Lauren Bates

Without hesitation and fresh off the acquisition of Whole Foods for a cool $13.7 billion, Amazon has their eyes set on taking over the fashion industry. The retail giant, second only to Alibaba, has added a new ‘try before you buy’ fashion service exclusively for Prime members.

Amazon has been zeroing in on the fashion industry for years! They just hadn’t come up with the right model, yet. Until now. It is called Amazon Prime Wardrobe and it lets consumers order items, try them on in the comfort of their own home (probably because Amazon knows no one wants to look at themselves under those awful fitting room lights) and return anything that they don’t like, for free! Similar to other wardrobe services like Stitch Fix or Trunk Club. Similar except for the fact that Amazon, and more than 1 million pieces (including women’s, men’s and children’s apparel), are a part of the new program – much more than what the other wardrobe services offer.

Here’s how it works: a Prime member selects at least three items, Amazon ships the items and then allows seven days to return anything that doesn’t make the cut. Now, this is largely incentivized by discounts, because well…Amazon. So, as long as the customer returns the reject items in seven days there is no cost for shipping. Hooray! I mean really, who likes to pay for shipping? Ok, one of my co-workers oddly enough, but that is neither here nor there.

Impressed? I know you’re not. Because like me, you know that Amazon offers free shipping to all Prime members on orders that qualify. So, they had to step up their game a little bit. If the customer keeps three or four items, it is 10% off the total and 20% off if they keep five or more items. Not bad, right? Well, not bad at all if you’re a Prime member. But for retailers, it is not as exciting.

This new offering could be the worst for department stores. With Amazon Prime Wardrobe’s one-million-piece inventory, familiar point of sale with free delivery and returns, how can department stores compete?

It gets better (or worse depending on who you ask).

According to Slice Intelligence data, Amazon has established itself as a go-to fashion resource for millennials. The powerhouse retailer accounts for 16.6% of all apparel sales in the US for consumers aged 18-34. More than doubling Nordstrom’s share, which came in second. This is a big deal since this demographic is pacing to become the highest spending generation in history, not to mention one that is infamously hard for brands to connect with.   

There is one challenge though: luxury. How is Amazon going to address luxury consumers?

I mean, they have tried. They have sponsored global fashion weeks and fashion-centric events like the Met Gala, as well as plastering advertisements on the glossy pages of fashion magazines (which people still read, btw). But, through all of this, many still cling to the idea that Amazon is a discount site and is emotionally detached from the consumer.

Have you ever tried to get a luxury brand to integrate with a coupon affiliate site? It is kind of like that. Affiliates (much like Amazon) can carry a stigma. But, they are a crucial part of your marketing mix and cannot be ignored. They just need to be included in a tactful way.

Anyway, the reputation (perceived or real) as a discount site means that Amazon might never be a destination for luxury retailers. Not to mention the attention that it has gained from fast fashion brands. Which, as you might have guessed, detours luxury brands even more. However, with time comes change and Amazon will eventually come up with some offerings that allows them to scale up.

Here’s why, first off, Amazon has maintained a level of report with their consumers. And this relationship isn’t superficial, it is deeply rooted across categories, products and brands making it less vulnerable to ebbing fashion trends. Then, (and perhaps more importantly) there is the wealth of data. Amazon has around 285 million active accounts. Just imagine how personalized they can get with their messaging if they leverage their data properly.

And they already have been leveling up. Amazon recently inked a deal with Nike in an (overarching) attempt to court major brands to the site. The decision from Nike to work directly with Amazon is due to the fact that Amazon cannot be ignored. Several merchants are already selling Nike products on Amazon. Today, there are 73,468 search results for Nike products on the site.

“Having Nike involved where Amazon can help Nike clean up the problem with third-party sellers is a huge win for Nike,” says Frank Poore, CEO of CommerceHub, which provides fulfillment and marketplace management services to some 10,000 brands, including 43 online retailers in the Internet Retailer 2017 Top 1000.

“Amazon gets a huge brand and it will quickly become the mainstay for Nike. It will be the place to go.”  Frank Poore

To really understand what Amazon is attempting with their breakthrough into the fashion space, is to understand the long-term mindset that the company was founded on. In a Wired article from 2011, Jeff Bezos, founder and CEO of Amazon, explained this vision: “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that.”

He believed, even back in 1997 when the company was founded, that simply by lengthening your scope, you can pursue activities that you would never have been able to otherwise because of an oversaturated market. The truth is, some businesses will fail and Bezos was banking on it.

“At Amazon, we like things to work in five to seven years. We’re willing to plant seeds, let them grow — and we’re very stubborn. We say we’re stubborn on vision and flexible on details.” – Jeff Bezos

So, back to the point. Odds are, Amazon will create a luxury offering. Bezos said himself that he likes to plant the seeds of growth and has made a living off of patience. Which is good, because it is likely that ramping up their luxury fashion effort will take a fair amount of time (especially considering the rate at which technology evolves).

The thing is, the fashion industry, particularly in the luxury space, doesn’t love change. However, this new Nike partnership could really change things for Amazon, mostly because Nike is already involved with luxury fashion brands. Just look at some of their collaborations; Vlone, Comme des Garçons, Acronym, Supreme and Riccardo Tisci (formerly of Givenchy). They are seemingly becoming a luxury brand themselves.

So, could Nike become Amazon’s point of entry into luxury retail? And will other brands soon follow? We’ll see. But, for now, we will be keeping an eye on their new fashion offering and how it will impact (the already suffering) department stores and retail space.