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Amazon is using Prime Day this year to try to win on fashion

On the morning of June 25, megamotives Arielle Charnas, who has collected more than 1.2 million followers on Instagram and has her own clothing line Something Navy on Nordstrom, announced when Amazon's Prime Day would be kicked this year. [19659002] It was a not-so-subtle signal of what Amazon hopes to achieve with its yearly appointments infidelity this year. It will still be a bigger name in fashion.

When you think of Prime Day, you can think of offers on Instant Pots and Amazon Echo devices – not half the dresses and designer heels.

But the market for clothing and accessories globally is worth more than $ 1

trillion, so Amazon clearly sees a lot at stake here. It uses Prime Day to tout fashion offers. And it has also had a number of new measures and links with fashion influence – beyond Charnas – to show that it is trying to establish the site as a place to shop for more than just the basics. It hopes to take market shares that other clothing retailers are struggling with. And it has not been afraid to experiment.

When it comes to selling clothes, Amazon is very good at "boring things," said Wells Fargo, analyst Ike Boruchow.

Wells Fargo has estimated that Amazon generated approximately $ 35 billion in sales in 2018 related to clothing and footwear, a total of $ 232.9 billion in sales. For context, Lululemon sold $ 3.3 billion last year, while Gap Inc.'s net sales were $ 16.6 billion, and Costco has said it generated $ 7 billion in sales in 2018 from clothing and footwear. Amazon dwarfs all of them, even combined.

However, many of these Amazon transactions stem from "commoditized" clothing such as white T-shirts, jeans and underwear, according to Boruchow. Amazon's internal brand AmazonEssentials is popular for that kind of thing – selling a 4-pack women's camisoles for $ 24.50, or a 10-pack cotton crew sock for kids for $ 9.45.

Bezos vision for fashion

CEO Jeff Bezos often told colleagues back in the early 2000s: "To be a company of two hundred billion dollars, we must learn to sell clothes and food," according to the book profiling Amazons ascension, written by Brad Stone, called "The Everything Store: Jeff Bezos and the Amazon Age." At that time, Bezos set its target based on the size of Walmart's sales, Stone said.

Amazon surpassed $ 200 billion in annual sales for the first time in 2018. This figure includes revenue from other businesses such as Amazon Web Services, not just retail. Meanwhile, Walmart's total revenue was $ 514.4 billion for his last fiscal year.

Amazon is trying to sell more fashionable clothing today as mall-based clothing retailers such as Victoria's Secret, Chico's, Dressbarn's owner Ascena Retail Group and Forever 21 closing stores and struggling to pull buyers . And department store chains like J.C. Penney and Macy's, who have historically relied on their clothing companies to grow sales, are shrinking. It has been estimated that end-of-life campaigns can reach 12,000 this year and put in a new record, with many of them coming from clothing-based businesses such as Charming Charlie and Charlotte Russe.

This Prime Day, which started Monday at 3:00 ET and runs for 48 hours, will set the Amazon's final effort to be a major fashion destination for the test.

Lessons from Prime Day

Prime Day 2019 will feature great deals on staple items, such as sweaters and socks, but also promote the Amazon's own fashionable items to highlight the reach of the clothes it offers.

Before Prime Day this year, Amazon pushed out deals for as much as 50% of leggings, accessories and more, said Jacquelyn Cooley at analytical intelligence 1010 data. Although fashion items were not on the top day list for Prime Day 2018, they may very well be this year, considering how the deals go out, she said.

On Prime Day, Amazon is 30% of Calvin Klein and is about some of their own exclusive devices.

On Monday morning, the buttons of the Amazon Goodthreads line were 30% off, their own Lark & ​​Ro dresses were 50% off, and some Calvin Klein and Adidas merchandise were 30% off. The majority of the offers appeared to be for their private labels, but not for big name tags.

Overall, this year's Prime Day could bring in as much as $ 5.8 billion globally, up from an estimated $ 3.9 billion in sales in 2018, when the event ran for just 36 hours, according to Coresight Research.

Beyond Prime Day

But a fashion store is not built on a two-day sales event. Amazon has apparently been collecting an army of fashion influences on social platforms like Instagram, bringing with them tens of thousands of followers together, to post posts with taglines such as "In #FoundItOnAmazon."

Women including Paola Alberdi, Sierra Furtado, Emi Suzuki, Leonie Hanne and Patricia Bright each have over 1 million followers on Instagram. Now they all share something else. They work with Amazon to promote the platform as a fashion destination – along with their posts on Reformation, Revolve, Channel, Rebecca Minkoff and other trendy and luxurious labels.

One of Amazon's new influenza-focused ventures, called "The Drop" went live in May.

With The Drop, Amazon collaborates with fashion influences such as Bright, a British-based vlogger known for posting elegant looks and outfits on her Instagram, and Furtado, an LA-based YouTuber known for her more relaxed style. These partners have designed limited clothing and accessories collections that Amazon will then create internally.

It's a barely element involved because buyers only get 30 hours to trade each immigrant's collection before the next is lost. A text alert notifies customers when a drop occurs. Amazon also says on its website that it only makes limited amounts of each drop, so the products are expected to sell out.

The drop sounds very like a fashion trader Zara strategy, which has found success by never doing the same thing twice, just delivering limited amounts of merchandise to stores and rotating stocks often to keep shoppers coming back again and again to browse clothing of clothing. Amazon seems to have its own staff at this approach.

To be a company of two hundred billion dollars, we must learn to sell clothes and food.

Amazon also has its own subscription box program related to Stitch Fix called Prime Wardrobe, where users can pick out a handful of clothes, try them at home and pay only for what they want to keep, send back what they don't want.

And just last month, it launched an artificial intelligence tool called "StyleSnap." Within the Amazon app, users can either take a photo or upload an existing image of an outfit, and StyleSnap will use machine learning to "match the look" with clothing for sale on Amazon.

Making Shopping Joy

Nevertheless, analysts and fashion experts agree that navigation of Amazon's clothing website is often more difficult than it is pleasant. Website design is not desirable for discovering new things or new brands. Most people who shop at Amazon go there and know exactly what they are looking for. With fashion, Amazon has to figure out how to make the experience more fun.

It is also reluctant to collaborate with Amazon because they lose autonomy over pricing and marketing, the founders have told CNBC.

At all, it doesn't have I haven't been easy for Amazon to lure popular fashion brands to sell there. Most product lists on Amazon's fashion site are from third parties. This is probably one of the reasons why Amazon has been incubating so many of its own clothing and accessories lines internally. It has more than 60 today, according to a tracking of TJI Research, such as Core 10 for women's leggings and sports bras, and Goodthreads for men's khaki pants and button-down tops.

More clothing sales changing online

Separate data from the eMarketer show Amazon is on the right track to obtain nearly 30% of the market for clothing and accessories sold online in the US this year, up from 22.7% , or about $ 18.38 billion in revenue, in 2016.

] But remember, US e-commerce sales still represent less than 15% of total retail, according to eMarketer. The majority of purchases are still in brick and mortar stores.

RBC Capital Markets retail team predicts that 40% of sales in the US will take place on the Internet by 2023, up from nearly 30% today. Currently, RBC says e-commerce accounts for about 20% to 25% of clothing and accessories sales for most retailers. For specialty dealers, it is close to 29%, for warehouses it is about 24%, and for off-retail retailers it is only 2%, according to the company.

And in a survey of 1,000 consumers in the United States aged 18 to 34 released in June, RBC found over 50% of respondents that they are starting to search clothing online on platforms that carry many brands, rather than directly from a single one. marked website. It may end up working well for Amazon.

"We believe that Amazon could have a material presence on fashion, over time," RBC said in a new comment to clients. "That said, we believe that Amazon will need to respond to changing style trends at a faster pace, especially with its own private label inventory. … Amazon can also improve its browsing experience for fashion customers – try searching for" women black dress "and you get over 350 options."

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