The threat of Amazon private label apparel has already quietly arrived.
The company isn’t only building out a team to make private label goods, it’s already selling apparel and accessories under its own trademarked brands.
KeyBanc Capital analyst Ed Yruma noted the company has introduced at least seven private label fashion brands with about 1,800 stockkeeping units. Launched with little fanfare, the brands are: Franklin & Freeman, Franklin Tailored, James & Erin, Lark & Ro, North Eleven, Scout + Ro and Society New York. The brands sell goods ranging from men’s dress shoes, suiting and accessories to women’s casual and contemporary clothing, accessories, and children’s clothing. Most of the items are in the women’s dress and handbags line, called Society New York, which has 911 sku’s, and in Franklin Tailored, the men’s accessories line, 250 sku’s.
Contemporary women’s clothing line Lark & Ro sells dresses for $66.50 and tops for $31.41 and its Amazon Web store touts: “Practical yet polished, our wardrobe essentials are the perfect solution for those navigating busy mornings, a hectic work schedule, and a full roster of after-hours and weekend events. Our purpose is to simplify your life by serving up effortless style when you need it most.”
“Amazon will use private label selectively, which should both enhance the offering and induce traditional apparel vendors to sell to Amazon,” Yruma said in a research note. “Apparel is a large category that remains highly fragmented. We think the low barriers to entry, size and significant competitive set make this an attractive category for Amazon. While apparel is one of Amazon’s fastest-growing categories, more work must be done for the business to scale. We expect the challenges the company has faced in courting the fashion community to remain, but we think Amazon will continue to evolve its strategy. We believe greater brand cooperation with third-party seller restrictions and an owned brand approach (development of niche brands and private label) will be necessary to penetrate the apparel market in a more meaningful way.”
Yruma said the push into apparel, if successful, could help boost Amazon’s profits and contribute at least 25 cents to earnings per share in 2017. KeyBanc places the company’s 2017 earnings at $9.36 a share.
“Amazon is one of the most disruptive forces in retail and technology today,” he said. “We think it will continue to take market share and also benefit as total share accorded to e-commerce continues to grow.”
In recent weeks, Amazon has been looking to build its private label team, with job openings listed for a head of marketing and senior brand manager, senior sourcing manager and senior merchandiser to staff the Amazon Fashion Private Label unit. And according to The Gaurdian, Amazon in talks with former Marks & Spencer women’s wear head Frances Russell for a senior role.
Although Amazon hasn’t confirmed this initiative, Amazon Fashion vice president Jeff Yurcisin alluded to this opportunity during the WWD CEO Summit in New York last October.
Experts seem to agree that Amazon is well poised to be a significant contender in offering basics and fast fashion, which would allow it to both take advantage of gaps in its assortment from outside vendors and make considerably higher margins.