Fintech meets Fashion.
Fintech & Fashion: The Relationship
1. Main Driver: Frictionless-ness
Most of my e-commerce purchases are lost because my wallet is in the other room and I don’t want to get up and go get it to enter my card details. It is because of consumers like me that “frictionless-ness” is the main driver of this relationship.
The buyer must be given no time to think. It should all go off in a swoooosh and they won’t even know what happened. This frictionless-ness in fashion applies in 3 main ways:
2. Hand-in-hand Marketing:
What Fintech & Fashion do for another is fairly obvious via the nature of their work. It is, however, interesting to note the contribution they make to each other’s marketing endeavours.
3. Consequences of the Fintech-Fashion Romance:
Like every other love story, Fintech-Fashion aren’t free of opposition, well-observed as well as unsolicited opinions. Here are a few consequences:
Extra Scoop:
Quotes from reputed articles on the topic:
Types of Fashion x Fintech:
There’s also a tier of business-to-business-to-consumer platforms that offer a selling option for brands and payment flexibility for consumers (Klarna, Affirm, Afterpay, etc.). Then there are b-to-b solutions that are helping to drive global commerce and facilitate cross-border transactions (Payoneer, Adyen, etc.). And there are also peer-to-peer apps and platforms to send cash to friends and family (and the plumber who just fixed your sink) such as Venmo, Paypal, Square Cash, Zelle, Google Wallet and even Facebook Messenger.
According to CB Insights, fintech investments in the U.S. alone totaled $11.9 billion last year. Driving that growth is a global payments industry experiencing double-digit growth.
China leads at the storefront with 40 percent of in-person spending already occurring on mobile digital wallets such as Alipay and WeChat Pay. Globally, top providers include Android Pay, Apple Pay and Samsung Pay.
Another benefit to the global trend in payment innovations. Fintech benefits emerging markets by offering a secure space to store money for populations who cannot easily access banks. M-Pesa, a company based in Kenya, has a large and expanding user base. It allows individuals to deposit money and to make everyday purchases easily. People who were previously excluded by the formal financial system have found access through the app.
One of the primary benefits of new payment innovations is that payments can be seamlessly made across borders.
We launched the Klarna app, which streamlines the shopping experience from pre- to post-purchase, including enabling users to shop at any online store and to create and share wish lists, get price-drop notifications, and access exclusive deals.
Klarna, the $5.5 billion fintech platform that allows shoppers to buy now and pay later. In the past couple of years, Klarna has begun to offer a direct-to-consumer digital shopping mall that services close to 8 million U.S. consumers. H&M, Sephora, Timberland, The North Face, Fender, Anine Bing, FORWARD, and ModCloth are among the leading retailers that have signed on as merchant partners, leading Klarna to a 163% growth in partnerships in the past year.
Payment solutions are usually designed to make life easier for the technology provider and processor rather than for the consumer.
Klarna, used by brands and retailers globally including Farfetch, Marchesa, Givenchy and Burberry, charges retailers between 4.5 and 5.9 per cent of each transaction depending on each retailer’s negotiated rates; in exchange, the retailer is paid upfront, and Klarna assumes the risk of collecting payments.
When Klarna onboards a major retailer, it will typically invest in a co-marketing campaign, he says. When the company launched with watch brand Daniel Wellington in New York, for example, it contributed to funding a campaign wrapping the city’s subways. It also promotes brand partners to customers, targeted based on shopping history, and emails relevant discounts to its 70 million US users.
What apps do you use while shopping?
What are your thoughts on Buy Now, Pay Later? Ever tried it?
Do make sure to comment below or reply to the email 😍
LinkedIn: https://www.linkedin.com/company/closet-on-the-cloud/
Instagram: https://www.instagram.com/closetonthecloud/
Not signed up for the newsletter yet? Sign up HERE!
