Resources - Blog
Amazon Launches Luxury Stores for Fashion Brands
Stay on top of the latest e-commerce and marketplace trends.
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.
Amazon’s Luxury Brand Initiative
Amazon has historically struggled to lure high-end brands to its marketplace. The company’s new initiative is a major step toward positioning itself as a destination for luxury and high-end fashion items. Oscar de la Renta is setting the stage for other designer labels to follow suit.
Amazon is the largest seller of apparel in the United States. Furthermore, Amazon customers ordered over 1 billion fashion items on mobile devices in the past year, indicating how Amazon fashion customers enjoy shopping for items within the mobile experience.
Although the items are mostly fast fashion, creating a space in which shoppers can purchase high-end fashion will expand Amazon’s customer base. Accessibility to luxury fashion items, combined with the mobile experience proven to be highly utilized, may become a highly profitable business model.
Eligible Prime members will receive an email invitation from Amazon that grants access to Luxury Stores. As of now, it is not clear how the retailer determines eligibility.
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.”
Luxury Stores’ Innovative Feature
The Luxury Stores experience provides a View in 360 tool, which is an interactive, AR feature that enables consumers to view a garment from a 360-degree view. The tool also provides a visual of how the garment will look on a variety of body types and skin tones, represented through multiple models for each size.
The tool was created to overcome the difficulties consumers experience in shopping online for clothes that fit well. The feature provides an extensive view of the size, fit, and draping of a garment to help shoppers determine if the item will be flattering. Consumers may greatly appreciate the tool, as it enhances the online shopping experience and allows shoppers to envision how the item will look on them.
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.
Previous Forays into Luxury
Amazon’s previous attempts to appeal to high-end brands paved the way for its latest venture. Amazon added Stores in search results to drive traffic to a brand’s Store, providing consumers with a more streamlined shopping experience and giving brands greater visibility and representation in search.
The retailer also took part in a partnership with Vogue and Council of Fashion Designers of America (CFDA) to launch Common Threads: Vogue x Amazon Fashion. Common Threads is a storefront created to lift the sales of independent designers during the COVID-19 pandemic.
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.