But several of the private label categories have “long tail” selling potential (meaning these products will sell well, but not garner a top 10 selling spot on the site), according to a just-released report from L2.
The authors of the report also noted that “Amazon has yet to invest significantly in features that could improve its search relevance [for the private label brands], but will likely ramp-up optimization efforts once it has determined the categories in which its fashion brands are most competitive.”
The four brands are Franklin & Freeman (men’s boots and loafers); Franklin Tailored (men’s suits and sport coats); James & Erin (women’s casual dresses and tops/tees), and Society New York (women’s cocktail dresses and sweaters).
Of the eight categories of apparel and footwear offered, L2 said none had been optimized for searches and none had made it as a bestseller. But six of the eight — men’s boots, men’s sport coats, women’s casual dresses, women’s tops/Ts, women’s cocktail dresses and women’s sweaters — had long tail potential. Also, four of the categories — men’s boots, men’s loafers, women’s cocktail dresses and women’s sweaters — had “competitive pricing.”
Amazon’s push to go deeper into private label is based on sales of its electronics and batteries. “Amazon’s success with private label brands to date is best exemplified by AmazonBasics, its brand for consumer electronics, which now accounts for one-third of all batteries sold online in the U.S.,” the L2 researchers said. “Building on previous private label success, Amazon is now breaking into the fashion industry.”
The launch of private label brands dates back to the 19th century. Macy’s was an innovator in the business with a variety of consumer products sold highlighting its red star. Brooks Brothers is considered by scholars to be one of the first retailers (not tailors) to offer ready-to-wear shirts under its own moniker. In the 20th century, Macy’s and Sears & Roebuck as well as supermarket chain A&P all expanded their private label programs, with the two department store and catalogue firms offering a variety of apparel.
For its part, Amazon is seen grabbing nearly 20 percent of the apparel market by 2020, according to a report last year by Morgan Stanley. Analysts expect the company to achieve it with well-known apparel and footwear brands as well as its own private labels. This drive to dominate the market is putting pressure on retailers as well as fashion brands.
“Amazon’s private label fashion brands pose the biggest threat to legacy brands in men’s shoes, women’s cocktail dresses and women’s sweaters, as those are the categories with significant long-tail opportunity,” the L2 authors said in their report. “In categories where long-tail brands have a smaller collective share of voice — like sport coats, blazers and men’s suits — private label brands pose the least risk.”
Subsequently, brands need to strategize — now. The L2 researchers said fashion brands need to consider pricing strategies. “Brands that compete at the same price point should be prepared to defend their turf,” L2 said, adding that fashion brands that find themselves in direct competition with Amazon’s private label brands “should stay true to their identity and condition consumers to increase the brand specificity of their searches.”