Amazon Launches Luxury Stores for Fashion Brands

On Sept. 15, Amazon announced the introduction of Luxury Stores, its newest venture into the luxury market. Luxury Stores will feature established and emerging fashion houses and brands. Oscar de la Renta is the first label to open its store and additional brands will reportedly join in the coming weeks.

Luxury Stores is available to eligible Prime members on Amazon’s mobile app. The new shopping experience is available to shoppers on an invite-only basis, although shoppers can request access on the Luxury Stores webpage. Amazon has created an online environment of exclusivity that its target audience is accustomed to.

Oscar de la Renta Sets the Stage

Fashion house Oscar de la Renta is featuring its Pre-Fall and Fall/Winter 2020 collections, inclusive of ready-to-wear, handbags, jewelry, accessories, and a new perfume, with plans to add its childrenswear line soon. 

Oscar de la Renta CEO, Alex Bolen, sees an immense growth opportunity in partnering with Amazon, since a large portion of the designer brand’s customers are on Amazon and are mostly Prime members.

Bolen told Vogue, “For me to get more mindshare with existing customers in addition to getting new customers — that’s the name of the game. We want to be able to talk to her wherever she’s comfortable shopping.”

Pros and Cons for High-End Brands

High-end brands who participate in Luxury Stores will encounter their share of opportunities and challenges. Prestigious brands will need to evaluate the trade-offs when deciding to join.

Benefits for high-end brands are outlined below:

• Reach More of Your Customers: Since consumers have proven to be Amazon-centric, now more than ever before, high-end brands can reach more of their customers and acquire new customers on the marketplace.
• “Store-Within-a-Store” Experience: The “store-within-a-store” functionality provides luxury brands full control over inventory, selection, and pricing. The independence offered may be greater than traditional department-store relationships.
• Amazon Merchandising Tools: Amazon offers high-end brands tools to create personalized content for their unique voices. The content and technological capabilities offered to brands will enable them to engage with their customers through immersive storytelling.

Challenges for brands are as follows:

• “Lack of Prestige” Perception: Amazon’s apparel business is largely fast fashion. Given the prestige that is associated with luxury brands, fashion houses may fear their exclusivity will be compromised.
• Digital Has a Higher Return Rate: Online stores have shown to have higher returns rates than brick-and-mortar stores. Alex Bolen, Oscar de la Renta CEO, shared that digital almost reached a 30% return rate in a day compared to low single digits in-store.
• Former Major Brands Lacked Brand Protection: In recent years, major brands (i.e. Nike, Birkenstock) have terminated their business partnerships with Amazon due to a lack of brand protection. High-end brands run the risk of experiencing the same challenges. It is currently unclear if brands that participate in Luxury Stores will have greater access to customer data and brand protection measures.

Final Thoughts

Amazon’s Luxury Stores shopping experience may begin to draw more high-end brands to its marketplace in a time which many are pivoting to double down on e-commerce, as luxury department stores shutter their doors. High-end brands can reach more of their customers on a platform they are already using, providing opportunity to nurture existing customers, drive shopper loyalty, and acquire new customers from a wide audience of Prime members.