Cart­ing Ahead!

In this cut-throat mar­ket com­pe­ti­tion, it takes a lot of ef­fort, will and strat­egy to make it to the top and stay there. Anurima Das delves into Ama­zon’s phe­nom­e­nal suc­cess in the ap­parel space and shares some in­sights on its growth graph.

Apparel - - Contents July 2018 -

Analysing Ama­zon’s phe­nom­e­nal suc­cess in the ap­parel space

Ama­zon, an e-com­merce ven­ture that be­lieved in mak­ing ev­ery­thing avail­able to you, had in­scribed their thought process even on their com­pany logo, right from the start. The ar­row point­ing to­wards ‘A’ on one side and ‘Z’ on the other was enough to hint at their ex­haus­tive, all-en­com­pass­ing vi­sion. From the start, Ama­zon has strate­gi­cally gained mar­ket hold, pro­gress­ing one step at a time, one re­gion af­ter the other. This nat­u­ral pro­gres­sion has over the years helped Jeff Be­zos build an em­pire of sorts with Ama­zon. Founded in 1994, Ama­zon has al­ways charted its way to the top ex­per­i­ment­ing with the new.

Staying at the top and main­tain­ing the win­ner’s stand for years al­to­gether is a tough task. But Ama­zon has never failed with their quar­terly re­sults or with their con­sumer li­ai­son. Re­cently, Mor­gan Stan­ley re­vealed that the e-com­merce gi­ant Ama­zon will soon be­come the top player of the US ap­parel in­dus­try by the end of 2018, hav­ing gained 1.5 per cent of the mar­ket share in 2017 it­self. Ama­zon’s move to over­take the mar­ket is surely a sign of threat for many re­puted brick-and-mor­tar brands and is al­ready low­er­ing sales among the key on­line play­ers.

EX­PERT THOUGHTS

Trade an­a­lysts and ex­perts be­lieve that Ama­zon’s suc­cess is not a work of magic; rather it is their sys­tem­atic ap­proach that has brought them so far. The way they have ven­tured into var­ied cat­e­gories tak­ing ex­pan­sion as a steady ride is a sheer me­thod­i­cal ride. They also be­lieve that sell­ing ca­sual everyday items has ac­tu­ally led Ama­zon to reach its present heights. Sell­ing everyday clothes, ath­leisure, reg­u­lar ca­sual cloth­ing from re­puted brands such as Calvin Klein, Nike, Adi­das, etc., has brought Ama­zon closer to the peo­ple.

Among Mor­gan Stan­ley’s list of brands who stayed be­hind in busi­ness in 2017, prom­i­nent names like Sears Hold­ings, Macy’s, As­cena Re­tail Group, L Brands, Ralph Lauren and Chico's, fea­ture. This list is self-ex­plana­tory and does high­light Ama­zon's ex­cep­tional po­si­tion in the mar­ket. Map­ping gains with ev­ery sale, Ama­zon is win­ning to leave be­hind the tra­di­tional de­part­ment stores at ev­ery nook and cor­ner. As per re­ports, ev­ery time Ama­zon is scor­ing that ex­tra run a de­part­ment store in the US is scor­ing in neg­a­tives. Mor­gan Stan­ley has also men­tioned that the de­part­ment stores will only com­prise about eight per cent of the to­tal US ap­parel mar­ket in 2022, as com­pared to 24 per cent in 2006.

Ama­zon, on the other hand, is pick­ing up sales from its Prime shop­pers. The ex­clu­sive Prime mem­ber­ship al­lows you to shop for your favourites and get them handed over to you in just a few hours, max­i­mum within a day’s time. The com­pany has them­selves dis­closed on the oc­ca­sion of their grow­ing sales fig­ure that it has more than 100 mil­lion Prime mem­bers to­day. So it is clear that cus­tomers want fast de­liv­er­ies, qual­ity prod­ucts, and a happy brand. Ama­zon is a con­coc­tion of all this and much more. Thus, it is ev­i­dent that the brand will at­tract more loy­al­ists all along its jour­ney, and these peo­ple will not mind pay­ing a yearly mem­ber­ship to shop on

Ama­zon. Ac­cord­ing to Mor­gan Stan­ley re­ports, Prime shop­pers are now two times more likely as com­pared to non-Prime shop­pers to buy clothes on Ama­zon.com. This fig­ure is al­ready an up­trend from 1.5 times a year ago.

EXTRAVAGANT SUC­CESS

Since the last few years, sta­tis­tics track­ing the foot­falls in malls in the US have recorded a drop in the num­ber of peo­ple walk­ing in. This is just one part as then there is the ques­tion of turn­ing ev­ery foot­fall into a sale. Ap­parel re­tail brands hav­ing a mall store and malls in gen­eral have started fall­ing back on the growth map while the In­ter­net has started to move ahead within the shop­ping fron­tier. This was just one side of the story; the Ama­zon story is a to­tally sep­a­rate one as the way it has pro­gressed stands next to none.

For in­vestors, this has worked out as one of the most prosperous times be­cause the un­be­liev­able rise of Ama­zon has cre­ated far more mar­ket capitalisation than has been lost by the de­cline of tra­di­tional brick-and-mor­tar re­tail­ers. The rise in Ama­zon’s mar­ket capitalisation in

FOR IN­VESTORS, THIS HAS WORKED OUT AS ONE OF THE MOST PROSPEROUS TIMES BE­CAUSE THE UN­BE­LIEV­ABLE RISE OF AMA­ZON HAS CRE­ATED FAR MORE MAR­KET CAPITALISATION THAN HAS BEEN LOST BY THE DE­CLINE OF TRA­DI­TIONAL BRICKAND-MOR­TAR RE­TAIL­ERS.

2017 alone is big­ger than the com­bined to­tal mar­ket val­ues of ev­ery fa­mil­iar chain that is to be found in US malls. Ama­zon’s stocks are at an all-time high and ex­perts note that the more Ama­zon shines, the lower will be the prospect of pros­per­ity for the other brands, both vir­tual and brick-and-mor­tar alike.

On the other hand, sales data recorded by Sec­ond Mea­sure, a re­search firm that uses anonymised credit card data, men­tions that Ama­zon’s growth will soon reach a point this year when its sales will over­take those of Wal­mart’s brick-and-mor­tar stores. This is in­deed a big men­tion when Wal­mart them­selves are win­ning over and buy­ing In­ter­net ven­tures in our part of the world. So, the ques­tion is, will Wal­mart try to break bar­ri­ers and strike a chord with the vir­tual cus­tomer base in In­dia be­fore Ama­zon? This is what time will tell, but the US mar­ket threat is a clue enough to hint at Wal­mart’s quick pro­gres­sion to buy newer ven­tures. Ad­di­tion­ally, Ama­zon’s steady growth has be­come far more rapid over the last few months. It nearly caught Wal­mart last Thanks­giv­ing; it now looks vir­tu­ally cer­tain to over­take it in 2018. Wal­mart’s on­line ef­forts has how­ever led to steady and bal­anced growth in its e-com­merce rev­enues (As per re­ports re­leased by the com­pany, it ex­pects on­line sales to grow by 40 per cent to USD 11.5 bil­lion for the fis­cal year to Jan­uary), but they re­main a rel­a­tively small por­tion of its to­tal sales,

Ama­zon is a suc­cess story that de­serves to be told to gen­er­a­tions alike. It is just the US mar­ket for now where this e-com­merce brand has started rul­ing on the ap­parel front. But as their growth graph sig­nals, it is not too late when Ama­zon will con­quer, with their ap­parel col­lec­tion at ev­ery cor­ner of the world.

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