Amazon is coming for your millennials, and it’s bringing inexpensive clothes and free shipping.

 

In February, the online retailer quietly launched seven new private label brands, with offerings that include men’s, women’s and children’s clothing, men’s dress shoes, and men’s and women’s accessories. Prices are eminently affordable, with the most expensive pieces topping out at just under $90.

 

At a time when retail stalwarts are suffering losses and announcing store closures—Kohl’s, Wal-Mart, and Macy’s—Amazon is clearly hoping to buck the trend. For industry experts, Amazon’s timing couldn’t be better.

 

“I’m surprised it took so long for Amazon to do this,” said Adheer Bahulkar, partner in the retail practice of A.T. Kearney, a global strategy and management consulting firm. “Amazon has a massive reach, and it’s the first site that U.S. shoppers visit. Plus, Amazon can look at shoppers’ browsing history, see why they buy and when they buy and how they buy, and then decide what they can build for their customers. It’s a very unique advantage. So if not now, when? They’re only losing market share by waiting.”

 

Past perspective

 

Amazon, which did not respond to requests for comment, has been building up to private labels for a while. Since entering the apparel and accessories categories in 2002, Amazon has become progressively more aggressive, acquiring Shopbop in 2006, Zappos in 2009 and discount designer sale site MyHabit in 2011.

 

Over the next few years, Amazon worked to steadily increase its fashion presence. According to Internet Retailer, investment banking firm R.W. Baird & Co. estimates that total clothing and accessories SKUs, including what’s sold by marketplace sellers, accounted for 6% of all Amazon products as of Q3 2015, growing 87% since Q3 2014. Furthermore, Women’s Wear Daily—citing KeyBanc Capital analyst Ed Yruma—reported approximately 1,800 SKUs for Amazon's new private label brands alone. In 2015, Amazon also became a sponsor for the CFDA’s first Men’s Fashion Week.

 

Then there’s Amazon’s new fashion show, "Style Code Live," which combines interactive viewing and chat features with random celebrity appearances (singer Meghan Trainor and actress Keri Russell made appearances on the first episode), styling tips, and of course, a shopping push.

 

For those who have been tracking Amazon's progress, this is all part of the plan. The e-retailer is not actually new to private label product, but Keith Anderson, vice president, strategy and insight at Profitero, an e-commerce analytics consultancy, says that fashion in particular represents an important piece of the puzzle for Amazon, a company that tends to invest with what he calls "great conviction."

 

 

Image: purple prom dresses

 

"Amazon has been courting fashion shoppers for years": Keith Anderson

 

“Amazon has been courting fashion shoppers for years,” said Anderson. “It hasn’t perfected the model, but it does have a massive, loyal shopper base and high volume of traffic.”

 

Anderson says that the success of Amazon programs such as Prime and Pantry have positioned the retailer as a trusted source of everyday essentials, including fashion. “Fashion is among the handful of massive, high-margin discretionary categories that Amazon has yet to deeply penetrate," he said.

 

Anderson believes that persuading consumers to cross the digital aisle from everyday consumables to fashion apparel will improve both the lifetime value and profitability of Amazon's most loyal shoppers.

 

“It may not crack the code on fashion overnight, but given fashion’s strategic importance, Amazon is likely to be persistent and willing to iterate on its approach until it succeeds,” Anderson said.

 

Positioned for success

 

The question is how long, exactly, it will take for Amazon to win at what has notoriously been a difficult market to crack. A.T. Kearney's Bahulkar thinks that Amazon already has many of the core components necessary to create a viable fast fashion presence.

 

“If you break down what fast fashion is and why it succeeds, it’s because it’s cheap, it’s basic, it’s on time, and it’s on trend,” said Bahulkar, who believes that Amazon will easily be able to source affordable fashion using channels similar to H&M and Forever 21. He also thinks that Amazon’s extant supply channel will be a big advantage, calling its shipping prowess “leaps and bounds ahead” of other retailers.

 

Bahulkar additionally says that brand names are less important for younger customers than they used to be, with apparel brand loyalty dropping 15% from 2008 to 2013. This will help Amazon navigate potential hurdles associated with its unfashionable background, as long as they focus on the product.

 

“People surveyed say they think about product first, and not brand first," said Bahulkar. “I expect that trend to continue. And even Gap and Abercrombie have dramatically reduced their logo-driven merchandise.”

 

“Millennials don’t give a damn about brands anymore”: Robin Lewis

 

Other experts agree. “Millennials don’t give a damn about brands anymore,” said Robin Lewis, CEO of The Robin Report, a retail strategy publication, and co-author of 'The New Rules of Retail: Competing in the World’s Toughest Marketplace.' “Brands aren’t a destination for them, and they’re not loyal to brands. They’re looking for new, now, and that comes before the brand name.”

 

Lewis also said that he doesn’t believe Amazon is concerned about the costs involved in developing its fashion category.

 

“For them, to get this and up and running, they don’t have to fund malls to lease space or find brick and mortar stores,” he said. “Maybe they tweak their supply chain and hire people and find styles. But there’s not a lot of investment. Though [Amazon founder and CEO Jeff] Bezos has dipped his toe in this fashion water before, and not been successful, I think this time it will succeed.”

 

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