Amazon – Friend or Foe For Fashion? – Forbes

By on December 13, 2019
INDIA AMAZON

Employees stand near an The Amazon Inc. logo is displayed above the reception counter at the … [+] company’s campus in Hyderabad, India, on Friday, Sept. 6, 2019. Amazon’s only company-owned campus outside the U.S. opened at the end of August on the other side of the globe, thousands of miles from their Seattle headquarters. The 15-storey building towers over the landscape in Hyderabad’s technology and financial district, signaling the giant online retailer’s ambitions to expand in one of the world’s fastest-growing retail markets. Photographer: Dhiraj Singh/Bloomberg

© 2019 Bloomberg Finance LP

There has been much (often in hushed tones) talk of the threat Amazon poses to the fashion industry as the mighty online retailer has started to focus its extensive resources on its apparel offering…but just how big a threat is Amazon to fashion brands?

Given the current tough retail conditions, economic uncertainty lowered consumer confidence and globalization driven changes to shopping behaviors – any added competition for consumer spending is a major threat in already uncertain times. And the threat doesn’t come any bigger than Amazon.

The Amazon threat is fourfold – they have the scale, resources, experience and data insight to enter and quickly dominate new categories and markets. 

In the book The Everything Store it is claimed that Jeff Bezos told Amazon employees back in 2007 that “in order to be a two-hundred billion-dollar company, we’ve got to learn how to sell clothes and food”. Demonstrating their commitment and the depth of their resources Amazon paid $13.7 billion in 2017 for grocery chain Whole Foods Market marking their entry into the food market.

The fashion market is undoubtedly a ‘harder sell’ for the company, as Amazon is a commodity-driven marketplace whereas fashion purchases are more desire led with consumers making buying decisions based on the browsing experience and the stories brands tell them. 

This explains why Amazon has led their foray into the fashion market with basic, volume led fashion staples where purchasing decisions are more akin to household commodity purchases. Shoppers are much less likely to buy an expensive fashion item via Amazon when they are online stocking up on toilet paper and dog food whereas a pain black vest for a few pounds is less of a jump.

Phew, so it’s only the pile em high sell em cheap fashion brands and retailer that need to feel threatened? 

No, Amazon has identified that an answer to their commodities image is to offer branded goods and have in recent years, successfully partnered with the likes of Calvin Klein – who now sell more products via Amazon than through department stores.

Luxury Brands In China

Pedestrians make their way past a Phillips-Van Heusen Corp. Calvin Klein jeans store in Swire … [+] Pacific Ltd.’s Sanlitun Village North commercial development in Beijing, China, on Wednesday, July 6, 2011. A reduction of Chinese taxes on luxury goods may curb spending by mainland visitors in Hong Kong at a time when the city’s retail stores have never been more dependent on tourists. Photographer: Keith Bedford/Bloomberg

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Brands such as Calvin Klein have the resources and the sheer strength of brand to ‘risk’ selling on Amazon but what of mid market retailers who are all too aware of Amazons’ track record of using their marketplace data to learn what products consumers are buying and then to enter the most profitable markets directly using this insight. This is the formula that Amazon has used to successfully enter and dominate in categories from electricals to sports goods.

The threat is so real that beauty brand Coty actually went to the European Court of Justice in 2017 to prevent one of its retailers selling premium Coty products on Amazon and  won, so now premium brands can prevent their products being sold by the online giant to ‘protect their aura of luxury!”

But while this EU ruling might have safeguarded some luxury products it’s certainly not deterred Amazon from seeking to succeed in the fashion market. In fact it’s been reported that out of Amazon’s 74 own brands, a whopping 66 are apparel – this focus on own brand is a smart move and mirrors the strategy being adopted by a number of the more progressive department stores who have sought tighter product and margin control via an increased own brand offering, often to allow them to fight the ‘everything store’ approach of Amazon. 

Alongside their own brand ranges Amazon has also bought companies targeting the more discerning fashion consumer – Shopbop for higher-end clothing and Zappos for footwear. This differentiation allows Amazon to attract a whole new genre of customers who would have been deterred from making fashion purchases on the main Amazon site but view Shopbop and Zappos separately. 

But this isn’t the only approach they have taken to enticing a more upmarket fashion consumer. 

Other approaches taken have included; The Drop – limited fashion collections released in association with international fashion influencers which are only available for 30 hours and are made to order – cleverly increasing their desirability and for those who miss out there is a supporting basics collection always on offer. StyleSnap, where shoppers can upload an image of an outfit they like and using AI Amazon, will find and offer similar options and Prime Wardrobe where prime subscribers can try before they buy.

Therefore, yes Amazon definitely poses a threat to fashion retailers of all sizes (other than perhaps global superbrands) but as with all threats, there are also opportunities for brands who can learn from Amazon’s pioneering approach to customer data, insights and relationships – as well as selling through their platform, even at some point that data might be used against you.

Source Article from https://www.forbes.com/sites/callyrussell/2019/12/12/amazonfriend-or-foe-for-fashion/
Amazon – Friend or Foe For Fashion? – Forbes
https://www.forbes.com/sites/callyrussell/2019/12/12/amazonfriend-or-foe-for-fashion/
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