Books, cloud, movies, hardware and now even pharmacy don’t seem to be keeping Jeff Bezos’ hands full. Now, the e-commerce giant is all set to advance into the sportswear niche. Shashank Venkat with the story
As a company which tracks Amazon’s every move very closely, it is becoming hard even for us to keep up with the company’s diverse strategic moves. Just last week, Amazon’s purported move from subscriptions to prescriptions
was grabbing the headlines. Now, the company is all set to gain a stronger foothold in the retail industry by launching a sportswear line.
According to a Bloomberg news report
, Amazon is working with Makalot Industrial company, a Taiwanese vendor that produces clothing for popular apparel brands such as Gap and Uniqlo. In addition, Amazon is also collaborating with Eclat Textile Co., another Taiwanese company that makes apparel for sportswear giants such as Nike, Under Armour and Lululemon Athletica. While no long-term contracts have been signed yet, Amazon is said to be working on a trial basis with the vendors till it starts promoting the effort more aggressively.
Playing right into Amazon’s strengths
Unlike the new pharmacy business, Amazon is fairly well entrenched in the apparel space. Earlier this year, the company launched Amazon Prime Wardrobe
, a subscription box service that allows subscribers to order clothes with no upfront costs. Amazon also has a line of in-house clothing brands such as Lark & Ro, Scout + Ro and Paris Sunday, among others.
Amazon is also unmatched when it comes to selling apparel online, and the other sportswear brands will find it hard to compete with Amazon’s aggressive discounts and promotions. In fact, Amazon has been so successful in the retail space that the company is set to become the largest apparel retailer in the US this year
Worry much Nike, Lululemon?
If you think that the more established brands like Nike and Lululemon have nothing to fear from a new entrant like Amazon, is it time to think again? The shares of Nike, Lululemon and Under Armour all slipped by a few percentage points following the news last week. At a time when activewear companies are struggling with dipping sales numbers and more competition, Amazon’s latest announcement will definitely make them sweat!
Moreover, it’s not as if these companies can snap ties with Amazon to reduce its leverage. Only earlier this year, Nike tied up with Amazon
to house their products on the e-commerce platform for the first time. At a time when sales are already dwindling, these sportswear brands need all the visibility that they can get.
But tying up with Amazon is now a double-edged sword – while they need the platform for its shoppers, they also have to contend with the massive competition Amazon’s new line will offer to their own products.
The Power of Amazon Prime
Not everyone seems to realise the powerhouse Amazon’s Prime subscription service is turning into. Judging from my own experience, ever since I became an Amazon Prime subscriber, I have found myself ordering a lot more from Amazon. And that’s a trend which is observed worldwide. Amazon Prime shoppers, on an average, spend double the amount of money
compared with non-prime Amazon shoppers and spend nearly 80% more time
on the app.
The Amazon Prime subscription service offers immense possibilities to the new sportswear clothing line. For one, Amazon Prime members can be given early access and additional discounts for their clothing line. They can also subscribe to the products used more frequently, helping the company drive further sales. Add to that the quick and convenient deliveries offered via Prime, and it instantly becomes an attractive proposition for the more ‘active’ subscribers.
What next, Jeff?
With the company sourcing from the same vendor as the other sportswear companies, there’s a good chance that sales will continue to remain fragmented. While it may be difficult for Amazon to completely dominate sportswear, the company can surely do enough to hurt the incumbents. And even if Amazon can only hold a small stake in this giant market, Jeff Bezos will consider himself successful.
More interestingly, where will Amazon go next? Clothes, check. Books, check. Smart devices, check. Airlines maybe? The thing is, you can never really know with Amazon!