While it may not be impossible, it certainly is going to be painfully hard. It needs to work on its presentation.
Clearly Amazon, the world’s biggest retailer, has mastered the art of selling essential goods and groceries online. It wants to do more than just that. Its entry into the online music streaming market with its Music Unlimited and Prime Video services is likely to give stiff competition to Spotify and Apple Music.
But it’s not happy with just that. Amazon is now trying to enter the Everest of all markets – the impossibly difficult to enter fashion market. Although selling clothes is not new to Amazon, selling high-fashion retail ones is the next holy grail.
Amazon wants to be the marketplace which sells you the $12 Hanes hoodie as well as the $1,500 Louis Vuitton.
This February, Amazon has quietly launched the sale of 7 in-house bands. With this strategy Amazon may have tried to make fashionable clothing more affordable. It offers close to 2,000 clothing for women, men and children.
In order to generate more traffic for Gilt, it shutdown MyHabit. While the latter was its own, it acquired Gilt couple of years back. Both sites offer deep discounts for name-brand apparels. Much to their surprise, MyHabit users were told that they can now shop for fashion items in Amazon.com
In April this year, Amazon clarified this move by saying the decision was to “simplify” its offering while noting that fashion is one of its “fastest-growing” categories.
Armed with 300 million active users of which 63 million are paid Prime members who are likely to frequently shop on the site, it would seem very plausible if Amazon’s basic strategy revolves around its Prime members.
However, the more Amazon tries to push its way into the couture industry, pushback from existing players from that sector is inevitable.
With Amazon kicking off its $15 million advertising blitz earlier this month in an effort to brand itself as a high-fashion retailer, LVMH, the owner of Celine, Dior, Louis Vuitton, Givenchy, and several other luxury labels, stated clearly it doesn’t see itself working with Amazon anytime soon.
“We believe the business of Amazon does not fit with LVMH full stop and it does not fit with our brands,” said Jean-Jacques Guiony, LVMH’s chief financial officer, to investors during an earnings call last week. “There is no way we can do business with them for the time being.”
LMVH has its own distribution channels and for a luxury brand having full control of the retail experience is of paramount importance. In this light, Guiony’s statements are hardly shocking, although it’s not something that Amazon wants to hear.
As per sources familiar with the matter at hand, one of the reasons why luxury brands are wary of Amazon is because they don’t want to devalue their brands. After all it’s about being exclusive. Selling high-end couture alongside food items and toilet paper makes things rather mundane.
“As we saw several years ago when Louis Vuitton began producing some bags in larger quantities and offering lower priced options,” says Julie Zerbo, founder and editor-in-chief of The Fashion Law, “demand and sales dropped off quite significantly.”
She goes on to add, brands such as LVMH sell highly priced goods and thrive on the notion of exclusivity, something as “seemingly insignificant as selling on Amazon could be hugely detrimental.”
Secondly, brands want to avoid counterfeits like plague. A spokesperson for
Michael Kors said that the company does not sell its wares in any category through Amazon, “at this time”, so if you bought Michael Kors on Amazon, its very likely that it’s a counterfeit.
Earlier this year, Birkenstock, an upscale footwear designer, stated it would stop doing business with Amazon, citing an increase of counterfeit goods sale on the site. It also mentioned that the threat of “a constant stream of unidentifiable unauthorized resellers” was another reason for its decision.
In an e-email to its retail partners, David Kahan, Birkenstock’s CEO, wrote,
“Policing this activity internally and in partnership with Amazon.com has proven impossible.”
Last week, Apple filed a lawsuit against Amazon saying most Lightning cables and chargers sold on Amazon are fake. The suit claims these accessories are “poorly constructed” and “pose an immediate threat to consumer safety.” The products on Amazon’s site were sold as “Fulfilled by Amazon”.
“For luxury brands, controlling the chains of sellers is extremely important for maintaining brand image and exclusivity,” says Zerbo. “But they also need to ensure authenticity and quality, both in terms of the products themselves and the customer experience.”
Although it would appear that this is the end of the line for Amazon, it need not be: it’s just work-in-progress. To make its mark on the fashion industry, Amazon will need more than just $15 million and an ad campaign.
Cracking down on dubious third party sellers could be a knock on the door.