More brands are expected to open stores in the coming weeks and seasons, according to Amazon, and US Prime members who have not already been invited to shop the platform can request an invitation.
While there is no word yet on whether Luxury Stores will become available in other markets, the gradual global rollout of Amazon’s other fashion services, such as Prime Wardrobe, suggests this will be the case.
From bookstore to fashion giant
Once a digital bookstore, Amazon is now a major player in the global fashion industry, having pipped Walmart last year to become the number one seller of apparel in the US.
Still, the e-commerce giant is mostly seen as a destination for everyday basics rather than investment pieces. Can the “everything store” really compete in the world of luxury?
“My initial thoughts are that Amazon is not known for luxury, nor fashion,” Steven Altman, a Hong Kong-based consultant who specialises in premium and affluent consumers, told Inside Retail.
“There is a lot of competition around who are far more associated with fashion and luxury, such as Net-A-Porter. Therefore, extra effort will be needed to gather credibility and trust.”
Amazon’s ability to establish credibility in the luxury space largely depends on how many high-end brands, and which ones, ultimately join Luxury Stores. And this will depend on the way brands view the cost-benefit analysis of following their customers onto a shopping platform that could diminish their perceived value, but is used by two thirds of the US population.
Oscar de la Renta CEO Alex Bolen said that nearly 100 per cent of its existing customers are on Amazon and “a huge percentage” are Prime members, according to a report by The Motley Fool.
But KeyBanc Capital Markets analyst Edward Yruma told Business of Fashion that Oscar de la Renta’s apparel presence in the traditional wholesale channel has waned in recent years, suggesting it might be more receptive to Amazon’s pitch than other, more popular brands.
Altman warned that Amazon will need to differentiate Luxury Stores from its primary offering in order to reassure brands they won’t lose prestige by joining.
“To me, no one brand can be all things to all people unless it is cleverly segmented,” he said.
Luxury goes digital
Brands that join the platform will reportedly have complete control over inventory, selection and pricing, and can either choose to store their products in Amazon’s warehouses for a fee, or fulfil orders themselves. Amazon didn’t disclose its terms, but presumably it will take a cut of each sale made through Luxury Stores, as it does with Marketplace sellers.
While the launch announcement was short on details about the look and feel of the new platform, it appears brands will be given merchandising tools to personalise their stores with auto-play imagery and in-motion graphics, helping to create an immersive and unique shopping experience. They can also tap into Amazon’s ‘View in 360’ technology, which lets customers explore products from every angle.
Luxury brands have traditionally differentiated themselves by the opulence of their bricks-and-mortar stores, which is difficult to translate to an e-commerce environment. Platforms like Net-A-Porter tend to make up for this by offering exceptional customer service.
“It is very true that luxury brands have struggled with online platforms as ‘traditional’ luxury is highly experiential and often driven by in-store. However, online luxury shopping will increase, so luxury brands need to get on board and create ‘experiences’ with the same brand messaging, but executed differently,” Altman advised.
He suggested Amazon could set itself apart from the competition in this respect by offering more unique services that resonate with the luxury consumer, or creating virtual experiences that others cannot.
Perhaps the biggest opportunity involves integrating Luxury Stores with some of Amazon’s other products, technology and services, such as its Prime Wardrobe program, which allows customers to try items on at home before fully committing to a purchase, or even its video or music streaming services.
Christine Beauchamp, president of Amazon Fashion, said the company was excited to offer luxury brands the services and technology to build an inspiring, elevated customer experience.
“It’s still Day One, and we look forward to growing Luxury Stores, innovating on behalf of our customers, and opening a new door for designers all over the world to access existing and new luxury customers,” she said.