Amazon is America’s biggest clothing retailer and there’s no close second

Discussion
Source: Amazon.com
Mar 18, 2021
George Anderson

Amazon.com is the number one seller of clothing in the U.S., having surpassed Walmart in 2020 to earn that distinction.

The e-tailing and technology giant saw its sales of clothing and footwear jump 15 percent to $41 billion last year, according to analysts at Well Fargo. The move upward reflected a multiyear trend that, no doubt, received a boost as more home-bound Americans went online to buy what they needed during the pandemic.

Ike Boruchow and Tom Nikic of Wells Fargo estimate that Amazon’s sales represent 11 to 12 percent of the total U.S. market and between 34 and 35 percent of what is sold online. Amazon’s revenues are about 20 to 25 percent higher than Walmart’s overall and its online business is seven times that of its closest rival, Macy’s, online. The two analysts expect Amazon’s sales will grow another $4 billion this year to top $45 billion.

Amazon has benefited from a number of factors in growing its share of the market. The company has used its influence with more than 100 million Prime members, fast delivery times and responsive customer service (this includes its Zappos business, as well) to get consumers to try their sites for purchasing clothing essentials.

The retail giant has responded to the opportunity by expanding its selection of private labels items while recruiting third-party sellers, including the likes of Lands’ End and The Children’s Place, to sell on its marketplace.

Amazon has further sought to expand its reach by moving into higher priced goods and seeking more brand partners. The site introduced Luxury Stores last September, featuring Oscar de la Renta as its first significant brand partner. While a report by Glossy suggests that the going has been slow, to date, Amazon has not provided any indication of consumer acceptance and has said that brand relationships with current sellers are favorable.

Bringing on key partners and keeping them has proven a challenge for Amazon, with some complaining that the shopping experience on the site fails to play to the strengths of individual brands. A case in point is Nike, which began a test with Amazon in 2017 that ended in 2019. The brand emphasized its strategic plan to eliminate partnerships that failed to provide its customers with a differentiated experience and to focus more on doing that itself with its consumer-direct business.

DISCUSSION QUESTIONS: What do you see as the biggest factors supporting Amazon’s growth in apparel and footwear sales? What will Amazon need to improve upon and add in the years to follow to maintain its top position and further grow its share of the market?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The single biggest factor is simple. Convenience, convenience, convenience. "
"Despite dedicated brand stores, Amazon still has room to improve experience for premium brand partners."
"This makes Amazon “America’s mall,” not the leading clothing retailer. I think that is an important distinction."

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32 Comments on "Amazon is America’s biggest clothing retailer and there’s no close second"


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Mark Ryski
BrainTrust

Amazon’s sheer size and depth of connection to customers via Prime is very powerful. Once you’re an Amazon shopper, it’s only a matter of time before you are tempted to explore new categories. There’s no doubt that the pandemic gave Amazon’s apparel and footwear sales a big boost, but I suspect a good amount of this will continue post-pandemic. Going forward, Amazon should continue to focus on cultivating great brands and especially house brands.

Neil Saunders
BrainTrust

If third-party sales are included Amazon does take the top spot. If you take out third-party sales, Amazon is not the top retailer of apparel. At a general level, this distinction doesn’t really matter as consumers see it as “shopping on Amazon.” But in a technical sense, this kind of analysis is a bit like including mall owners in market share analysis by virtue of all the retailers selling within their properties.

In 2020, apparel was by far the worst affected category in retail. Sales of workwear and occasion wear collapsed. And of those clothing sales that did happen, more migrated online due to store restrictions and temporary closures. This was beneficial for Amazon and other online players, and less so for in-store retailers. Some of this will re-balance as society reopens, although I have no doubt that Amazon will remain a winner over the longer term.

Gene Detroyer
BrainTrust

As you state, there is no distinction by the consumer. They determine they are “shopping at Amazon” and really that is all that counts.

Neil Saunders
BrainTrust

In a technical sense, I think the distinction is interesting. Not all of those sales “belong” to Amazon. There are other companies, including a lot of smaller apparel innovators, who are benefiting from people shopping on the Amazon marketplace. That’s something to celebrate. It’s also something to dig into when analyzing trends and consumption patterns in the apparel market.

Georganne Bender
BrainTrust

I think what Neil said about sales from third parties is important. We all think of Amazon as, well, Amazon, but it’s really made up of lots of other companies selling on the site.

George Anderson
Staff

Neil’s analogy is well taken. It’s also an indication of the brilliance of what Amazon has built since sales through third parties, including those mentioned in the article, bring it revenues associated with transactions without the need to purchase inventory.

Venky Ramesh
BrainTrust

Great comment Neil. Walmart’s online marketplace will be much smaller in comparison and it would be unfair to compare them by including marketplace data.

Ken Morris
BrainTrust

Amazon eats every segment it goes after. Its loyalty app, its ease of use, its understanding of the consumer and its real-time platform give it the advantage. People still like to use the rest of their senses of touch, smell and taste when shopping so retailers need to compete by accentuating what Amazon doesn’t have while Amazon looks for a brick-and-mortar presence beyond just Whole Foods.

Gene Detroyer
BrainTrust

The single biggest factor is simple. Convenience, convenience, convenience.

And the pandemic has done nothing but help people experience the convenience of online shopping.

Bob Amster
BrainTrust

The short answer is that Amazon is a marketplace, not a store. Amazon enjoys the breadth of brands and styles that no single retailer (except Walmart) could achieve. Talk about an endless aisle!

Cathy Hotka
BrainTrust

These are breathtaking numbers. Then consider that Amazon paid no federal income tax in 2018 — which means that all of us as individuals pay more than the behemoth from Washington State.

Bob Amster
BrainTrust

Different discussion. Time to rewrite the tax code. If the U.S. changed the tax code, and businesses wound up paying income tax on what they earn, even Democrats would not have to raise taxes of individuals. What a novel idea…

Jeff Sward
BrainTrust

Convenience is more of a driver than ever. Social media is more of a driver than ever. Convenience + social media = e-commerce. The more familiar a customer is with a brand or influencer, the easier it is to trust in an e-commerce transaction. And Amazon is often the default for that. Physical retail has a real challenge to up their game in offering the kind of treasure hunt that will make customers want to grab their car keys. Explore + Experiment = Experience. And the experience doesn’t have to be a roller coaster ride at the mall. How about some simple, entertaining discovery in the store?

Gary Sankary
BrainTrust

Today, unfortunately, we live in an era of disposable clothing. Consumers have been trained to pay nothing for clothes and to have almost no expectation of quality. At one time we retailers of a certain age thought that no one would buy clothes without touching them and trying them on. Well, like almost every other paradigm they’ve challenged, Amazon crushed this with broad assortments, easy access to the products and a revolutionary (at the time) return policy for DTC business. And I suspect for many consumers since the products are inexpensive, if it doesn’t quite work, they’re not going to be too upset about it and they’ll take a risk. This eliminated a big objection for apparel purchases going back to the days of mail order catalogues.

To grow this business even more, I would suggest they need to expand even further in their private label offers and give customers unique Amazon-branded products. This will build loyalty and improve Amazon’s margins.

Kathleen Fischer
BrainTrust

It’s all about convenience for the customer!

Lisa Goller
BrainTrust

Top-of-mind brand status, the biggest assortment in the world, hassle-free returns and fast, free delivery fuel Amazon’s apparel growth.

Innovations like Made For You act as a digital personal stylist and Luxury Stores elevates e-commerce with upscale fashions. Personalized data refines product recommendations so they’re relevant and irresistible.

Looking ahead, collaborations with niche brands for exclusive collections and a broader range of private label staples can balance excitement and reliability. More partners like Kohl’s can extend Amazon’s omnichannel apparel reach and make returns easier. Virtual try-ons and proof of premium items’ authenticity will deepen brand trust, reduce returns and further expand Amazon’s market share.

Richard Hernandez
BrainTrust

So this would make sense that Walmart has thrown down the gauntlet with focusing on what Amazon’s Achilles’ heel is – higher-end fashion. A tall order indeed.

Verlin Youd
BrainTrust

Two factors, both related, are equally important in 2020. First, lack of friction or as some have put it, convenience. You can shop from anywhere at anytime, interrupt shopping to do other things and come back easily, easily see reviews, complete the purchase easily and it magically appears when and where you want it. Second, COVID-19. Many who were hesitant about Amazon for clothing felt pushed to Amazon and realized that it’s a decent experience. Some will stay, some will go back to stores, many will do both.

Lauren Goldberg
BrainTrust

2020 growth was driven by convenience and Amazon’s exceptional use of data/AI to make relevant recommendations. As more people relied on Prime during the pandemic, they accumulated more data and used it well to expand their share in apparel.

Ananda Chakravarty
BrainTrust

COVID-19, e-commerce, easy return policy, assortment range and Prime customer loyalty have driven Amazon apparel growth. The hit from COVID-19 at the start of the pandemic with many apparel retailers sidetracked as non-essential pushed business online. Amazon has kept a lead in online selling and enabling the “touch” factor was seen as less important when return policies were generous and easy to execute (though in reality this is contested). Lastly, the Prime program has driven automated customer loyalty on less critical products, including apparel which had lost its luster across the past year with folks working from home. The real question is whether Amazon can retain its title – which will require deeper customer experience impacts and easier returns given the competition and expected return of apparel stores.

Ben Ball
BrainTrust

Easy and free returns. Removing the need to go to the store to try on models or sizes or even to compare colors is huge. Penalty free (and practically hassle free) returns at places like Kohl’s make the primary shopper in our household not think twice about ordering multiple variations of an item. Heck, she even gets a reward at Kohl’s (discount coupon) for returning stuff! What’s not to like for a serial shopper?

Richard J. George, Ph.D.
BrainTrust

Amazon wins all online battles by offering seamless, convenient and easily returnable products. The ability to return items is a critical point of differentiation, especially with apparel and footwear purchases. I do not anticipate any significant change in its dominance as Amazon moves upmarket in its fashion offerings.

Yogesh Kulkarni
BrainTrust

Amazon’s advantages in being a platform that offers customer convenience and an aggregator of brands have created a multiplier effect for them in the apparel category. Frankly, there is no other competitor with both of those in place. The department stores are a distant offline equivalent but they have a myriad of their own problems to resolve. Amazon will continue to chip away. However I know that big and successful brands like Nike won’t use Amazon as a sales channel and continue to grow their DTC. Amazon, not unlike all the other dominant retailers, have perfected the art of creating an “Amazon Choice” clone for every successful brand and product out there.

Bindu Gupta
BrainTrust

Amazon’s biggest strength is the ease and convenience of shopping!