Sustainability is in style, and hopefully here to stay. Power Retail spoke to Ethi founder Jimmy Zhong about ethical fashion in e-commerce.
The fashion industry is changing all the time, and not just to develop next season’s looks. In an industry known for ‘fast fashion’ and wasteful practices, sustainable approaches are becoming more and more important. This is why Melbourne-based entrepreneur Jimmy Zhong founded ethical fashion retailer Ethi in 2015.
“What makes Ethi unique is that brands that sell on our marketplace must meet at least one of our seven EMPATHY values – these stand for Environment, Material Sustainability, People, Animal-free, Transparency Handmade, and Your Local,” says Zhong. “Each value has a set of criteria that we assess a brand against before making an evaluation. We also donate $1 from every sale to a charity of your choosing on checkout.”
Ethi’s ‘modular marketplace’ allows brands to list their page and products without creating a new listing or inventory specifically for the website, Zhong explains. “We leverage their existing inventory from their website using a real-time inventory sync app called Syncio…When a customer purchases from Ethi, that order gets automatically sent across to the brand to fulfil and deliver. By avoiding the need for a brand to create and manage separate inventory on Ethi, we’ve made Ethi essentially an extension of the brand’s online store, providing them a low maintenance channel with a large audience.”
So what does this online marketplace mean for the ever-changing industry? Power Retail spoke with Zhong in an exclusive interview, where he talked sustainability, e-commerce, and the future of ethical fashion.
How have you used the online marketplace platform to support a more sustainable approach to fashion?
Sustainable fashion has gained a whole lot more awareness over the past five years and is growing at almost twice the rate as the rest of the clothing and apparel industry. Despite this encouraging trend, sustainable fashion is still very much a niche market, so if you’re an emerging ethical brand, it may still be quite challenging to find customers.
We saw this when working on our previous startup Akagu, where we were increasingly approached by more and more designer labels or lifestyle brands with a sustainability focus that had an amazing story and created beautiful products, but struggled with distribution.
You can see similar brands at any of your local design markets – there are many that struggle to find an online presence but would love to grow one. Providing an online marketplace platform allows these brands to have a presence online as we have a growing community in the thousands. What’s more, brands can leverage each other’s reach through the network effect that our marketplace provides. For example, a fan of Hara that was shopping for Hara may inadvertently discover Leo the Strange and vice versa.
Over time as our community grows, we can leverage this network to amplify our efforts to grow awareness of shopping more consciously. I think it’s awesome that individual brands such as Reformation or Patagonia have managed to become an amazing voice for sustainable fashion, but I think there is a missing seat for a platform with the voice of a network of sustainable brands. A marketplace platform also provides the infrastructure for the growth of sustainable fashion and brands.
What were the key challenges you faced in setting up your online retail business, and how did you overcome these?
The key challenge for setting up an online marketplace is that it requires a large number of brands and products for customers to shop for. We didn’t have the technology infrastructure to accommodate a large volume of brands and products and thus weren’t set up to scale our business model.
An example is that it took us roughly an hour to upload 30 products when a new brand agreed to sell on Ethi – we had to set up their brand page, each product with images, description, inventory levels, etc. Then when it was all uploaded and available to sell, we’d often sell out-of-stock products because the inventory was no longer up to date. The challenge was that it was difficult for us to acquire a customer only to then disappoint them when they finally purchased.
We solved this problem by building an internal integration API that could sync our brands’ inventory to Ethi with a click, with ongoing inventory changes updated in real-time to both stores. This API eventually became Syncio, which is now used by thousands of other stores enjoying the benefits of no longer wasting time updating inventory.
What marketing and website initiatives do you believe have been the biggest contributors to your success?
Our content marketing and social media is probably our biggest contributor to our success, we have built a strong online community across Instagram (15K following), Facebook (3K following), Pinterest (1M+ views/month), and our blog is a great source of traffic too. There’s no secret sauce, just delivering consistently relevant content to our audience has really helped. There is so much happening right now in sustainability that we’re becoming somewhat of a news and information hub for our audience on all aspects of sustainability.
We’re also constantly experimenting with different channels such as FB ads, Adwords, PR, and will look into more traditional marketing channels too over the next 6 months.
What options do you offer customers for fulfilment, and what model do you use for logistics?
We use a drop shipping model where purchases are delivered by the brand themselves. We find this a less capital-intensive model as well as less wasteful, as we avoid the unnecessary step of shipping goods to us before we send it off to the customer. Customers also get more of the brand experience when the order is coming from the brand directly.
What technologies do you use to power Ethi? How would you describe your mobile strategy?
We use Shopify as our e-commerce platform – Shopify is an amazing ecosystem and allows you to drastically reduce time and money spent on building an e-commerce website from scratch. Our inventory is completely powered by Syncio, which is a real-time inventory sync app that we built ourselves. Syncio has enabled us to grow our brand and product range without the pain of managing such a large inventory. Syncio also makes it a really simple experience for our brands.
In what ways does your business engage with social media and how do you determine ROI, if at all?
We have a very active presence on Instagram, Facebook, and Pinterest. Social media is a very important channel for us to engage and grow our community, which includes both customers and our brands. We try and measure as much as we can across any social media channel we use. As a startup, time is our most valuable commodity and thus we need to know whether our resources poured into social media is producing an outcome that is helping us towards our objectives. For example, we realised that Twitter was not an effective channel based on ROI and thus decided to stop using it. ROI from social media is based off whether for example an Instagram follower eventually becomes a subscriber and ultimately a customer. We are constantly exploring new channels or experimenting with new tactics to test whether this could be an effective way for us to find new customers.
What opportunities or trends do you see in the future of online fashion retailing, particularly in ethical fashion?
The future of online fashion retailing is really bright! It’s all about enhancing the customer experience and there are some great things happening in VR/AR, as well as AI that aim to do this by helping you find clothes that are a match to you in terms of style, size, etc. Customisation is another that aims to give you exactly what you want.
Ethical fashion could have the most potential in terms of delivering exceptional customer experience because it can provide a story behind the product that fast fashion can’t. I’m also excited to see closed-loop ecosystems where not only is the clothing ethically made but once the customer no longer has a use for the piece of clothing it remains in circulation, either rented or sold second-hand, all the way to the true end of life for that piece of clothing, to then to be recycled into a new piece of clothing.
What are some of the things you know now that you wish you had known while you were setting up Ethi?
Where do I begin? I guess the key thing is to really understand the market that you are targeting. Even if you were an industry expert, without actually testing your product or value proposition with the market, you are still making an assumption. So rather than spend a lot of money and time on building the perfect product, branding, and website before you even have your first customer, go out there and collect data and feedback from people about whether there is a demand for your product. We kind of did this for our first startup though in hindsight nowhere near enough, and definitely did a better job of validating our idea for Ethi first. I think this is critical and especially tricky in fashion but you’ve got to combine art with some science, unless you are incredibly lucky and/or are the oracle.
Finally, what do you love most about the online retail space?
I love the limitless potential that online retail has to create exceptional customer experiences through every touch point of a customer’s journey. Online retailers, as opposed to bricks-and-mortar retailers, can engage customers in many more ways than when a customer is in the store. I also love the pace at which online retailers innovate and enhance their experience based off user feedback, and really enjoy browsing online stores based off their aesthetics and even their email sequences!