Amazon Fashion fostering over 100 private-label brands
On October 24 to 27, Berlin hosted Destination Denim, the first denim-dedicated event staged by Amazon Fashion. It was the opportunity for journalists from the international media to meet John Boumphrey, vice-president of Amazon Fashion Europe. To say that the US web giant is discreet about its fashion strategy, in Europe and elsewhere, is at best a polite euphemism. Amazon’s silence is all the more threatening as fashion labels and retailers, already wary about Amazon as a competitor, are now worrying about the deluge of private-label apparel brands launched by the web giant. These labels have been the subject of several case studies, highlighting how Amazon is potentially a direct competitor to the partner brands it hosts on its sites.
For the time being, as Boumphrey indicated, the number of private-label brands introduced by Amazon Fashion in Europe is only five. “We began with Truth & Fable, a label of women’s occasionwear, notably evening and cocktail dresses,” Boumphrey told FashionNetwork.com. “We then launched Find, which features a more directional, street-style range. It was followed by wardrobe essentials line Meraki, the Iris & Lilly lingerie label and finally Aurique, Amazon’s athleisure and sportswear brand,” added Boumphrey.
However, besides the five private labels introduced in Europe so far, Amazon has another 103 own apparel brands worldwide, giving an idea of the fashion firepower it could eventually unleash in Europe. And this array of private labels must not be confused with the other 105 brands that consulting firm Gartner tagged as ‘Amazon Exclusive’ last March. The latter are third-party brands which, outside of their own bricks-and-mortar and digital stores, are committed to selling exclusively on Amazon.com, giving the web giant the opportunity of boosting its range of exclusive brands at a lower cost. Fashion is central to Amazon’s strategy, since 48% of private-label and exclusive brands featured by the US site belong to this category.
A figure that might partly explain why the group is so quiet about its plans in the fashion category. Between 2014 and 2016, Amazon launched five of its own fashion labels, then another 54 in 2017 and a further 44 since 2018. Some of these are limited to specific markets, but they all share the same development model, indicating that the range is liable to expand. “As it does in the USA, Amazon is carrying out a concerted effort in Europe to strengthen its leading private-label brands,” said Gartner Consulting, adding that “the fundamentals defined by Find serve as a platform to expand into new categories, most recently cosmetics [on October 24, Amazon Europe launched its own beauty brand Belei].”
Labels positioned in the entry-level and mid-market segments
One of the issues is the market positioning of Amazon’s labels, and how the online giant decides on it. “Our marketing model is designed to offer consumers choice, value and convenience. When we ask our customers what they want, the answer is ‘more products, more styles, more colours’,” said Boumphrey, adding that “the reason why we launch these private labels is that we regard and plan them as complementary [to other labels featured on Amazon]. With the overarching aim of offering good value for money.”
Actually, price-positioning is key in the role played by Amazon’s private-label brands. As Gartner Consulting found last year, these brands are almost systematically positioned in the entry-level and mid-market segments, at the lower end of each category's range, in the ‘blank space’, magically identified by big data, that is left by other featured brands.
This segment was mapped more accurately by e-commerce data specialist Marketplace Pulse, which scrutinised 10,000 products by Amazon's own brands across all categories on Amazon’s US website. Marketplace Pulse found that 49% of the products analysed sold for less than $20, while 12.1% sold for over $50. Even more intriguingly, 89% of these brands featured less than one hundred SKUs, with 25% of them actually having less than 10. Altogether, 47.7% of the private-label brands analysed belonged to the fashion, footwear and jewellery categories.
“Several [of Amazon’s own ] brands, notably in the apparel category, target a specific type of customer or respond to market demand for a specific type of product,” said Juozas Kaziukénas, author of the Marketplace Pulse report, who also underlined Amazon’s ability to order in bulk to keep prices down. “As a result, many of these brands are small in size. On the opposite side of the spectrum, generic brands like Amazon Basics are trying to offer a range of thousands of products in order to gain the customers’ trust with one brand only,” added Kaziukénas.
A price-based war
Two types of private-label brands emerged from the analysis. One consists of brands that clearly spell out their provenance, such as home equipment brand Amazon Basics, jewellery brand Amazon Collection, and the Amazon Essentials menswear and womenswear label. Other brands are rather nondescript, with names like Simple Joys (childrenswear), Goodthreads (menswear), or Daily Ritual and Lark&Ro (womenswear). The latter type of brands are reportedly less successful than the former, and are designed primarily to appeal through value-for-money rather than brand reputation, like the food private labels of mass-market distribution chains.
This didn’t stop Amazon's private labels from building some brand cachet for themselves. A survey carried out last year by Coresight with 1,700 apparel consumers from the USA (of whom 45.9% bought fashion products on Amazon in the same year) found that 18.8% of interviewees said they were interested in Amazon’s own-brand range of fashion and footwear products. Indeed, 11% of interviewees had bought Amazon Fashion products.
Young people aged 18-29 were the most interested in these private labels, as well as in the Prime Wardrobe feature, and also in the possibility of Amazon Fashion opening a series of brick-and-mortar stores. Although the same consumer segment was the least keen in claiming an Amazon brand as their favourite label.
Rather than a must for trend aficionados, Amazon Fashion is still largely regarded as a low-cost option. Whether searching for Amazon labels or third-party brands, 48% of customers actually browse Amazon Fashion looking to pay less than elsewhere. According to the Coresight survey, 32% of interviewees stated they turn to Amazon Fashion chiefly for the price, while only 11.5% do so for the trends it offers.
Partner or competitor?
However, given the spate of own labels it has spawned, isn’t Amazon Fashion afraid of being increasingly regarded as a competitor? Not at all, according to Boumphrey. “We think that Amazon is a wonderful marketplace for brands, which tell us they appreciate the opportunity of reaching out to our huge audience. We are also developing specific tools to support [client] brands in their growth,” he said.
Nevertheless, it seems that consumer purchases on Amazon Fashion in the USA are going directly to the detriment of other market players. The US consumers interviewed by Coresight stated that the amounts they spend on Amazon are now encroaching on apparel budgets previously allocated to retailers like Target (according to 30% of the panel) or Walmart (for 24.9% of the panel), or to brands like Old Navy (16.6% of the panel), Gap (8.1%) and Forever 21 (7%). The same encroachment is likely to occur in all other regions targeted by Amazon Fashion.
Diffidence dominates in Europe
This is why Amazon is almost always mentioned as a threat in forums dedicated to fashion retail. This is true in the USA, where Amazon is now said to be the largest apparel distributor, and where the American Apparel and Footwear Association is sounding alarm bells about the huge number of counterfeit products appearing on some of Amazon’s sites. And the same is true in Europe, where Amazon's growing influence is monitored by retailers and pure players alike. Amazon Fashion Europe’s silence about its plans is of course far from reassuring for these operators.
It was impossible to learn anything about Prime Wardrobe's deployment in Europe, as Boumphrey simply enthused about its launch in the UK last year, and in Germany within a month. “The idea is to bring a fitting room into people’s homes,” said Boumphrey, talking about the Prime Wardrobe boxes, which contain a selection of products; consumers pay only for those they keep, while returning the rest for free. In the meantime, Amazon continues to test on-demand production with The Drop, a range of items designed by influencers and offered for sale for only 30 hours, or until the total number of products available has been sold.
Last year, Amazon put up for sale some 23,000 different products with its 406 private-label and Amazon Exclusive brands, according to Marketplace Pulse. These items generated nearly 1.4 million customer reviews, giving them a strong position in the ranking of Amazon’s internal search engine. A search engine that, according to the 'Enabling Experience-Driven Commerce Anytime, Anywhere' report of 2018, is now more widely used than Google by US consumers searching for products on the web.
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