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Amazon: Apparel’s Friend or Foe? Sourcing Executives Weigh In

Amazon is always the elephant, the 800-lb gorilla and the inconvenient truth in the room, but some seem to think companies are unnecessarily quaking in Amazon’s wake.

It’s no secret that Amazon has been slowly and quietly encroaching on the apparel space, with new private label brands, more targeted marketing and a previously reluctant Nike finally agreeing to sell with the e-commerce behemoth—and that forward movement into the apparel space isn’t expected to let up.

Analysts at Cowen & Company have said Amazon will surpass Macy’s to become the largest apparel seller in the U.S. this year, and that the company’s gross margin value should rise from $22 billion in 2016 to $62 billion by 2021.

“I think Amazon has changed the world and the way we shop and I actually think it’s a really exciting time,” Bonobos chief supply chain officer Liz Hershfield said during a panel at the recent Sourcing Journal Summit in New York City. “Walmart is right up there with it, obviously, [thanks at least in part to its acquisition of both Bonobos and] with the strategy from an e-commerce perspective, so I think it’s going to be interesting to see what happens, because they are just all over the place, in every piece of the business you can imagine. They are going for world domination.”

[Read more about what execs had to say at the Summit: Next Step for Sourcing? Go Where No Supply Chain Has Gone Before]

World domination may be all well and good when it comes to goals for Amazon to strive for, but to Untuckit chief supply chain officer Bjorn Bengsston, Amazon is just another piece in the apparel industry’s puzzle.

“We tend to read these big headlines that Amazon is going to take over business etcetera etcetera,” Bengsston said, adding, “It’s just another player and I don’t think Amazon yet has proved to us they’ll be able to sell fashion product to a great extent.”

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Untuckit’s favored dress shirts designed to be worn untucked can be found on Amazon, and though Amazon has very quickly expanded its fashion offering, basics is what Bengsston says they’ve been best at. And though they’re expanded on the private label side, that business is still in its nascent stages.

“I think it’s dangerous to overestimate the impact that Amazon will have,” Bengsston said. “I think they will be an important player, but it also depends on business to business and which business you’re in and who your customer is.”

It’s still possible that Amazon is simply having its day, as Macy’s once did, so thinking of Amazon as the end all for apparel may be the wrong approach.

“I think Amazon is just another route to the customer,” PVH chief supply chain officer Bill McRaith said. At this point, he added, he’s not sure whether to consider Amazon a FedEx 2.0, a sort of delivery mechanism to the customer, or an updated version of a catalog with a FedEx 2.0 element. “What I know is they’re another player who is in the mix…they are important just as everyone else is important.”

What the industry shouldn’t be doing, McRaith cautioned, is writing off brick-and-mortar as dead or dying—though it may be presently indisposed.

“Brick-and-mortar retail last year grew exactly the same rate as e-commerce did: $30 billion for retail, $30 billion for online. Now the sizes are completely different, so certainly there’s a different percentage growth, but everyone is important,” McRaith said. “The question is, do you have strategies built that allow you to support all the models, however the customer wants to buy the product? Do you have a model that actually works in all of this? That’s what we’re trying to do.”

Whatever the approach, a lack of those necessary strategies or any inefficiencies in the supply chain, could very well position brands and retailers to fail in the face of Amazon, which is scooping up startups—and will likely continue to. It’s most recent acquisition was of Body Labs, a company creating lifelike 3-D body models and can use a photo of a woman to generate custom 3-D print-knit clothing within 30 minutes on a Shima Seiki machine.

As founder and managing director of innovation accelerator XRC Labs, Pano Anthos, said during a separate talk at the Summit, “Amazon is actually as nimble as any startup.”