Amazon.com (s AMZN) is moving into the high-fashion business, the New York Times reports, and in order to get profits from this high-margin business, the company is willing to lose a ton of money. That is bad news for the traditional retailers that may get a spanking similar to the one Best Buy got from the Seattle e-tailer.
Amazon’s decision to go after high fashion is about plain economics. Because Amazon’s costs are about the same whether it is shipping a $10 book or a $1,000 skirt, “gross profit dollars per unit will be much higher on a fashion item,” Mr. Bezos said, and it already makes money on fashion.
Amazon is going after mass brands that are a staple of most mid-market retailers like Macy’s and Bloomingdales– designers like Jack Spade and Michael Kors, for example. And so those chains should be seriously worried. Here is why:
“It’s not a place where you look at it and are, like, ‘Oh, my clothes look and feel really good,’” Andy Dunn, founder of the men’s fashion brand Bonobos, tells the New York Times.
I sort of agree with Andy. Amazon’s website today is very functional, and the design conveys convenience and discounts and treats everything as a commodity. That works well when buying a coffee machine, a book, or a DVD. It doesn’t work when buying a great pair of shoes or pants.
But Amazon doesn’t have a huge mountain to climb. The online sites for, say, Macy’s or Bloomingdales or even Nordstrom are better in terms of showing off their wares, but it’s still a pretty average experience. Amazon can easily improve their fashion retail experience and combine it with things it is really good at — like overall customer experience, after-sales service and easy shipping.
Amazon’s considerable computing capability, for example, has already been turned to fashion and the analysis of enormous amounts of shopping data. The company has also made a “disproportionate” investment in photography, said Cathy Beaudoin, the president of fashion for Amazon. The photography studio, in Kentucky, can shoot more than two images a minute, allowing the company to post new items daily on the Web that were photographed hours earlier.
Instead of static product images, models spin and pose to show off the clothing. The model’s body measurements and the clothing measurements are provided to help with sizing. And shopper-friendly advice — does the size 8 shoe run big or small? — is prominent.
Bezos seems to be pretty serious about this whole fashion thing. A decidedly unfashionable dude, he was named the honorary co-chair of the Costume Institute Benefit at the Metropolitan Museum of Art in New York City. Anna Wintour, the legendary editor of Vogue was one of the three architects of the evening, advised him to wear a pocket square with his Tom Ford tuxedo, The Times reports.
7 thoughts on “Why Jeff Bezos' latest plan should scare fashion retailers”
I think that you mean Michael Kors, not Michael Coors. One would be mid-to-higher end fashion, while the other would be low quality beer.
I don’t envy the retailers who will end up battling Amazon. One possible result will end up being the end of Amazon’s sales tax free status in so many states. When it was just books that was one thing. Now they’re going after merchants on main street that politicos may actually shop at.
Haha, Michael Coors? Didn’t know Bezos had the power to merge high fashion and rocky mountain taste like that.
Don’t forget that they already have the high end with one of their subsidiaries: shopbop.com – which is growing nicely from what little I know about the company (they are based in Madison, where I live). So the model of a great user experience coupled with fashion is already present in-house.
I wounder if it will turn into the BestBuy/Amazon model of “Browsing at Nordstrom, engage with their staff, finding what I want, then going home and buying it without tax on Amazon”.
America seems hell bent on taking away the beauty, excitement and luxury out of a well made purchase. I’m no Luddite & do not begrudge anyone the convenience of technology but isn’t there something to be said about finding something beautiful and paying for it outright (with no intention of return) and gladly paying the sales tax to support the state that is still concerned with small business?
They’re clearly edging into more of an experience shopping here.
It’s not like Macy’s competes on price. Might be a better fit for Zappos.
We already use MyHabit for most of our child-related clothing purchases and find the experience enjoyable. I can see an immediate problem for Macy’s, but do not think that Neiman’s has anything to worry about in the near future.
For some, the store from which an item is purchased serves as a prestige factor. In addition, there are rewards programs and close relationships between customers and their sales people and tailors.