3 Elements of Amazon’s Clothing Strategy to Watch
Do you remember the time when people looked down on Amazon as a place to shop for clothing? Well times have changed. If you go on to TikTok the hashtag #amazonclothinghaul has more than 50 million views and there are many more related hashtags that have been viewed by millions of people. For Amazon apparel is a big business, coming in as Amazon’s second largest category estimated to generate $64 billion in sales last year. Amazon is now the largest retailer of clothing in the United States, ahead of Walmart. When you think of popular clothing retailers like lululemon, Zara or H&M their apparel sales do not even come close to Amazon’s.
Chart of Amazon US eCommerce Sales by Product Category, 2022
With Amazon dominating the apparel sector many direct to consumer brands which once shunned Amazon are now setting up shop on the platform. This is not only to expand reach but also because ads on Facebook and Instagram are less effective because of Apple’s privacy changes that make it more difficult to track consumer activity across apps.
Not only are direct to consumer brands choosing to set up shop on Amazon but more traditional brands are also selling on Amazon including Gap which in November announced it would be selling on Amazon. Gap is selling basics on Amazon including hoodies, T-shirts, denim, socks, underwear and sleepwear. “Gap’s sales volumes has been falling, and the brand is losing market share,” said Neil Saunders, managing director of retail at GlobalData. “Rebuilding this through its stores and website is proving difficult. Opening a store on Amazon is another route to market and, theoretically, exposes Gap to a lot more shoppers as Amazon has a lot of traffic to the fashion part of its site. Gap will be hoping for a sales boost from Amazon.”
As Amazon continues to lure apparel and accessories retailers and brands small and large onto its platform consider these three elements of its strategy.
1. Grab share in the resale market. Amazon is expanding into the fashion resale business with a new partnership with Rent the Runway. Rent the Runway which sells pre-loved as well as new apparel has a storefront on Amazon now. The storefront features fashion from 35 brands including merchandise that is exclusive to Rent the Runway. Sales from fashion online resale marketplaces in the United States are expected to increase by 15.3% this year to reach $14.1 billion.
2. Move into brick and mortar. Amazon opened its first clothing store in California last year called Amazon Style. The 30,000 sq. ft men’s and women’s store sells hundreds of clothing and accessories brands including Amazon’s own private label brands. "Customers enjoy doing a mix of online and in-store shopping. And that's no different in fashion," said Simoina Vasen, vice president Amazon physical retail & technology. "There's so many great brands and designers, but discovering them isn't always easy."
These stores display one of each style. To help you imagine why this is a good idea, think of a crowded store that has a row of the same denim shirts, with three versions of that shirt in each size from small to 3X. That’s a lot of shirts! And all of those shirts take up precious space. Amazon claims that by displaying only one of each style it can have more than twice the number of styles on the floor at one time. “This allows us to offer more selection without requiring customers to sift through racks to find that right color, size and fit,” said Simoina Vasen, managing director of Amazon Style.
While shopping at Amazon Style to ensure the items you want end up in your fitting room, all you need to do is to scan a QR code on the item you like and request that it is sent to a fitting room. While in the fitting room customers can rate the items they have selected, then those ratings feed into Amazon’s real time recommendation engine on the Amazon shopping app. Customers can also request that an item they have seen on amazon.com be sent to an Amazon Style store so they can try it on.
In Amazon Style fitting rooms there are touchscreens customers can use to request that a sales associate bring them new items, either a different size, a different colour or a new style. As Amazon writes in a blog post: “Amazon Style completely reimagines what’s possible in the fitting room, turning it into a personalized space where customers can continue to shop a seemingly endless closet of great styles. When a shopper enters their fitting room, they will find the items they requested while browsing the store, plus additional options chosen based on their preferences.” In October Amazon opened a second Amazon Style store in Columbus.
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3. Try to capture share in the luxury market. Amazon has long had aspirations of taking a piece of the luxury apparel market but luxury brands have other ideas. Most luxury brands shun the idea of selling on Amazon for a number of reasons including the inability of Amazon to provide a high end look and feel on Amazon’s website that is commensurate with the price and heritage of the goods being sold.
Then there’s the issue of counterfeits. After taking its products off Amazon in 2016, Birkenstock Americas CEO David Kahan said: “the Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand.” “Policing this activity internally and in partnership with Amazon.com has proven impossible.”
Despite these challenges it should be no surprise that Amazon is not giving up. In 2020 Amazon opened Luxury Stores on its website in the United States as a way for consumers to shop for luxury apparel with Oscar de la Renta as the first luxury brand in the venture. Now Amazon Luxury Store websites are opening in several European countries and feature merchandise from Christopher Kane, Dundas, Elie Saab and Altuzarra. The participating brands retain control over pricing, selection and inventory.
Oscar de la Renta, which has hasn’t made an appearance at New York Fashion Week since before the pandemic, streamed a fashion show in December on Amazon instead of having a show in fashion week. “Is Amazon exactly the right venue for luxury fashion? I’m not sure,” said Oscar de la Renta chief executive Alex Bolen. “But we have to experiment with new ways to get our story out.”
Last year the CFDA fashion awards, which are also known as the Oscars for fashion, were hosted in partnership with Amazon. “We’re delighted to partner with the CFDA to bring our innovation and resources to the larger fashion community and to champion CFDA’s mission of strengthening American fashion,” said Muge Erdirik Dogan, president of Amazon Fashion. “This collaboration allows us to further our support of both emerging and well-established designers, creating a fresh new way to connect brands with our diverse fashion-engaged customer base.”
In October Amazon announced it entered into a partnership with What Goes Around Comes Around to sell pre-owned luxury bags. Consumers shopping on Amazon will now be able to buy a range of pre-owned luxury bags from: Chanel bags, to Birkins to Prada bags. What Goes Around Comes Around controls its inventory and handles authentication. “We have had a long time partnership with [Amazon subsidiary] Shopbop, it was one of the first accounts we began distribution with in 2009. So through that we have always been on Amazon’s radar. In late 2020, Amazon started putting some of Shopbop’s products from us onto the main Amazon platform, and then Amazon approached us earlier this year about being part of the Luxury Shops,” said Seth Weisser, CEO of What Goes Around Comes Around.