Amazon sees apparel as a good fit
SEATTLE — If future anthropologists want to study the rubble of early 21st-century retail, a good place to start will be what Amazon.com did to apparel shopping in the few years before and after 2017.
The outlook for physical retailers is grim, the sector roiled by store closings, layoffs and bankruptcies. This year, Amazon will surpass Macy’s, which last year announced it would shut 100 stores, to become the largest seller of apparel in America, by several analysts’ estimates.
It is looking at ways to keep expanding, too. Amazon is exploring the possibility of selling custom-fit clothing, tailored to the more precise measurements of customers, and it has considered acquiring clothing manufacturers to further expand its presence in the category.
If there are tipping points in retail — moments when shopping behaviour swings decisively in one direction — there’s a strong case to be made that apparel is reaching one now, with broad implications for jobs, malls and shopping districts.
Those moments often occur around the time that online shopping reaches about 20 per cent of total national retail spending in a category, the research firm L2 has concluded after studying the evolution of e-commerce. Online clothing and accessory shopping’s share of retail hit 21 per cent last year, according to estimates by Cowen and Co., a stock research firm.
“I do think this year is the year apparel e-commerce takes off,” said Cooper Smith, an analyst at L2.
Apparel has been something of an e-commerce laggard. In years gone by, buying clothing over the Internet was only for the fearless, with most shoppers unwilling to take the risk that a dress or a pair of shoes would fit poorly or look terrible on them.
It took time, but shopping habits for clothing are shifting profoundly.
Amazon’s solution was to improve clothing selection, pour money into photography to give Internet shoppers a better representation of garments and offer free returns on most apparel so customers could order untroubled by the thought of sending items back.
Amazon is by far the biggest beneficiary of e-commerce growth, accounting for 43 cents of every dollar spent online in the nation last year, estimated Slice Intelligence, a company that measures online shopping.
Still, Amazon faces hurdles in its apparel business. Some apparel makers have been frustrated by the prevalence of counterfeit versions of their products on Amazon, peddled by independent merchants.
Last year, Birkenstock, the sandal maker, stopped selling its footwear directly to Amazon, becoming one of the biggest brands to cease doing business with the retailer. Since then, Birkenstock has warmed somewhat to Amazon, allowing authorized independent sellers to continue to sell its products on the site.
The idea of buying clothing without first trying it on is still a deal breaker for many shoppers, even with the security of free returns. Amazon executives look at such hurdles as “friction,” which they are constantly seeking to eliminate.
One idea Amazon is considering to lubricate apparel shopping: custom-fit clothing. The company’s apparel team is exploring the possibility of offering “on-demand” clothing that would be made only after a customer submitted an order, using the customer’s precise measurements, according to a person briefed on the discussions who asked for anonymity because they were confidential.
If it works, the plan could make shoppers happier by delivering clothing that looks better on them, while also addressing the ruinous consequences that returns can have on the profits of Internet apparel retailers. It’s not uncommon for shoppers to order three sizes of a shirt or dress and send back two.
About 35 per cent of all apparel orders are returned, said Stefan Weitz, chief product and strategy officer for Radial, a company that runs e-commerce operations for other brands and retailers.
“That has huge impact on customer experience and satisfaction and also on that retailer’s P and L,” said Drew Green, chief executive of Indochino, an Internet retailer of custom-fit suits, referring to profit-and-loss statements. Green said fewer than one per cent of Indochino’s orders were returned.