While many experts are looking for signs that Amazon will strengthen its apparel business, fashion is just a part of the company’s much larger push for consumer dominance.
Jeff Bezos, founder and chief executive officer, told shareholders last week that the Prime membership program hit a milestone, registering over 100 million subscribers. The company is also working, as usual, on a dizzying array of new initiatives, like a program to deliver goods to customers’ cars, a new deal with electronics retailer Best Buy and a kid-friendly tweak to its Alexa digital assistant.
But Amazon has also faced protests tied to its hunt for a second headquarters and its treatment of employees as well as security bugs in its cloud business at the start of the year. And there was also the intense burst of tweets from President Trump, attacking the company, in particular for the deal it struck with the Post Office, which is a profitable arrangement for the government.
Any unease is compounded by a certain shakiness in technology stocks lately, driven at least in part by data concerns at Facebook and Trump’s tweetstorm. Amazon shares dropped as much as 3.1 percent Wednesday and closed up just 8 cents to $1,450.17.
On average, analysts are looking for the company’s first-quarter profits to fall to $1.27 a share from $1.48 a year ago while net revenues grow 39.6 percent to $49.87 billion.
Some experts believe fashion has become a critical goalpost for the company and an area that could receive more attention this year.
A recent survey of 1,500 U.S. shoppers by CPC Strategy, a digital marketing firm for the retail sector, found that 46.7 percent of those surveyed bought fashions from a retailer’s web site in the last six months. But 52.1 percent headed to Amazon.
Nii Ahene, CPC Strategy’s chief operating officer, expects Amazon to point to continued growth in Prime membership and results that effectively show off the company’s expertise in “mobile search and shopping experience, resulting in Amazon being the leading ‘product search engine’ for most U.S. consumers,” he told WWD.
Already, Amazon has more than 70 private label brands. Across all apparel, Cowen & Co. believes Amazon will sell $28 billion worth of goods this year.
Credit Suisse analyst Stephen Ju told clients in a research note, “E-commerce growth for the next two decades will hinge on harder-to-handle non-homogeneous product verticals,” and that Amazon’s moves in groceries and apparel put it in a key position to take advantage. Ju has an outperform rating on Amazon shares.
“Apparel and groceries remain large pools of dollars still left to come online and Prime Wardrobe and the link-up between Whole Foods Market content and Prime Now distribution will serve as the spearheads to address those opportunities,” Ju said.
The Amazon Web Services cloud computing business will also be in the spotlight. The division powers a major chunk of the Internet and holds more than half the market share in its business. But security problems plagued the cloud services sector as January got underway. Companies like Amazon, Google and Microsoft rushed to push out patches to address security bugs, and investors will be keen to see how AWS fared. Still, virtually everyone who follows Amazon’s cloud division expects it to deliver strong results and possibly even higher growth than last year, now that the bugs have been squashed.