Being a stranger in the world of fashion
Amazon not for nothing the years have lost hundreds of millions of dollars for free delivery and returns in the following year, the company will become the largest American fashion retailer. Clothing is one of the most profitable products. It is profitable to sell, but to make is more profitable. Therefore, in early 2016, Amazon launched seven private fashion brands. “The secret” explains how the company Jeff Bezos captures a new market.
“To become a company that is worth $200 billion, we must learn how to sell clothes and food” — these words of Amazon founder Jeff Bezos said in 2007. A special unit Amazon Fashion, the company has appeared only in 2012, but it is consistent with the style of Bezos.
In 2011, responding to a question in Wired magazine about why he invested $42 million in the development hours that can go up to 10,000 years, the founder of Amazon said, “If your investment horizon is three years, you are competing with a variety of companies. If your horizon is seven years, you are competing with a small part, because few companies look that far ahead. Projects for which Amazon takes, five to seven years. We sow the grain and stubbornly observe how they grow.”
Last year, Amazon earned on clothes to $16.3 billion In the comparable online revenue in the U.S. market never had, and companies that are still ahead of Amazon at the expense of offline retail, for several years been experiencing a crisis.
The largest American fashion retailer Macy’s, whose sales just five years ago was five times more than the apparel division of Amazon, and in 2015 amounted to only $22.2 billion, this year had to close 100 stores. Walmart has closed more — 269. Next year Amazon is projected to earn on clothes $of 27.77 billion and will leave the competitors far behind.
In 2016 every second American, intending to make a purchase on the Internet, first go to the Amazon website. Clothes, shoes or fashion accessory has already acquired over 40 million people. Only the company 285 million active users.
“To become a company that is worth $200 billion, we must learn how to sell clothes and food”
One of the main trumps Amazon in the struggle for customers is called Prime Now. For $99 a year, each participant receives free shipping for two days, access to Amazon Video and the Kindle library, trial subscription to the Washington Post, as well as free shipping 25 000 products of daily use within one to two hours with an additional charge of $7,99. By the middle of 2016 on Prime Now signed 63 million people. They spend almost three times more than other visitors.
Logistics has always been a major cost to Amazon. Just last year the company spent on its development $11 billion starting in 2016, she rented 20 Boeing 767 aircraft, bought 4,000 trucks, as well as built more than 100 logistics hub, ready to launch the “Global supply system”, which is an alternative to FedEx and UPS.
Seller No. 1
The Amazon Fashion Studio in London
© Brian Ach / Getty Images
R. W. Baird analysts estimate that by the end of 2015 in category clothing and accessories on the Amazon website there were 30 million items — items longer than electronic devices. In order to have time daily to do your directory for 3000 pictures of the clothes, the company opened in new York and London, two giant Studio.
Amazon is trying very hard to establish cooperation with representatives of the fashion world, but given the company it’s not easy. Of the 100 largest American brands, only 16 (including Calvin Klein, Michael Kors and Tommy Hilfiger)are presented in the online store Amazon officially, the rest through unauthorized intermediaries.
“Do I want to be in a place where people go for great deals on shampoos, books and products?” — Hana Ben-Shabat, an expert on the retail market of clothes of the consulting company A. T. Kearney, says that some popular brands still ignoring Amazon because the answer to this question in the negative.
If the fashion industry is always sought to sell the images, sensations, and aesthetics, then Amazon — the advantages and convenience (Amazon Fashion slogan is “Smart is beautiful”). In the fashion of the high price and scarcity of things add to her attractiveness, while Amazon is famous for its disregard for the profitability of your products and striving for maximum speed and optimize prices. To experiment with the price elasticity of the company seriously: if online clothing stores Kohl’s and Macy’s nenaudokite average 1.6 and 2.1 times per year, Amazon makes it nine times. The fashion world is more afraid that the increase in sales due to lower prices will erode the identity of their brands.
“Do I want to be in a place where people go for great deals on shampoos, books and products?”
To compensate for the lack of some popular brands, Amazon is quietly developing its own. Purchase history giant audience allows the company to see not only what most people are looking to buy, but also what they find. While seven brands (the Society New York, Franklin Tailored, North Eleven, Franklin & Freeman, James & Erin, Lark & Scout and Ro + Ro), under which the company offers 1,800 products, from office dresses to children’s clothing.
Vacancies in Department of own brands Amazon Fashion hint on what niche to aim the company: it required a brand Manager and merchandiser with “a strong understanding of products of the segments of the base clothes and fast fashion and ability to identify and capitalize on current trends”.
Fashion Amazon
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© Facebook / AmazonFashion
© Facebook / AmazonFashion
© Facebook / AmazonFashion
“Luxury has never been our goal,” — never tired of repeating, the head of Amazon Fashion Cathy Beaudoin. However, last spring there were rumors that the company intends to acquire the largest online store of luxury clothing, Net-a-Porter. Later for 3.2 billion euros it bought the Swiss holding company Richemont.
Amazon flirts with the world of high fashion by sponsoring important events like the first new York men’s fashion week or the Tokyo fashion week (Amazon Fashion Week Tokyo). The choice is always non-random. So, in the first case it was due to the fact that almost half of the sales Amazon Fashion accounts for men’s clothing and accessories, second — value Japanese market, which in terms of sales ($90 billion per year) is second only to American and Chinese.
Amazon is establishing relationships with young designers, organizing meetings and competitions for students from leading fashion schools, including fashion Institute of technology and Parsons School of design. For your Amazon Video companypeople the third season of the reality show “the Fashion Fund,” in which ten designers compete for a prize of $400 000 before the jury of the editor in chief of American Vogue Anna Wintour and head of the Council of American fashion designers Diane von fürstenberg. Finally, the company hired Vogue’s editor Caroline Palmer to create editorial content.
The spectacular conquest of fashion retail is just one of the many long-term moves of the party, which Jeff Bezos started to make Amazon the most expensive company in the world. And everything is in his favor. On 17 October 2016, the market capitalization of Amazon is more than $380 billion a year company ahead of Facebook, Exxon Mobil and Berkshire Hathaway, becoming the number four on the NASDAQ.
Cover photo: Bloomberg / Getty Images
