Amazon's Strategy for Fashion Expansion

Summary

Amazon has ventured into the fashion industry with a live fashion show, featuring brands like Nicole Miller and Calvin Klein. Unlike its usual low-price strategy, Amazon promises full pricing to attract fashion brands. This move comes as online apparel shopping is on the rise, with only 15% of purchases made online last year. Traditional department stores face challenges as Amazon's US apparel business is projected to reach $52 billion by 2020, potentially surpassing Macy's. While some brands like Nike and Tory Burch remain skeptical, Amazon's Prime membership and data analytics offer significant advantages.

Takeaways

• 📈 Amazon has launched a live fashion show to attract fashion brands to its platform.
• 👗 Brands like Nicole Miller, Calvin Klein, and Kate Spade are now selling directly on Amazon.
• 💰 Amazon is offering full pricing to fashion brands, a shift from its usual low-price strategy.
• 🛍️ Amazon's move into fashion is part of a broader strategy to capture a larger share of the ecommerce market.
• 📊 Only 15% of apparel was purchased online last year, indicating a significant growth opportunity.
• 📉 Traditional department stores are struggling with sales, while Amazon's North American sales rose by 25%.
• 🏬 Amazon's apparel business is forecast to grow significantly, potentially surpassing Macy's as the largest apparel retailer in the US.
• 🚫 Some high-end brands like Nike, Tory Burch, and Rag & Bone are hesitant to join Amazon due to its perceived downscale image.
• 🛒 Amazon Prime membership benefits like free two-day shipping and free returns make online apparel shopping more appealing.
• 📊 Amazon uses data analytics to help brands understand regional preferences and optimize pricing for different styles and sizes.

Q & A

What is Amazon's latest initiative in the fashion industry?

Amazon has launched a live fashion show, combining elements of a QVC shop-at-home broadcast with MTV-like celebrity guests to highlight fashion items sold on the site.

Which brands are now selling directly to Amazon?

Brands like Nicole Miller, Calvin Klein, Kate Spade, Lacoste, and Levi Strauss are among those selling directly to Amazon.

What strategy is Amazon employing to attract fashion brands?

Amazon is offering full pricing to attract fashion brands, which is a departure from its regular strategy of offering low prices on a wide range of products.

How has Amazon been building its fashion business over the last decade?

Amazon has been building its fashion business by acquiring companies like shopbop.com and Zappos, launching flash sale sites like myhabit.com, and hiring industry professionals such as Cathy Beaudoin from Gap.

Why has fashion been one of the last ecommerce holdouts?

Fashion has been a holdout because the fit and feel of clothing are important to shoppers, making the online shopping experience less appealing compared to in-store purchases.

What percentage of apparel was purchased online last year according to Forrester Research?

Only fifteen percent of apparel was purchased online last year, according to Forrester Research.

How is the shift to online clothes shopping impacting traditional department stores?

The shift to online clothes shopping is a significant blow to traditional department stores, as they face sluggish sales and are closing stores and cutting staff.

What is the forecast for Amazon's US apparel business by 2020?

Amazon's US apparel business, including sales by third parties, is forecast to rise to fifty-two billion dollars in 2020, up from sixteen billion the previous year.

Which brands are holding out from selling on Amazon?

Brands like Nike, Tory Burch, Rag & Bone, and many European luxury goods players are holding out from selling on Amazon.

What advantages does Amazon offer that traditional retailers find hard to match?

Amazon offers advantages like Prime membership with free two-day shipping and free returns, and uses its technology expertise to mine analytical data, helping brands target shoppers and optimize pricing by region.

How does Amazon's live fashion show aim to enhance the online shopping experience?

Amazon's live fashion show aims to enhance the online shopping experience by providing a more interactive and engaging way to showcase fashion items, akin to walking through an aisle at a favorite store but in the comfort of one's own home.