Next? Amazon Branded Stores
The world does not need another brand of anything, and even more to the point, more apparel brands. However, Amazon Fashion VP and CEO of its Shopbop unit, Jeff Yurcisin, spoke at the recent WWD CEO Summit and said Amazon will once again defy gravity and launch its own brand or brands into the overstuffed mess of the apparel marketplace.
Well, why not stuff another ten pounds of s*&#t into a five pound bag? But, wait a second. This is Amazon we’re talking about, the killer of the publishing world, the hijacker of electronics and the uber-disrupter and price-cutting monster of practically every consumer facing business. So, why not attack the apparel business?
Strong indications that Amazon was going to step up its efforts to establish a more dominant foothold in fashion occurred in 2012 when Jeff Bezos was quoted in the “New York Times,” “It’s Day-1 in the category.” He went on to say that “…the company was making a ‘significant’ investment in fashion to convince top brands that it wanted to work with them, not against them.” At the time, they were focused on signing on luxury and designer brands such as Michael Kors, Vivienne Westwood, Catherine Malandrino, Jack Spade, Tracy Reese and many more.
Not so incidentally, Bezos’ statement and the buzz around it was accompanied by the optics of Bezos, as honorary chairman and sponsor, attending the Costume Institute benefit at the Metropolitan Museum of Art – plus live-streaming the gala. Bezos rarely attends events of any kind, to say nothing of dressing up in the Tom Ford tux he wore. I guess he wanted to punctuate his interest in the world of fashion.
From Optics to an Amazon Apparel Brand
Will the Amazon name actually be on the label of apparel? Or will they choose other names as they have done with the brand Pinzon for home and kitchen items or Strathwood, a line of patio and outdoor furniture? Or, might they use another configuration as with AmazonBasics for cheap electronics? However, it’s kind of difficult to digest an Amazon label on a fashionable dress. Consumers’ value perception of the Amazon brand is that it stands for everything at the lowest possible prices. From the beginning, the brand has never been associated with fashion or style.
This raises another question regarding what consumer segments the brand will be targeting. According to Yurcisin, they will be looking to fill the white spaces — those apparel categories and consumer segments that are not being served by their third-party brands and retailers. Yurcisin said, “When we see gaps, when certain brands have actually decided for their own reasons not to sell with us, our customer still wants a product like that.”
Another predictive note that would support Amazon’s more aggressive pursuit of growth in the apparel category is the report by financial services firm Cowen and Company that forecasts Amazon surpassing Macy’s to become the top seller of clothing in the U.S. by 2017.
Uniquely Differentiated Amazon Strategy
Actually, filling the white spaces could be a brilliant strategy for Amazon, and one they could uniquely implement. It’s a well-known fact that Amazon has aggregated, analyzed and put to use, down to a “gnat’s eyelash,” more data on each and every one of its consumers than any other retailer on the planet. So they can quickly identify popular products to brand that third-party brands have either dropped or stopped selling through Amazon. They can also efficiently spot opportunities to satisfy underserved consumer desires.
Furthermore, brands and retailers operating on Amazon’s site often critically chastise Amazon’s ability to identify and copy best-selling products to sell under its own private labels. This practice is nothing new in the traditional world of retailing. However, Amazon can do it more accurately and quickly due to their mastery of big data.
Next Up: Chain of Amazon Apparel Stores
I predict that once Amazon has successfully launched an Amazon private apparel brand, they will quickly move to open physical apparel stores that will resemble showrooms. Several factors play into Amazon’s probable success as a brick-and-mortar retailer. Its superior accumulation and use of personal data can mitigate the fact that over 40% of apparel purchases online are returned due to bad fit by preselecting appropriate sizes for existing customers. We know that consumers like to touch, feel and try on apparel. So an offline Amazon would benefit from the advantage that brick-and-mortar retailers gain over pure e-commerce sites. Research has found that consumers having more than one channel to shop are spending three to four times as much as those with only access to one.
So just as Amazon is opening a physical bookstore in Seattle, knowing precisely what the local reading preferences are in the store’s trading area, they will have no doubts about using the same formula for opening physical stores.
And as I’ve stated before, these showrooms will be merchandised with precisely the apparel that appeals to consumers in the neighborhoods it serves. Once Amazon has achieved national geographic coverage of its distribution centers and the ability of same-day delivery, the showrooms will likely be narrowly assorted with sizes and samples for try-on. In-store iPads will be available for ordering the right size, color and style featured in the showroom or from any of Amazon’s total inventory.
If a consumer first shops on Amazon’s site, and spots a sweater she likes but wants to feel the fabric aesthetic and try it on, the site will indicate where she can access the nearest Amazon showroom. While in the showroom, she will likely make an impulse purchase of something else she wants. Thus, the omnichannel advantage kicks in for Amazon.
Get Nadia Back
Lastly, Jeff Bezos could re-hire Nadia Shouraboura, (if she would be willing to come back). She left Amazon to launch her own brilliant retail model called Hointer. The Hointer model could provide a perfect synergy with Amazon’s personalization capabilities. Nadia’s credentials started with a Ph.D. in computational geometry, which I’m told is the foundational discipline for robotics. That is the science of using a computer to move objects through space (read: the distribution of goods from one place to another, to get the right product and right amount to the right place at the right time, and quickly). So early-on, she headed up global fulfillment technology and the complex supply chain for Amazon, spearheading one of the most powerful global distribution and logistics machines in the world.
So the Doctor is no slouch when it comes to computational geometry, and she had a vision for Hointer: “I wanted to bring the efficiency of online shopping into the physical store,” she said, essentially, combining the best of both worlds. She added, “There’s a very beautiful part of retail, the beauty of the store and the fun that people have when they go to the store, but there is a part that’s really old and hasn’t changed much. It could be a great experience if they added great technology to it.”
Without getting into the weeds of the Doctor’s technology wizardry, she and her team created an end-to-end software platform that enables the a specific showroom model and great new shopping experience.
The showroom consists of one sample of as many styles of jeans, shirts, and tops as Hointer wants to market. The shopper sees a style she likes and she simply downloads the Hointer app and scans the e-tag on the product. It triggers a visual of the garment on a celebrity on the mobile device, then allows the shopper to tap on a size and color choices. The shopper is immersed in a digital experience immediately. But the big aha moment that is that the selected item(s) will arrive via a chute into the shopper’s designated dressing room in under the 30-second customer tolerance level. The goods are “beamed” (so to speak) into the dressing room from an uber-efficient “micro-warehouse,” as Shouraboura calls it, (a fraction of the size of traditional DC’s), sitting behind Hointer’s showroom. Her “secret sauce” is a combination of micro-robotics and human-powered logistics processes.
Shouraboura was quoted, “In a traditional stock room, the customer is going to have to wait five minutes for somebody to fetch the item. At Hointer, everything is powered by technology, from how the micro-warehouse is organized to how its items are packed. The technology knows all of the items and how to retrieve them and it prioritizes tasks. It’s a very efficient, very compact warehouse that has the ability to respond to a customer request very quickly.”
Items that don’t fit or are not preferred can be deleted from the shopping cart and dropped into an outgoing chute that sends the stuff back to the warehouse. If the shopper wants to try on a different size while in the dressing room, she just taps on the app and the additional items will appear in the chute in seconds. The items are then purchased by swiping a credit or debit card. If shoppers so desire, they can enter, transact and leave without ever connecting with an associate.
On repeat visits, since the shopper’s credit card is already on file, she can exit the store without even swiping their card. The app knows what she left with and will automatically charge her.
“We want a zero-action purchase,” Shouraboura says. “It’s not ‘click and you’re done.’ We want no clicks.” Go here to read the full “Robin Report” article on Nadia Shouraboura>> .
So the Hointer model could be the perfect model for Amazon showrooms. In fact, when launching Hointer, Shouraboura audaciously proclaimed, “Soon, every item in the world will be sold like this. It will be bigger than Amazon.”
Wouldn’t it be a huge irony if Jeff and Nadia got together again, this time with her performing her brilliance on the front end of the business where the art and science of retail converge? This move would accelerate Amazon’s innovation in the brick-and-mortar space…on steroids.