Chiara Ferragni Amazon Fashion's Spring 2016 Campaign Shoot

Wall Street investors and retail competitors will be closely watching Amazon’s third-quarter financial update today for hints of just how far the web giant wants to go in fashion.

Amazon’s long been the e-commerce player to beat (or at least with which to compete), but that hasn’t typically been as true for apparel. Now the company is increasing its focus and efforts on fashion and accessories.

According to a report from Cowen and Co., the number of people buying apparel on Amazon increased 26 percent this year. And by 2021, Amazon’s U.S. apparel gross merchandise volume is expected to reach as much as $62 billion, up from an estimated $22 billion this year.

Cowen’s research found that Amazon apparel customers were primarily shopping for replenishment items, basics, branded or well-known items and specific looks that customers already knew they wanted. This aligns with Amazon’s in-house branded apparel strategy. The company early this year introduced seven private-label fashion brands that sell goods ranging from men’s dress shoes, suiting and accessories to women’s casual and contemporary clothing, accessories and children’s clothing, which largely focus on basics and low-priced offerings.

Consumers polled by Cowen reported that they were attracted to Amazon’s reliable and fast Prime service, its convenience, its customer service and its reviews. PVH Corp., which makes brands such as Tommy Hilfiger and Calvin Klein, has been the most successful company in growing its relationship with Amazon, with 17,000 Prime-eligible stockkeeping units available, according to the report.

But customers did identify some weaknesses, which stand to give brick-and-mortar retailers a competitive edge. Amazon lost out on its lack of a physical presence, its lack of a loyalty program and issues with browsing and curation. Other retailers in the study won out in factors related to breadth and depth of brand selection, convenience, store experience, curation of content, competitive pricing, service and even occasion in free shipping or returns.

Participants said that sites such as Rue La La, Gilt and 6PM (controlled by the Amazon-owned Zappos) are better at merchandising. They also said that, for higher-end items and a rich retail experience, brick-and-mortar was still “highly valued.” Cowen researchers said that Nordstrom, Ulta and Wal-Mart were among the “bricks and clicks” retailer that stood to offer tough competition to Amazon.

But physical stores still account for the majority of most retailers’ revenues.

“Customers still like physical stores, given the immersive lifestyle and emotional experience, immediate gratification of purchasing an item and the entertainment factor of shopping,” according to the report.

Some say that Amazon might eventually broaden its early foray into physical retail with an apparel store. KeyBanc Capital Markets analyst Ed Yruma noted that apparel and groceries are two categories of strategic importance to Amazon, which will have opened five bookstores by the end of the year and has multiple pop-up mall kiosks, which primarily sell electronics.

A physical store for Amazon apparel could be used in part as a marketing tool, said Mabel McLean, who is director of Amazon IQ at research firm L2, and would follow in the footsteps of former online pure-plays Trunk Club, Rent the Runway and Warby Parker.

Additionally, the report addressed recent statements from LVMH Moët Hennessy Louis Vuitton chief financial officer Jean-Jacques Guiony, who said last week that the company would not do business with Amazon in its existing business model.

Researchers noted that LVMH’s heritage of direct-to-consumer control on the selling experience, superior and innovative brand management and conflicts with existing channels of distribution “do not appear synergistic with Amazon.”

“We believe that LVMH should consider pursuing an integrated luxury online department store of the future which is able to leverage a fast delivery supply chain, advanced mobile phone shopping innovation and multibrand traffic in order to compete differently from Amazon if the company does not pursue a direct partnership,” Cowen researchers said, adding that this will be increasingly important as social media becomes pervasive and younger customers grow in age and wealth.