Amazon Scales Up Its Ambitions for Fashion Sales 

Fashion brands can no longer ignore the platform

Author: Andria Cheng

April 28, 2017

On Amazon’s jobs site, nearly 450 positions containing the keyword fashion are currently open, for positions from brand managers for its private label or plus size categories to fashion features editor or merchant manager.

Amazon is serious about fashion and the job postings are only one indicator of that. When Amazon reported better-than-expected quarterly profit and sales on Thursday, it also referenced the introduction of seven private-label apparel lines, from the Paris Sunday women’s line to the Buttoned Down men’s label, just for its Prime members.

Its newly released $199 Alexa-powered Echo Look allows users to take full-length pictures and videos hands free, a feature that is fashion-focused: It not only allows users to create a look book and share their outfits, it also can recommend brands and styles and act as a de-facto personal stylist offering style recommendations from a combination of machine learning and fashion specialists.

“Amazon management has called out its apparel business as a key growth driver multiple times over the past few years,” said a Morgan Stanley report. “It’s hard to deny the success the company has had to date…. Amazon is quickly gaining traction in apparel.”

Amazon is now the No. 2 US apparel retailer, generating $20.3 billion in clothing gross merchandise value and garnering a 7.4% share of the overall 2016 US apparel market, according to the Morgan Stanley study. Only Walmart had a bigger share, at 8.1%. The study also showed that Amazon’s growing share came at the expense of Target and department stores including Macy’s, Kohl’s Corp., JC Penney and Sears, many of which have announced store closing plans following declining comparable sales. (Walmart’s share also grew albeit just slightly.)

Apparel sales by internet retailers, led by Amazon, rose $6.1 billion in 2016, an increase of nearly 17%, the report said, citing Euromonitor data. Department stores saw their sales decline by 5.5%, or $1.6 billion last year.

For Amazon, apparel alone is set to drive about 18% of its US forward gross merchandise value growth, the study finds. (Gross merchandise value measures total sales volume sold through the entire Amazon marketplace and includes third-party sales.)

The study included an online survey of 1,000 consumers that indicated Amazon is improving in terms of being perceived as fashionable. “We think that speaks to how Amazon’s fashion efforts are having an impact on consumer behavior and increasing their willingness to shop for fashion on the site, which over time could lead to even faster apparel growth,” Morgan Stanley analysts said.

Amazon promotes fashion brands on social media.

Amazon has been aggressive upping its fashion quotient, including making presence in Fashion Week runway shows, advertising on TV, and offering a live-streaming fashion show. Meanwhile, it has hired staffers from publications including Vogue and People StyleWatch. On social sites, Amazon prominently promotes upscale items, including a $395 black dress from actress Sarah Jessica Parker’s SJP Collection.

In another sign of increased consumer acceptance, 46% of respondents in the study, Morgan Stanley’s second annual consumer survey, said they bought clothing on Amazon the past 12 months, the second highest in the survey, following 60% who said they bought at Walmart. More than a third, or 36% of respondents said they bought clothing on Amazon a few times the past year, up from 31% in last year’s survey.

With the importance of Prime members to Amazon’s growth, it’s not surprising that the study found Prime members are 1.5 times more likely than non-Prime shoppers to buy clothes on the site.

Despite Amazon’s various women’s fashion moves, the survey found that so far its apparel shoppers still skew more toward men, but they tend to come from higher income households and are younger: Nearly 60% of consumers surveyed in the coveted 18-34-age group said they are likely to buy clothes on Amazon.

Many luxury fashion houses remain skeptical about selling on Amazon for fear of cheapening their brand, but many others have jumped on board. Other upscale brands such as Coach-owned Stuart Weitzman also is selling on Amazon.

“Amazon’s online pure-play model becomes increasingly critical for many brands to maintain overall market share,” according to Morgan Stanley.

Indeed, the following comment from the top executive at parent company of Ugg boot, which is selling on Amazon, sums it all up.

"We'd be foolish to think that Amazon is not going to be a major player in the future." 

“We need to shift our distribution strategy,” said Dave Powers, president and CEO of Deckers, which also owns such brands as Teva sandals, in an earnings call earlier this year. “The consumer is going to continue to migrate to the Amazon platform. In order for us to, again, control our distribution, we think it's important to be on there, to be visible to that consumer in a positive way….We'd be foolish to think that Amazon is not going to be a major player in the future. The younger consumer is migrating there quickly, and we think it's important for us to show up with all of our brands in a positive way on that platform.”