Reactions To Amazon’s Push Into Private Label Fashion

RetailWireBrainTrustLogo 150While Amazon builds up its private label fashion offerings, there's been a lot of discussion in the media about the likelihood and degree of Amazon's success in this highly competitive venue. In Can Amazon dominate apparel with its own private labels?  the RetailWire BrainTrust discussed the branding challenges ahead of Amazon, and whether they thought Amazon's private label clothing would catch on with consumers. First, the RetailWire Instant poll question asked: How likely is it that Amazon will become the go-to retailer for fashionable clothing over the next five years?

RetailWire Instant Poll

The answers to the poll: 

47% of the respondents thought it "very unlikely" that Amazon would become the go-to retailer for fashionable clothing over the next five years.

42% thought it "somewhat unlikely".

5% thought it "somewhat likely".   

5% "weren't sure".

Questions put to the RetailWire BrainTrust for further discussion, were:

"Can Amazon dominate apparel with its own private labels?" and "What will Amazon's push into the apparel space mean for other retailers?"

Here are  some responses selected from the BrainTrust discussion:

"…Amazon is going to have some difficulty in creating a private-label fashion line for a few reasons," said Adam Herman, EVP, Chief Integrated Media Officer, Zimmerman, who went on to say:

  1. Manufacturing product is not a core competency (of Amazon); they are experts in selling others' brands.
  2. Fashion is as much about the halo of the name of the designer as it is about the style / quality of the clothing and Amazon is associated with efficiency and functionality and not design.
  3. They will be competing in a fashion industry that has been transformed by e-commerce, but not decimated by e-commerce such as the commodity products of music and books, where their web channel competency can dominate.  

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"Building a brand is not an overnight adventure and requires a lot of investment in marketing and product R&D, and more patience than most companies have for that investment," said Peter J. Charness, SVP America, Global CMO, TXT Group.

Charness continued: "ROI is a long term affair… there aren't many companies like Amazon who are willing to take the long view and slowly build a business without the usual requirement for profitability in a reasonable time horizon. So if they do it right and expect returns in the four to five year window, yes they can do it. Any revenue they gain comes as a loss to some other retailers. (Even those who have Amazon stores)."

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"Amazon's private label clothing line could catch on with consumers if the clothing quality meets consumer expectations for quality and value, whether it's for functional clothes or higher fashion... If Amazon is successful, it would hurt sales from competitive stores, depending on the quality and design of the line(s)," noted Max Goldberg, President, Max Goldberg & Associates.

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"Amazon can fund these activities at a loss for a lot longer than any retailer can and Amazon's cost structure is a lot more efficient," wrote Gib Bassett, CPG and Retail Industry Principal, Oracle.

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"Amazon has been performing well for growth in the apparel category over the past three years," wrote Roger Saunders, Global Managing Director, Prosper Business Development.

"The Prosper Monthly Consumer Survey reveals that in March 2013, 23.8 percent of Amazon Prime members used the Amazon.com website MOST often for apparel shopping vs. 28.4 percent who used the site MOST often in December, 2015," Saunders continued, adding:    

"Prime members also increased their loyalty to Amazon for non-apparel during that time, jumping from 54 percent to 59.4 percent…. Amazon.com has picked up the pace with Millennials choosing the website MOST often for apparel, rising from 16.4 percent to 23.8 percent of Millennials during those three years… Amazon's private-label clothing will hold value within the ready-to-wear space…. Nordstrom, Macy's, JC Penney and other disciplined management teams need to build the firewall for their own online sites -- particularly with Millennials. Specialty apparel shops will have to do the same."  Roger Saunders, Global Managing Director, Prosper Business Development.

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"…Women are not going to be boasting about the outfit they bought from Amazon." Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions.

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"This is not in Amazon's wheelhouse, " wrote Lee Kent, Sharing Insights for Success in Retail

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"…Amazon is not likely to convert a lot of label-conscious fashionistas to a new private-label line…." wrote Liatt.

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Bottom Line For Your Bottom Line:  

Amazon has had plenty of success with most of its ventures, but this case is different, where Amazon, known for low prices, has to employ a new strategy for fashion selling, i.e. charging full price.  Another issue that many fashion executives point out is, "Why would you undercut your own distribution channels by selling to them (Amazon)?" (Wall Street Journal, Amazon Struts Its Fashion Sense, Challenging Traditional Stores). Others wonder if Amazon will run into big challenges with clothing returns. (Fashion retailers Neiman Marcus and Nordstrom offer free returns). Meanwhile, retailers like J.C. Penney and Kohl's are rededicating their efforts to bolster their own popular private label merchandise. (Fortune, Amazon Steps Up Fashion Challenge to Retailers by Charging Full Price).          

See also:

10 Advantages of Private Label Branding: Why Amazon Is Banking On Fashion Private Label

Amazon Pursues Profitable Fashion Sales With Own Private Label Offerings    

 

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Naomi K. Shapiro, Strategic Market Communications

About Author

Seasoned strategic market communicator, Naomi headed public information for several academic and professional associations as well as founding Creative Brilliance Associates Market Communications. She created and published Brilliant Ideas for Publishers Magazine and authored popular newspaper trade reference, The Brilliant Book of Promotions, Sales Tools & Special Events. Simultaneously, Naomi savored the world as an adventure travel writer that included trekking on glaciers, fishing with saltwater crocodiles and swimming with piranhas. Naomi holds her M.A. from the University of Wisconsin, including participation in a unique industry-science-technical writing program.
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