The e-commerce juggernaut marked its “biggest shopping day ever” at the start of the holidays on Cyber Monday, which briefly catapulted chief executive officer Jeff Bezos’ net worth over the $100 billion mark.
How much of that was born of Amazon Fashion and its holiday efforts isn’t clear. What was obvious, however, was that the apparel group did its best to drum up sales, launching numerous promotions ahead of the shopping season. Days in advance, it slashed prices by 30 to 65 percent on a range of goods, from its own lines to others including Adidas Stan Smiths, Eberjey pajamas and footwear from Frye and Uggs.
Those efforts, however, couldn’t hold a candle to Amazon’s electronics category. The company revealed that four of its gadgets — the Echo Dot smart speaker, the Fire TV Stick with Alexa Voice Remote, the new Echo and the Fire 7 tablet — were the “top-selling products across all categories” on its site. The low-end Echo Dot topped the site’s bestseller list worldwide.
Perhaps it’s not fair to compare Amazon Fashion and its devices, however. The tech company has been making gadgets since 2007, with the first Kindle e-reader, while the nascent apparel business is still taking shape.
Not that this year didn’t bring some noteworthy moves. The web giant courted big brands such as Nike, which has been piloting an online store on the site, and pursued retail deals with actress Drew Barrymore and basketball star Dwyane Wade. It fine-tuned its try-before-you-buy Prime Wardrobe service, pushed to expand its own private labels, and served up recommendations with its Echo Look camera and styling assistant. In the background, the company — which owns a patent on a shape-shifting mannequin — is integrating recent acquisition Body Labs and its virtual fitting technology.
If that seems like something of a hodgepodge, then welcome to Amazon’s strategy. The company has always operated upside down from the status quo, and it’s doing it again in fashion. To see where it’s all going, look to Amazon’s approach to technology, where its secret weapon — that massive marketplace — and its unusual methodology are hidden in plain sight.
Tech makers often start with devices, using them to drive attention to their platforms. But Amazon started with the platform, its retail marketplace, and took its time to build it out. It knew it wouldn’t turn a profit for the first several years, but it was playing a long game. Eventually, it fished around for the right devices, digital content and new categories to feed back into its ecosystem.
The ensuing parade of e-readers, phones, tablets, TV devices and other gizmos garnered mixed results until the first Echo speaker arrived in 2015. The sleeper hit intrigued the market with its voice powers and exclusive, invitation-only debut.
Now Amazon owns at least three-quarters of the burgeoning smart speaker sector. That’s no small matter. Analysts see voice and other input technologies changing the way people interact with their computing devices on a broad scale. For most interactions, people use keyboards to engage technology. But those days are numbered, noted IDC’s Karsten Weide, program vice president of media and entertainment. “There’s only one reason consumers use a keyboard at all — they must,” he explained. “And once they don’t have to anymore, they won’t.”
Today brands are racing to come up with a voice strategy and develop Alexa skills. Meanwhile, competitors like Google find themselves in the strange position of catching up to a tech rival it all but laughed at a few years ago.
The Echo line is a self-reinforcing phenomenon for Amazon, expanding access to its marketplace in new ways, bringing the company to the forefront of a new technology, opening up a new commercial vista in the smart home and giving customers a little something more.
This “pray and spray” approach requires very deep pockets and a willingness to test relentlessly while failing often. That can create tough work environments, as Amazon’s European divisions discovered this holiday season, with strikes in Germany and Italy, and accusations of poor working conditions in England.
Whatever the speed bumps, Amazon has the resources to keep pressing forward. Beyond e-commerce, its coffers swell with revenue from Amazon Web Services, or AWS. Last quarter, the cloud business broke the $4 billion mark, and it’s been on a tear since, expanding in multiple directions. The Amazon subsidiary announced major improvements to cloud infrastructure, security and new tools for video, Internet of Things technologies, machine learning and virtual and augmented reality and 3-D apps. It built a video camera to give developers hands-on machine-learning experience, and introduced features that allow them to add AWS-powered speech translation, recognition and translation to apps.
Tech makers, media companies and retailers are lining up, including the NFL, Intuit, Thomson Reuters, DigitalGlobe, Hotels.com, ZipRecruiter, Washington Post, Symantec, Motorola Solutions, Expedia, The Walt Disney Co., Turner and others.
Amazon has always had the willingness to experiment, and it has the ability to fuel a seemingly limitless array of attempts until it reaches the right formula. Then it aggressively blankets the market.
That’s the company’s m.o., and it has the online retailer sticking its hands into a variety of businesses. Recent speculation puts drugstores in the crosshairs — perhaps as a natural extension of its supermarket interests. In groceries, that mind-set has spawned numerous services aimed at joining Prime membership with Whole Foods shopping, new pricing models, on-site lockers and other tests to see what resonates with shoppers.
Similarly, it’s the breadth of Amazon’s ventures into fashion that show the company is in the apparel business for the long haul.
For now, however, retailers and brands may take comfort in one important detail: Fashion is a fundamentally different business than commodity products, like consumer electronics and food.
“Bringing in both big and trendy brands has sure put Amazon’s apparel business on the map,” said CrowdTap ceo Matt Britton, an author, Millennial marketing expert and consultant for Fortune 500 companies. “That said, there’s still work to be done before they take the cake from online retailers.” As holiday sales got under way, he noted that the e-commerce company’s major strength lies in nonapparel products.
“While Amazon is becoming as active in apparel as they have been in electronics, this strategy shows that fashion is a bit more niche and personal,” he said, though noting that the company is gearing up. “In leveraging a diverse array of brands and expert influencers that speak to many different aesthetics, Amazon is prepping fashion for tomorrow’s individualized, innovation-seeking consumers.”
As it prepares for the future, its present success in apparel is rooted in basics, said research firm L2.
According to L2’s “Amazon Intelligence: Fashion 2017” report, which analyzed the company’s fashion business between January and August, the site had a strong showing with T-shirts and underwear. L2 said Amazon’s private-label business “found success in men’s polo shirts and shorts and poses an especially big threat to basics brands like Hanes and Dockers,” but that overall, “sluggish growth of some of its private-label brands” prompted the retailer to use its Prime Day event this year to compensate for it.
In a later report, the firm wrote that “Prime Day drove enough awareness for Amazon’s private-label fashion brands that Amazon Essentials has been able to maintain momentum and surpass legacy brand Dockers in performance rank.” The latter refers to L2’s scoring tool for brand performance on the retail platform.
“Amazon is a home of repetitive, commoditized things,” said Loren Padelford, vice president at Shopify and general manager of the Shopify Plus enterprise platform. “Commodities are thriving on Amazon, while brands are better off engaging with their consumers in a more direct, experiential way.”
That’s the narrative now, but clearly Amazon with its array of tests has its sights on more — or at least it’s not done trying to pick up more pieces of the fashion puzzle. And it has plenty of runway, if it chooses, to try more, bigger, better, faster.