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Mena fashion e-commerce sales grew 19% in Q1, 2023

UAE recorded second-highest average order value in 2022

Fashion e-commerce sales in the Middle East and Africa region rose 19 per cent in the first quarter of 2023, recent research showed.

According to data from Admitad (a Mitgo company), 2022 saw the number of worldwide online fashion purchases grow by more than 30 per cent and gross merchandise value (GMV) by 35 per cent year-on-year, and in Mena it was no different. In fact, the amount Mena consumers were willing to pay for fashion purchases increased by 15 per cent.

However, the first quarter of 2023 has shown a more moderate growth. According to Admitad, the number of global fashion orders made between January-February 2023 grew by 15 per cent YoY. Mena bucked this global trend, growing by 19 per cent.

“The fashion industry’s boom seasons generally occur in the spring and autumn months, when many large sales take place. Still, these figures might set the tone for the coming year,” an Admitad spokeperson said.

Between 2021-2022, the market moved into a rapid recovery phase which saw a gradual return in growth for online sales.

A main driver of this growth was the growth of the e-commerce segment as a whole. The Covid-19 pandemic played a significant role in the further popularising of online shopping, although the financial doom and gloom of the first year of the pandemic negated any positive sales trends that occurred during this time.

Online fashion retail’s success is based around convenience, online sizing and fitting tools, simple delivery and return methods and access to a large number of special offers and discounts. These benefits detract from online shopping’s main downside — the risk that the item does not suit the customer, Admitad says.

Admitad estimates that clothing, footwear and fashion accessories make up more than 20 per cent of all global e-commerce sales, and this market share is expected to grow.

The rise of second-hand clothes e-commerce

This period also saw dramatic growth in the online second-hand fashion market.

According to experts, resale sales in the fashion segment jumped by 24 per cent globally in 2022, and will continue to grow at a rate of around three times faster than regular sales. Among many other factors, the success of the second-hand shopping trend has been attributed to the topics of environmental concern and conscious consumption. The second-hand fashion market value is expected to reach $228 billion in 2026.

Inflation-led GMV increases

Inflation made a significant impact on fashion’s e-commerce average order value (AOV). According to Admitad, average basket prices increased from $45 to $74 as the year progressed. In Mena, this factor did not play such a significant role, with the average order value holding steady at $101 throughout this period.

In fact, the UAE boasted the second-highest global AOV for 2022.

Economic uncertainty fuels partner marketing boom

Throughout 2022, the fashion industry experienced a period of great economic turbulence, with rising costs for manufacturers across the globe. Under these conditions, brands and marketplaces were forced to become even more cautious with their marketing spending.

Looking for ways to secure their revenues and acquire new customers, the fashion industry rushed towards performance marketing. According to Admitad, in 2022, the number of Mena brands and marketplaces using their channel to attract sales increased by 33 per cent (as opposed to 23 per cent worldwide).

The number of internet audience owners and traffic specialists ready to work with brands on partnership terms (for rewards from orders placed) grew to coincide with this. In Mena, their number increased by 10 per cent during the year, and their profit by 63 per cent.

Sales from a wide range of sources

In 2022, some traffic sources were particularly effective at generating sales for the fashion industry. In general, Mena customers did not deviate from these global trends, although there were some interesting and notable local nuances.

The share of orders made with the help of cashback services and coupon sites turned out to be several per cent higher than the global average. Also, contextual and targeted advertising was more effective for local brands. But, advertising through mobile applications brought in less than 1 per cent of all orders in the region — much below the worldwide average.

Affiliate stores became the record holders in terms of fuelling growth, increasing order flows by more than 20 per cent. Cashback services and coupon sites also performed well, increasing orders by 13.5 per cent and 9.8 per cent respectively.

Admitad’s partner, Get Outfit, a fashion recommendation platform powered by AI, has revealed that 76 per cent of Gen Z and millennials expect personalised product experiences. This trend is largely driven by the vast number of online stores available, which can make it challenging for users to navigate the endless assortment of products. On average, users visit up to 12 websites before making a purchase. In order to improve their user experience and save time, people are increasingly willing to share their data and trust AI recommendations, as well as utilize on-demand personal stylists to meet their fashion needs. “Personalisation is a key customer shift in fashion e-commerce that is driving growth in average order value (AOV). With more personalised and relevant offers of ready-made outfits and picks, the AOV is 27 per cent higher than in traditional e-commerce,” an Admitad spokesperson said.

According to to Get Outfit, 56 per cent of users find style inspiration from personalised offers in online stores, and over 40 per cent are influenced by fashion influencers. Additionally, at least 60 per cent of younger shoppers (aged 18-35) seek advice before purchasing clothing items, especially for special occasions or when they want to try something new. “This is not surprising, given that the UAE is a diverse country with people from different backgrounds, cultures, and age groups, which makes people more open to experimenting with their styles,” an Admitad spokesperson said. However, it’s important to note that each culture has its own guidance, which shoppers may seek before making their final decision.