While the e-commerce powerhouse often relies on gut to make big category bets — once it moves, it does so with a relentless, rigorous and data-driven process that tests and iterates toward domination.
“A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again,” Bezos wrote.
That clearly has worked on everything from books to batteries and beyond — including Prime Day, which was launched in 2015 and has now swooped in to liven up a slow summer period at retail, nudging as many as 250 competitors to hold sales of their own. The company’s scope and trajectory has caught the attention of regulators, who are taking a closer look at its operations. The European Commission said Wednesday that it had opened a probe into possible anticompetitive practices at Amazon given its role as both retailer and as a marketplace for independent merchants.
For now, the company is clearly using its scale to great effect. This year’s Prime Day sales event — which ran Monday and Tuesday — surpassed the company’s combined Black Friday and Cyber Monday take last year, with more than 175 million items purchased and over one million deals. While fashion got little mention in Amazon’s Prime Day wrap-up Wednesday, luxury beauty products did get a shout-out, with 350,000 products sold. Among the top-selling deals were beauty products in China, including Dove Exfoliating Scrub, L’Oréal Rejuvenating Eye Cream and the Silk’n Permanent Hair Removal Device. (The shout-out to beauty rather than fashion might have something to do with the fact that Amazon so far has had difficulty penetrating the former, as brands — not withstanding Lady Gaga’s new Haus Laboratories beauty — have been reluctant to sell on the platform).
Prime Day might now seem all encompassing for a brief stretch every July, but it started off as something of a 20th-anniversary celebration, a copy of Alibaba’s Singles’ Day that caught fire and has evolved into a steady slot on the annual calendar. It has evolved, for instance, to include more star power this year with a concert featuring Taylor Swift.
And that kind of never-ending forward movement characterizes everything Amazon does.
In fashion, the company has been testing and iterating for years, buying companies, launching brands, mashing up trends and formats, moving ahead with some while abandoning others.
The web giant bought Zappos and has left it as a stand-alone site; sponsored the Met Gala; tiptoed into private label fashion brands; dabbled with recommendations through the Echo Look; taken on Stitch Fix with the try-on at home Prime Wardrobe service, and more.
Not everything Amazon has tried has been a hit, and it’s been forced to change course along the way, shuttering the shoe- and accessories-focused Endless.com, axing Myhabit and killing the Style Code Live streaming service.
Lately, the company has been bringing influencers closer and borrowing from streetwear, introducing The Drop, which sells looks that are available for a narrow window of time and are only made once consumers place their orders. It also could be chasing the salon business anew with the recently reframed Amazon Professional Beauty Store.
Amazon has taken monster market share and become a threat to traditional retailers in almost every way. Wells Fargo’s Ike Boruchow estimated the company commanded 42.8 percent of the U.S. online apparel and footwear market last year, facilitating about $35 billion in sales.
But the dominance the company enjoys in books, where is is seen having a roughly 80 percent share, and other categories has so far eluded it in fashion — where, for now, it remains one very large player among many.
That doesn’t mean Amazon can’t eventually dominate in fashion, but it does mean that apparel retailers and brands still have something of a window to counter the e-commerce juggernaut.
For now, it seems Amazon is intent on testing and testing until it gets the formula right — and then all that’s left is for the company to press its advantage, leverage its scale and technological savvy and take over.
Sonia Lapinsky, managing director in AlixPartners’ retail practice, said fashion is the hardest category to buy online, given concerns over both fit and returns.
“Basics are the first thing in apparel and accessories that Amazon does well,” Lapinsky said. “At least on basics, the consumer is going to shop across online and they’re always going to stop at Amazon first.
“But in order to blow out fashion, they need to find the rest of the formula that really makes them a destination,” she said.
Given all the tests and approaches Amazon has made in fashion, it’s clearly a category Bezos & Co. believe deeply in.
Lapinsky said no one can compete with “their grit and perseverance.”
“How long are they going to be in this phase? Are they just going to keep testing and testing and trying?” she said. “I don’t think we’ll see a retreat from them for some time. They don’t retreat. They eventually do dominate these categories, this one likely will take longer. Is this going to be the first real roadblock for Amazon? The retailers have to stay on their toes. Just because Amazon hasn’t cracked the code yet, we know they’re going to keep going until they do.”
So now is a good time for fashion retailers to play to their own strengths as they seek to fend off Amazon. And that’s why so many have been talking about nothing but experience for two years, trying to bring back a vibrancy to the store and give their four walls a reason for being in an online world.
But retailers can still do more when it comes to stealing from the Amazon playbook.
“Traditional retail has a huge opportunity to implement a test and learn kind of approach,” said Alex Fitzgerald, a manager in A.T. Kearney’s consumer and retail practice. “We do see some of that happening in the market today after Amazon has sort of publicly made it a real best practice.”
Fitzgerald pointed to Macy’s, which has been trying more new initiatives, including the narrative based Story and discovery concept B8ta.
The key is not just to test new ideas, but to measure their impact and to let the consumer be the guidepost, leading retailers to features that keep shoppers coming back.
“Amazon is here to stay,” Fitzgerald said. “So in this world where Amazon is the large player, how do you operate to ensure that your value position continues to be well-defined and valued in the eyes of your consumer? Knowing who they are and what they want, how they see you and also how they’re evolving. Consumers aren’t static; that’s why this test and learn approach is so beneficial.”
Melissa Burdick, a marketing expert and president of software and services firm Pacvue, spent a decade at Amazon, learning its approach and helping launch its beauty business.
Burdick said it was likely Amazon would eventually find a way to win in fashion, but that retailers still had room to move forward.
“There’s still this need for the in-store experience,” she said. “That’s still Amazon’s weakness. [Retailers] have to come up with more in-store experiences and unique products.”
But the need to innovate, to test and fall on one’s face and bounce back up and move in another direction quickly is dire.
“If you’re not failing, you’re not learning and you’re not doing a good job,” Burdick said. “You should be aware of what [Amazon is] doing, but know it’s not the end state, it’s going to continue to iterate.”
Beauty is a good and recent example.
Burdick said the big brands steered clear of Amazon when the site refused to “gate,” or prevent third-parties from selling their goods through the marketplace. (She argued that the brands are ultimately responsible, noting, “Amazon’s just a magnifying glass that shows your dirty laundry and the dirty laundry is the fact that you haven’t controlled your distribution.”)
Having failed to bring on some of the key beauty brands, Amazon is now in the process of going around them, notably with the Lady Gaga collection.
By linking the singer’s fame with the Amazon platform, Haus Laboratories has a fast track to the global e-commerce market — the kind of reach and clout that a generation ago only the big beauty players could provide.
Burdick said the question is whether or not the big brands are starting to really lose out by not being on Amazon.
“Every c-level person has heard about [Lady Gaga’s launch] now at these big beauty brands and they’re taking note,” she said. “You need an example to light a fire under some of these brands to think, ‘Maybe I do need to partner with Amazon.’ Now, they’ve got another example to point at and say, ‘Hey, you continue to lose out.’”
If that argument wins across beauty and apparel, and more big brands officially arrive on Amazon — as, for instance, Nike has — that could be just the break the e-tailer needs to crack the code and truly take over in online fashion.