The Canadian online fashion retailer adopted an alternative approach to its competitors, staying true to its traditional consumer base rather than diluting its offering.
- The first big international investment in Ssense indicates the company has come a long way and has big ambitions
- The secret to the e-retailer’s success has been to focus on the streetwear segment and its traditional consumer base of fashion-savvy Gen-Z and Millennials
- As it broadens its product range, it remains to be seen whether Ssense can retain its competitive edge
Ssense takes on investment
On June 8, fashion e-tailer Ssense sold a minority stake to Sequoia Capital China for CAD 5bn (€3.5bn-$4.1bn). This is the first big investment the company had taken on in 18 years. It demonstrates that the Canadian platform has its eyes set on ambitious growth.
Founded in 2003, Ssense currently generates an average of 100 million monthly page views, with approximately 80 percent of its audience aged 18 to 40. The company has achieved high double-digit annual growth and profitability since its inception.
That is no small feat, as e-commerce is a notoriously challenging and competitive industry. The cost of shipping and returns can dent revenue. Relying on online sales rather than in-store interaction often makes it challenging to compete with other companies whose offerings can be easily accessed online. High customer acquisition costs usually offer relatively poor returns.
So what is Ssense doing right?
Target market focus – and being at the right place at the right time
Rivals like Matches fashion have pursued aggressive growth by seeking to broaden their consumer bases. Ssense, on the other hand, has stayed unwaveringly committed to its original target market of fashion-savvy Gen-Z and Millennials. That has not prevented the company from enjoying consistent growths in revenue.
It helped that streetwear, the segment in which Ssense originally specialized has become a major force in apparel during the last decade. Rather than having to seek new customers, Ssense was, therefore, able to ride the wave of this growing market.
Equally significantly, young consumers have become an increasingly important market force, accounting for a greater portion of luxury sales. Investing in a bold, youthful marketing approach has further increased the brand’s credibility among young consumers.
A new approach?
While Ssense has remained focused on its traditional target market and pursuing slow and steady growth until recently, now it is aiming to step up a gear. Shortly after striking the Sequoia deal, the brand has already moved into home goods, childrenswear and beauty.
The new investment is largely geared towards China where affluent consumers account for an increasingly large proportion of global revenues in streetwear. Significantly, Vogue China editor Angelica Cheung has been appointed as a board member.
Will Ssense retain its competitive edge while growing into new markets? Time will tell.
