Speculations rose on Amazon which is believed to be launching its own digital platform for luxury fashion in 2020 according to a new report from WWD‘s Samantha Conti & Evan Clark.
Industry sources told WWD that the new luxury fashion platform will work similarly to a concession in a high-end specialty store, where brands essentially operate as a miniature store within a store and either lease space or give a percentage of their sales to the larger store. Apparently, the new platform will only be available in the US when it launches, but Amazon has plans to roll it out internationally and is reportedly working with around 12 brands at present.
Amazon’s take on the news?
The company does not comment on rumors or speculation.
With the luxury fashion market hitting ~920 B€ in 2018, with a 4-5% annual expected growth until 2025, it would make sense to want a slice of the pie.
Beyond numbers, it’s a known fact that consumer behavior is ever changing and while they expect an awesome shopping journey and outstanding customer service, their buying pattern is evolving. In 2020 and beyond, Millennials and Gen Z are breaking the pattern and are expecting brands to create a deep and meaningful engagement in the new shopping environment.
And according to Deloitte consumer report Global Powers of Luxury Goods 2019 | Bridging the gap between the old and the new, a new consumer class has started to rise recently and is likely going to be very relevant in the future, especially for luxury brands: the HENRYs (High-Earners-Not–Rich-Yet). So, watch out for HENRYs, too – they are digital savvy, love online shopping and are big spenders, in particular the Millennial HENRYs.
With the rise of eCommerce and the new luxury (great relevant insights in BCG-Altagamma True-Luxury Global Consumer Insight 2019 study: 6th Edition), is a no-brainer you would want to penetrate this market. And apparently, Jeff Bezos’s company has been planning an expansion into the luxury field since 2012 according to WWD.
Julie Gilhart, top consultant and former fashion director of Barneys told WWD:
“Given the way things are going with the other large sites like JD.com with Toplife, and Alibaba with Tmall, a move like this wouldn’t surprise me.”
However, with Amazon being regarded more like a convenience marketplace selling basics and everyday items, it could come as a challenge how you can inspire consumers to discover fashionable items.
And if you factor in Amazon also being criticized in the past for selling counterfeit merchandise, it will be interesting to see how luxury brands will choose to be listed on the platform to sell their items and whether consumers will trust buying high end products via the eCommerce giant or not.
Back in 2019, Amazon addressed its counterfeit problem in a regulatory filing, under the “risk factors” section of its annual report “We Could Be Liable for Fraudulent or Unlawful Activities of Sellers”:
“We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies. Under our A2Z Guarantee, we reimburse buyers for payments up to certain limits in these situations, and as our third-party seller sales grow, the cost of this program will increase and could negatively affect our operating results. In addition, to the extent any of this occurs, it could harm our business or damage our reputation and we could face civil or criminal liability for unlawful activities by our sellers.”
The disclosure came after big brands such as Birkenstock, Mercedes Benz, Jessie Steele, ElevationLab, Milo and Gabby, and so on, raised some red flags on trademark infringements.
Are the rumors true? Will Amazon make a successful entry to the luxury fashion retail? and Well, I guess we’ll have to wait and see.