There's a lot of chatter in the media lately about Amazon's quiet foray into fashion private label. As the mammoth retailer casts in every direction for more massive growth, the e-commerce giant has started selling "fashion" clothes under at least seven different labels trademarked by the company itself. A major reason for this is that fashion sales are very profitable. "Amazon wants to become a $200 billion retailer… and for that, it has to get into clothes and food, which is where the biggest money in retailing is," writes Pascal-Emmanuel Gobry in Forbes: Amazon's Endlessly Fascinating Push Into High-End Fashion.
"Apparel margins are generally very high... as high as 80 percent depending on the product, price, and materials and labor used," says Forrester retail analyst, Sucharita Mulpuru in Amazon selling its own clothes actually makes a lot of sense, in Wired.
As it seeks to improve the quality of its fashion image, Amazon is also dramatically increasing the sheer quantity of clothes available on its site, including about 1800 different items in all, according to articles in Wired, Forbes, and Women's Wear Daily: Amazon quietly rolls out private label fashion.
It's worth note that Amazon's apparel and accessories category climbed 91 percent over the last year, to 20 million items by the 2015 holiday season (creating an even bigger pool of items than Amazon's electronics inventory).
How does Amazon know what kinds of clothes to sell?
How, indeed! This isn't Amazon's first fashion foray. Amazon started its online store in 1995 and by 2002 had already expanded into apparel.
Conveniently, the company has tons of data from years of offering clothes on its site. Amazon itself alludes to the advantages of this data. During a fashion industry conference, Jeff Yurcisin, vice president of Amazon Fashion, is quoted: "When we see gaps, when certain brands have decided for their own reasons not to sell with us, our customer still wants a product like that…. Amazon can just go around them and start making those clothes itself."
Imagine if you're a fashion label that's been selling on Amazon for years, says Jason Goldberg of Razorfish agency in the Wired article. "Then suddenly your partner (Amazon) -- who has seen your sales data, and knows what products you have for sale, knows your sizes and price points, knows what consumers buy, and what they looked at but didn't buy -- decides to sell its own apparel?"
In fact, many fashion retailers and "name" brand purveyors that once sold on Amazon have left since realizing that Amazon had probably been "going to school" on them and their data, identifying successful products and then carrying them itself." Research by Upstream Commerce Retail Intelligence Company study indicated that, within twelve weeks, Amazon picked up and sold 25 percent of best-selling women's fashion clothing items that were first introduced by its own marketplace vendors! When the retailers realized this was happening, many ended their relationship with Amazon. (See article: Does Amazon Eye Its Own Marketplace Vendors' Best Sellers).
Forbes contributor, George Anderson, who is RetailWire Associate Publisher, picked up on this issue in his article: Is Amazon Undercutting Third-Party Sellers Using Their Own Data? See also, RetailWire Braintrust discussion, Amazon goes all predatory on marketplace sellers.
Amazon is not banking on its own name.
Despite all its efforts, the media think that Amazon still has yet to secure an image as a place to buy stylish clothes. That's almost certainly why Amazon didn't use its own name to brand the clothes that it sells, as it does with AmazonBasics, the company's own line of self-branded electronics accessories and kitchen products. (The new "fashion" lines are labeled: Franklin & Freeman; Franklin Tailored; James & Erin; Lark & Ro; North Eleven; Scout + Ro; and Society New York). Offerings range from men's dress shoes and suits to women's office wear to basics for children. Prices for a sheath dress from Lark & Ro, for example, is $70.
Bottom Line for your bottom line:
Why would Amazon set its sights on fashion?
According to the Quartz article titled, Amazon has quietly launched its own clothing lines as it tries to take over fashion retail, Amazon has stated that fashion is its quickest growing category. But Quartz questions whether people will buy Amazon house brand clothing as replacements for the fashionable brands missing from the Amazon assortment is an open question.
The Amazon way, according to Gobry in Forbes, is, "in outline, simple: Lower prices, get economies of sale, and squeeze out competitors; lower prices further; and so on in a virtuous cycle."
The problem, says Gobry, is that that formula doesn't really work in fashion … (because)… people who buy fashion do it for emotional reasons that go beyond price and convenience.