While their stores fall prey to the Amazon phenomenon, a growing number of well-known American apparel brands are setting up shop on Amazon.com.
Apparel retailers such as Chico’s, Nike, Under Armour, Lands’ End and Levi Strauss & Co are all distributing products directly through Amazon. This gives them access to the ecommerce behemoth’s more than 100 million Amazon Prime members as well as its advanced delivery network. Chico’s started last May, and has embraced the arrangement. The women’s clothing retailer is expanding its branded micro site on Amazon while it considers closing hundreds of physical stores.
“The word that’s most commonly used with respect to Amazon from a brand perspective, and also retailers to some extent, is ‘frenemy,’” said Kate Delhagen, an independent consultant and former Senior Director of Global Digital Business Development at Nike. Many accept partnership with Amazon as a realist’s adaptation to a radically changed retail industry. As Sarah Rasmusen, Senior Vice President of E-Commerce at Lands’ End remarked, “We’d be ostriches sticking our heads in the sand if we didn’t take heed and pay attention to where customers are going.”
Both Chico’s and Lands’ End said the platform is a useful customer acquisition tool and that it is not pulling customers from their own ecommerce sites. But some retailers are put off by the loss of a direct customer relationship. “You don’t know where your customer’s coming from, you don’t know what they’re clicking on once they get to the site,” said Melanie Travis, founder of swimwear brand Andie, which is not sold on Amazon.
The risk, according to retailers and industry analysts, is that Amazon could use real-time data on its partners’ customers to benefit its own private label apparel brands, and ultimately take market share from them, Reuters reports. The European Commission has launched a preliminary antitrust investigation to determine whether Amazon might “gain access to competitively sensitive information about competitors’ products which it could use to boost its own retail activities at the expense of third-party sellers on its marketplace,” a spokesman said.
Amazon denies any such misuse of seller data. The company did not comment specifically on the EU’s early-stage probe, but an Amazon spokeswoman said the company’s private label products account for about 1% of its total retail sales. “Our private brands supplement the great assortment that our selling partners provide,” she said.
This is not to say Amazon doesn’t have big plans for its private label apparel. Former Amazon director Mike Pazak said the company has set a goal of being a leader in the apparel industry. It makes sense. Higher-income women comprise an important segment of Amazon’s customer base, according to Matt Sargent, Senior Vice President - Retail at consulting firm Magid.
Amazon is certainly growing its presence in the apparel industry. TJI Research notes that by the start of 2019, it had 109 of its own brands in the clothing, shoes and jewellery categories, representing a more than five-fold increase in two years. Last year, both Morgan Stanley and Wells Fargo predicted that Amazon was on pace to become the top U.S. apparel retailer this year. Analysts had been saying this for years, and in 2019, Amazon unseated Walmart as the biggest seller of apparel in the U.S., according to a Coresight Research survey.