Digital research firm L2 on Tuesday released the findings of its benchmarking for Amazon and its fashion vertical.
The report said that Amazon is on track to become America’s largest apparel retailer, helped by its own private-label fashion team, which created seven in-house brands earlier this year. Those brands are: Franklin & Freeman, Franklin Tailored, James & Erin, Lark & Ro, North Eleven, Scout + Ro and Society New York.
But L2 also noted that historically brands have been hesitant to distribute on Amazon, citing channel conflict, brand-equity and pricing concerns. It noted that less than a third of brands, or 29 percent, in L2’s Digital IQ Index: Fashion 2015 distribute officially through Amazon.com. Although there are some traditional early leaders, such as Levi’s, Skechers and PVH, the majority of the top sellers fall outside of the traditional brand competitive set, the report noted. The report went on to note that third-party merchant listings represent more than 75 percent of SKUs present for the fashion brand tracked by Amazon. Further, “success on Amazon, even in fashion, is typically dependent on a small concentration of core replenishment basics,” the report said.
Many of the brands that do officially distribute on Amazon are contemporary brands, as opposed to the high-fashion players, L2 said, adding that as Amazon becomes an increasingly dominant outlet, more fashion brands would likely pivot to a pro-Amazon strategy. But it then went on to note that should brands elect to sell on Amazon, they would need to first understand how selling on Amazon differs from other channels.
One major difference is that top performers tend to be fashion basics, such as replenishment items, and not necessarily the latest seasonal collections. Another difference is that the marketplace favors products with lower price points, L2 noted, citing a data point indicating that 65 percent of the top 100 best-selling shoes were less than $100, and 24 percent were less than $50.
L2 also concluded that the top brands on Amazon might not be “traditional competitors,” but rather “brands that are harder to find via brick-and-mortar distribution.”
L2 also noted that of the 29 fashion brands it tracks, 81 percent of Amazon product listings were sold through a third-party merchant. While many of the merchants were likely clearing out inventory, the L2 report said brands might want to track their presence on the platform to control equity-damaging listings, such as outdated products or off-brand imagery that is not aspirational. It also said that brands should monitor the Amazon ecosystem to track discounting, something the L2 report said was “widespread.”
Officials for Amazon could not be reached for comment on the L2 report.