Bucking what appeared to be a dying trend, Amazon announced the launch of a subscription-based box shopping service, Prime Wardrobe, on Tuesday, its latest effort to tap into the apparel market. According to Amazon, Prime Wardrobe will enable Amazon Prime subscribers to access garments and accessories from brands including Calvin Klein, Hugo Boss, Adidas, J. Brand, Milly, Parker, and Levi’s, as well as Amazon’s own private labels.
Already being likened to Rent the Runway and other rental or “try-before-you-buy” subscription services, Amazon’s new model – which is free of fees for Amazon Prime members – works this like: Users pick “three or more items” from Amazon’s selection of garments and accessories. Upon arrival, users have seven days to decide what to keep and send back what you do not want (shipping is free both ways). Customers will be charged for the items they decide to keep.
In an effort to get consumers to shop, Amazon – the world’s largest online retailer – is offering 10% off for those customers who keep three or four items from their order. Keep five or more, and you get 20% off. It will also undoubtedly add to the already enormous amount of waste associated with e-commerce and online shopping – a discussion best saved for another time.
HAS THE BUBBLE BURST?
The introduction of Amazon Prime Wardrobe, which is currently in beta mode, comes on the heels of an onslaught of subscription box models, largely heralded in recent years by Birchbox, which was founded in 2010. However, since the market has become so thoroughly saturated with options ranging from monthly cosmetics subscriptions (a la Birchbox) to ones for your pet (think: Barkbox), and in recent quarters, consumers have seemingly tired of the trend.
As reported by Forbes late last year, Birchbox, for one, has been experiencing slumping subscriptions. This coincides with a 90% drop in venture capital funding for the entire category, which appear to signal the end of the subscription box boom. (It is worth noting that Rent the Runway – an apparel rental service – raised $60 million in a funding round led by Fidelity Investments in December).
As for whether this will enable Amazon to compete with the reigning giant of the retail market – fast fashion – it is unlikely. This is, at least in part, because the Zara’s of the world are able to produce more on-trend items on a more rapid timetable and at lower costs than any other brands or retailers, and this is exactly what many consumers are demanding (as indicated by Zara’s ever-increasing sales and profit reports).
The big impact that Amazon’s Wardrobe Prime stands to have on the market has to do with the cost of shipping. Customers are increasingly expecting free delivery and even free returns, a practice that tends to cut deeply into profits. While many retailers offer free shipping, there is almost always a minimum purchase amount, and returns are often not free. It is here that Amazon – despite its $10.99 a month or $99 per year Prime membership fee – has an advantage.
As indicated in an April 2016 Morgan Stanley survey, the key reason consumers gave for shopping on Amazon was “ease and convenience,” followed by Prime free 2-day shipping. “In other words,” writes Bloomberg, “the sexiest part of Amazon’s fashion push was not the clothes on its site but its logistics.”
Pair this with the influencer marketing program that Amazon quietly launched in April. Distinct from its existing Amazon Affiliates initiative – which is open to just about anyone and enables users to receive a commission on sales garnered through links they share – the e-commerce giant’s Influencer Program is a more exclusive endeavor. Currently in beta mode, it is “open by invitation only.” As such, influencers must apply for an invitation and be approved in order to join.
That initiative, which, according to Amazon “will make it easy for customers to find, browse and buy the products introduced to them through social media influencers,” stands to drive apparel and accessories-seeking consumers to Amazon’s site.
Nonetheless, Wardrobe Prime will not be an instant hit for those looking for upscale brands, since Amazon – which is already the largest online seller of clothing with $16.3 billion in annual apparel sales – has had a difficult time romancing fashion brands. Luxury goods group LVMH Moët Hennessy Louis Vuitton – parent to Louis Vuitton, Givenchy, Celine, and Marc Jacobs – now rather infamously said last year that there was “no way” it would do business with Amazon even though the Internet retailer was keen to take on more high-end brands.
And this attitude is not entirely out of left field. Many brands have sworn off Amazon entirely, “bemoaning its cluttered website and the risk of counterfeit goods,” per Bloomberg. As such, Amazon’s selection of brands is limited to accessible luxury ones, such as Michael Kors, Calvin Klein and Kate Spade, which – when paired with Amazon’s own in-house labels – very well might be enough … until luxury brands ultimately come around, of course.