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Should fashion e-tailers worry about Amazon?

Incumbents beware. Amazon is rapidly expanding its fashion business. Its disruptive reputation usually gives established players sleepless nights, although in this case some will be more worried than others. In October, Asos reported a 33% rise in full-year sales to £1.92 billion and CEO, Nick Beighton, hailed “another exceptional year”.

2018 promises more of the same. “Everything begins with our customers so you’ll see continuing momentum right across the business to ensure we’ve got the most relevant product for our 20-something audience and a frictionless experience every time they shop with us,” an Asos spokesperson tells Essential Retail.

“Key highlights include the acceleration of our activewear offering as well as our own range, continued focus on our new Face + Body category and ongoing investment in our logistics and warehousing operations.”  

No mention of Amazon, which has been met with some resistance by the established fashion world.

But Asos says a key challenge for 2018 is “about avoiding complacency and not standing still”, while finding new ways of “delighting customers and keeping pace with ever-changing consumer behaviour”. Fighting talk for the 18-year-old fashion giant.

Amazon innovation

Nonetheless Amazon is pressing ahead, filing a patent for a blended-reality mirror that taps into virtual reality technology. While it recently opened a pop-up store in SoHo New York in partnership with Calvin Klein, which requires the Amazon app to purchase items in-store or get them delivered to home.

“What’s interesting is their ability to move in to this at scale, working with suppliers to create high quality lower cost times because of their size,” says Lucie Greene, worldwide director of J. Walter Thompson’s Innovation Group.

“But also their existing swathes of data on consumer behaviour – they know how much you want and when. As Amazon continues to become a de facto shopping search engine, this will give them a big impact. Amazon already incentivises private label items with Prime options, and placement on search; this will extend to fashion.”

Over the past few years, the company has sponsored the Met Gala, hired celebrity fashion buyer Julie Gilhart and also bought a warehouse in Brooklyn for its fashion operations.

“The issue previously was credibility – it didn’t feel like a credible luxury or fashion brand, and many traditional fashion brands were reluctant to be visible on it,” adds Greene. “In part also because the website feels very functional, not like the emotive, sleek websites that many upscale fashion brands have.

“We’re more label agnostic, or less motivated by brand now, thanks to the Warby Parkers and Everlanes of this world, so Amazon’s private label, which looks and feels like any other premium offer, is appealing.”

Amazon’s image has evolved with Echo, and Prime, and the former has created more of a lifestyle proposition in the home. “It plays music for us. We ask it for information. Amazon Prime has become an all-encompassing loyalty club,” explains Greene. “It has also set the benchmark for things being delivered, the speed and the cost (that being free), so that even when it’s selling other brands it is becoming a challenge for any retailer or direct-to-consumer brand who cannot compete.”

The Amazon threat

“Amazon has always been a game changer so as a retailer we are definitely feeling threatened by their next move,” adds Jess Jeetly, founder and CEO at Jeetly, a petite clothing brand for professional women. “At present, most of us retailers will be seeking ways to compete with Prime Air, Amazon’s drone delivery system, which claims to safely deliver small packages to customers in less than 30 minutes.”

Amazon’s power is in the data it has accumulated on consumer shopping preferences and purchase behaviours. But Jeetly argues that fashion is very personal for women, compared to books and groceries which are driven by price.

“The female shopper is influenced by an emotional connection with a fashion brand, so heritage, storytelling, and the full brand experience are more important than convenience when buying clothing,” says Jeetly. “This means Amazon will have to change its current user experience to match the great user experience shoppers are used to on fashion sites.”

But the try-before-you-buy service, Prime Wardrobe, is something which most retailers won’t be able to compete with. Whilst innovative strategies like this won’t make Amazon money selling fashion, they will gain some fashion market share thanks to a logistics vehicle that will appeal to shoppers who are happy buying from supermarket chains, Jeetly believes.

“But the bigger picture in my opinion is that Amazon will not be the first retailer women will think of for buying clothing as the shopping experience and presentation of fashion is still way below par when compared to the likes of Asos to Net-a-Porter,” explains Jeetly.

“Amazon still has a lot more work to do to make their fashion offer more appealing.”