A click away: Online fashion reaches a tipping point,
Digital giant gains momentum as physical retailers struggle
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 shut100 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 in the U.S. 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.
Pia Arthur, an Amazon spokesperson, declined to comment for this article.
Amazon is by far the biggest beneficiary of e-commerce growth, accounting for 43 cents of every dollar spent online in the U.S. last year, estimated Slice Intelligence, a company that measures online shopping.
But there’s little chance Amazon will come to have in apparel the crushing dominance it has established in, say, books, because of the way clothing sales are fragmented among so many retailers. Amazon accounts for half the country’s consumer book market on a unit basis, according to the Codex Group, a book market research firm.
Last year, the company’s gross mer- chandise apparel sales — Amazon’s direct sales of clothing plus the commission it collects on sales by independent merchants on its site — were $30 billion, or 6.6 per cent of the market, Cowen estimated. By 2021, the firm has forecast, Amazon will account for just more than16 per cent of apparel sales.
“We look at it as winner take most,” said John Blackledge, an analyst at Cowen. “That’s their game.”
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.
“We have seen improvements on the Amazon marketplace addressing our core issues of unauthorized sellers and counterfeit goods,” said Dania Shiblaq, a spokesperson for Birkenstock USA, adding the company still does not directly sell to Amazon.
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. “Anytime you make something simpler and lower friction, you get more of it,” Jeffrey Bezos, the company’s chief executive and founder, wrote in a letter to shareholders in 2007, after the company made getting a book nearly instantaneous with the original Kindle.
One idea Amazon is considering to lubricate apparel shopping: customfit 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.
The group has described its intentions as “five-day custom” in an internal presentation, the source said. In April, Amazon received a patent for on-demand apparel manufacturing, though that is no guarantee it will pursue the plan.
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.