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Amazon Takes On the Fashion Supply Chain

Posted by Josephine Grace Aguilo | March 14, 2016

Almost anything is available on Amazon—now get ready to wear their clothes.

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The e-commerce giant recently launched 1,800 fashion products, under seven trademarked brand names, ranging from men's suits to children's apparel to women's clothing.

Hoping to To Fill Gaps

Amazon is not new to fashion. It has been selling apparel since 2002, and has slowly been making further in-roads to the fashion industry. In fact, it has acquired fashion sites such as ShopBop, MyHabit and East Dane. It listed 30 million items in its fashion division at the end of 2015, a 91% increase from 2014. The company also sponsored the 2015 New York Men's fashion week for the first time. According to a report by Cowen & Co, Amazon is expected to surpass Macy's as the number 1 seller of clothes in the United States as it is expected to sell $27.77 billion worth of apparel. Despite the company's bigger presence in the fashion world, Amazon has trouble getting some high-end fashion brands to sell their goods on their website. Amazon Fashion Vice President of Clothing Jeff Yurcisin stated that he hopes to compensate for some brands' decision not to sell on Amazon by offering similar items at a lower price.

 

The Next Fast-Fashion Giant?

Analysts see the potential of Amazon to be a leader in “fast-fashion”— low-cost clothing collections based on current trends, a model that Target, Zara, Forever21, and H&M understand. Amazon's competitive advantages should not be overlooked. First, Amazon is aware of the challenges with supply chain operations; for more than a decade now, the company was able to handle quick warehousing and delivery for its brands with its well-developed delivery network and regional fulfillment centers that has allowed the company to cut shipping costs. Add in the fact that Amazon will launch its own delivery and logistics business that will compete with Alibaba, FedEx, DHL, and UPS. Amazon also knows how to innovate. The online giant owns a robot company that speed up the pace in its warehouses, an advantage that is difficult to duplicate. Third, Amazon is number 1 in customer service based on the National Retail Federation Customers’ Choice Awards. Some of the words used by customers to nominate Amazon are: "fast", "efficient", "hassle-free", and "free-shipping”, which are enough to capture sustainable customer loyalty.

Amazon’s entry to the fashion industry is not a surprise. Given the fact that the company has built itself overtime and it targets the right segment of the market -- it is fair to say that company is on the course to become the largest fashion retailer in the US.

 

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