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.
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.
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.
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.