This Tuesday at the Fashion 2.0 panel we will be discussing one of the most interesting and controversial subjects related to the fashion industry and the ways new technologies are changing it. Titled “Luxe vs. Mass”, the discussion will explore the differences between high-end and mass fashion brands, and the way they differentiate themselves online. I wanted to put some initial thoughts out there, preceding the discussion and hopefully raise some questions. Doing a research for the panel, I found a fascinating graph posted by Professor Mark J. Perry on his blog, which shows that for first time in U.S. history, spending on clothing and footwear falls below 3% of disposable income:

            
                                        Source: Professor Mark J. Perry’s Blog

According to Dr. Perry the reasons to that are cheaper than ever in history clothing options and a better selection at a higher quality. Of course, all these are made possible because of the industrial revolution and the new technological inventions that both improve the production process and the materials used for clothing and footwear. But in my opinion, the web and e-commerce have challenged the prices in some ways as well. Here are my top 5:

1. Online presentation has limited ability to show the quality of the fabric and fit. Many e-commerce brands in the space are trying to solve this problem by adding video, zooming tools, virtual “try on” functions and more. But the challenge is there to differentiate between a similar product in different production quality and pricing points. Example – Alexander Wang black t-shirt ($106) vs. American Apparel one ($20).

2. The internet is still a flat medium, a projection of reality lacking physical experience. As opposite to brick and mortars world, where retail brands have more control over the venue, service, personnel and atmosphere – online the world is flat and even after almost 20 years of existence most websites still look very similar. Example: Louis Viutton website isn’t that different from JCrew, if you look up close. Of course, the brand appeals to different audiences, but it’s harder to justify such a high pricing gap in the online environment.

3. Shopping comparison engines allow instant research for better value. Only few years ago the only option for a customer looking for a black t-shirt was going to the local mall, checking out few stores and buying the best possible product out of these few options. These days, thanks to shopping search engines like TheFind.com and others, the possibilities are endless (to be precise, my search for a black t-shirt returned 694,091 results, ranging from $3.99 Hanes to $236 Gucci). This means the customer has a better chance to find lower priced product.

4. Websites dedicated to finding discounted merchandise. From fashion blogs recommending “The Look for Less” to coupon sites promoting discounts – the web is a paradise fro bargain shopper.

5. Innovative business models focusing on bargains. There is no coincidence sample sale sites like Gilt, ideeli and Rue La La are flourishing online – the web technology provides the best tools to manage and move quickly limited time and quantities inventory at a very low cost. Various online auction sites offer bargains, and not to mention rental services like Avelle and Rent the Runway eliminate the need to shop for new clothes and accessories at all.