Source: Amazon.com
Amazon is America’s biggest clothing retailer and there’s no close second
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.
- Amazon unseats Walmart to become the No. 1 apparel retailer in U.S., Wells Fargo says – CNBC
- Amazon tops Walmart as US top apparel retailer: Wells Fargo – The Hill
- Zappos overhauls its website for home-bound customers – RetailWire
- Will Amazon’s new online store disrupt the luxury fashion and beauty business? – RetailWire
- 6 months in, Amazon’s Luxury Stores remains stagnant – Glossy
- What happens now that Nike has called off its deal with Amazon? – RetailWire
Discussion Questions
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?
Poll
BrainTrust
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Rachelle King
Retail Industry Thought Leader
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.
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.
As you state, there is no distinction by the consumer. They determine they are “shopping at Amazon” and really that is all that counts.
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.
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.
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.
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.
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.
The single biggest factor is simple. Convenience, convenience, convenience.
And the pandemic has done nothing but help people experience the convenience of online shopping.
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!
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.
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…
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?
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.
It’s all about convenience for the customer!
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.
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.
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.
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.
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.
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?
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.
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.
Amazon’s biggest strength is the ease and convenience of shopping!
There’s definitely going to be some pent up apparel buying coming up, it’s just a matter of when. But re: Amazon, their scale alone is a huge factor but the biggest driver is, as always, their mission statement: “to be the most customer-centric company in the world.” If they stick to that with apparel, given their excellence at data, logistics, speed and innovation, all the chips will fall their way and they know it.
We used to argue all the time about what the word “fashion” means, which is such a nebulous term, but at the end of the day it’s what sells. So with Amazon, by that measure alone, they’re going to do well in that world.
The biggest barrier to shopping apparel online was people’s desire to “try before you buy.” Amazon has already made some interesting investments in the space (including the acquisition of Body Labs), that gives them the tech wherewithal to use your 2-D photos to create a digital “twin sibling”- that can help them not only sell the right fitment for the right person but also create a line of highly personalized made-to-measure clothing. As always because of their ability to think futuristic and to take calculated risks, they can disrupt any industry they set their eyes on.
This makes Amazon “America’s mall,” not the leading clothing retailer. I think that is an important distinction. The brands are doing the business and they do it across a variety of distribution points, Amazon probably the largest at an aggregate level. Anyone want to talk about where Amazon ranks with its “own brand” apparel? Big, I suspect, but not great?
Selling basics rebranded as “Essentials” is not really selling apparel. No wonder brands complain the shopping experience on Amazon.com is a lousy playing field for their products. I urge everyone to try a search for a non-“Essential” apparel product; for example, a dress on Amazon.com. Quickly you will see there is no intelligence behind the screen when 100s of dresses are returned for the user to sort through. Amazon has work to do, especially when voice commerce takes hold, which will be soon. Alexa is going to need a whole brain to master voice shopping for non-essentials.
I have never purchased a single piece of Amazon apparel. Or Amazon shoes. Nor, do I expect, have any of the other commentators. Plus, I am not clear that they actually do make clothes (or footwear). Evidently, any proof is by way of private label branding. Which means no Amazon factory is involved. No child labor laws violated. And, ahem, no unions.
Meanwhile, undoubtedly a warehouse or distribution center is part of the deal. And one of Amazon’s was used, absolutely. (Well, there you go!)
Furthermore, proclaiming such a dubious victory is also troubling for either side. It makes those who already feel Amazon is already too unwieldy as even more insidious. To those who want to join the celebration, they should be reminded that getting here took more than one party.
So, until that strange day when Amazon becomes a maker (of anything, and not just clothes), I may only buy brands I know online. And will strive to give credit (or blame) to all, always.
As long as are in a global pandemic and bricks & mortar retail is closed, Amazon’s apparel and footwear sales will continue to thrive. We depend on Prime to get us the goods we want in a timeframe we are accustomed to. As long as stores are closed and shopping malls are at limited capacities, Amazon Prime will continue to thrive.
However, they will not be able to maintain their apparel and footwear growth as we exit the pandemic, as vaccines get administered, and as retailers continue to work on their last mile deliveries and supply chain hiccups. We will go back to shopping Amazon for our chargers, essentials, and books!
Amazon is not an apparel/footwear FASHION destination and although they have onboarded fashion luxury brands, the luxury customer is not shopping for luxury on Amazon. Ever.
Amazon’s reach is an undeniable lure for many merchants and brands. The nearly unmatched convenience of ultra-fast delivery resonates with homebound consumers. Factor in at-home shopping with unlimited assortment of everything and you have a made-to-order recipe for success in the age of social distancing. If Amazon couldn’t benefit from these conditions, some brows would be raised. Still, convenience and assortment only go so far. Premium brands will seek a premium experience for their consumers. Despite dedicated brand stores, Amazon still has room to improve experience for premium brand partners.
Is anyone shocked that they have become #1 in clothing sales? Convenience is the biggest factor — it’s really convenient to go to a single site for basically everything you need (clothes, food, furniture, etc.). Clothes don’t always fit as expected so easy “convenient” return options will be key to maintaining the top position.