Amazon’s next big invention?

I think there’s so much opportunity for invention there,” Jeff Bezos recently said, when he was asked about Amazon’s interest in… wait for it… FASHION.

While traditional brick and mortar retailers struggle to connect and grow shopper’s mindshare, online shopping continues to boom across all categories, including fashion.  In this case, “fashion” is being defined as any clothing or accessory. Think: Suits to shorts, Boots to sandals, Necklaces to bracelets. Looking at Year-to-date (January – April) online fashion sales this year vs the same period 2014, you can see how quickly online fashion is growing:

Mary Meeker’s Annual Internet Trends Report succinctly captured the struggles of brick and mortars and the successes of online retailers by saying:

“Physical Retailers become Digital Retailers….Digital Retailers become Data-Optimized Physical Retailers”.  Think: Warby Parker… now a Retailer who sells more per square foot than Tiffany & Co, Lululemon or Michael Kors.

While most (not all) brick and mortars struggle to gain online success, companies like Amazon are helping buoy the growth in online fashion.

Amazon’s rapid growth in fashion sales is not necessarily surprising, but what is surprising is the pace of growth in fashion sales coming from Amazon Direct vs Amazon’s 3rd Party Sellers, more commonly knowns as Amazon Marketplace.  Below is a view comparing the rate of growth for these two sides of Amazon:






Historically Amazon Marketplace has been the #1 location for fashion sales online.  Third party sellers are able to easily sell their merchandise and Amazon provides the sellers tremendous reach.  To be fair, when you already have such a large share, it is difficult to continue to grow at such a high rate.  However, Amazon Marketplace is clearly not keeping up with the rest of the market.  Looking at the first four months of 2014, here are the five [5] largest fashion Retailers with their respective online share of dollars:

And here are the five [5] largest fashion Retailers January – April 2016 with their respective online share of dollars. Retailers in red have seen their shares decline vs the same period 2014. Retailers in green have seen their shares increase:


As Amazon continues to focus on providing more fashion content, consumers are clearly receptive to the idea of Amazon as a fashion retailer.  As a result, Amazon’s shift in merchandising has clearly worked and is capturing sales through their Direct channel, and appears to be taking those dollars away from the Amazon third party sellers (Amazon Marketplace).  One can only assume the profit margin for Amazon is higher through their direct channel than through their marketplace (traditional margin for marketplace is 12%).


To quote Mary Meeker, Amazon is indeed a “Data-Optimized” Retailer.  As Titans of the fashion landscape such as Macys and Gap continue to struggle to increase their market share, it will be interesting to see what role real estate and their physical stores play in each company’s success (or failure). 



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