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Is Amazon Missing a “Prime” Opportunity in Apparel?

Though Amazon seems to have big plans for fashion, the vast majority of apparel on its e-commerce platform are listed by third parties, overlooking the potential to reach more of its valuable Prime member base by increasing trusted, first-party, Prime-eligible listings.

A new Coresight Research report, “Amazon Apparel: Who Is Selling What? An Analysis of Nearly 1 Million Clothing Listings on Amazon Fashion,” also evaluates Amazon’s nascent private labels as well as national brands including Nike and Calvin Klein to determine the kinds of brands that are performing well on the site—for the moment.

Among the most critical insights in the report: more brands would likely be willing to sell through Amazon if the e-commerce giant fulfilled items itself rather than relying on sometimes unreliable third parties, which consumers don’t trust when it comes to shipping and returns charges, and returns policies. Consumers also regard first-party listings as correlated to product authenticity, which could be especially important for high-cost, high-end fashion items.

Indeed, more than one third (38 percent) of those shopping Amazon for apparel said they’d rather buy directly from the e-commerce giant versus third-party sellers. Amazon-owned apparel would automatically be eligible for free two-day shipping via Prime, making these products significantly more attractive to high-value Prime customers.

For now, just 13.7% of men’s and women’s apparel is listed and fulfilled by Amazon; the rest, 86.3% percent, is executed by third parties, which is fairly evenly split across men’s and women’s, coming in at 87.1% and 85.7%, respectively.

If Amazon intends to become a serious player in fashion, and not just apparel, there’s considerable opportunity to bring a greater share of apparel inventory in-house and under tighter control to provide a truly customer-centric, and brand-friendly experience.

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Coresight found that Amazon, ever mindful of profits and margins, seems to be focusing its first-party inventory on higher-value categories like suiting and blazers, jeans and activewear in its women’s wear holdings.

Despite the closely watched, stealthily launched private-label rollout last year, to date Amazon’s private brands account for just 0.1% of total apparel available for sale on the site. Like the industry overall, 80 percent of Amazon’s private labels focus on women’s apparel.

Women’s brand Lark & Ro, leads by far with the greatest number of products, 454, on offer. Mae, an intimates and sleepwear label, comes in a distant second with 91 items. Trailside Supply Co. includes less than two dozen (21) products.

Though their numbers remain relatively small, Amazon’s private labels very much are finding their way into customers’ shopping carts and closets, perhaps due to these products’ prominent positioning in on-site search results. According to the report, one in nine shoppers reported purchasing Amazon private-label apparel in the past year, driving Amazon to the position of fourth-most-purchased clothing brand on its e-commerce site.

Among the national brands available on Amazon, many familiar names, as well as some lesser known ones, occupy the top 10 list of labels with the greatest number of products registered. Though premium athletic brand Nike comes in at the top of the most-listed brands, with 16,764 products on offer, Interstate Apparel, which offers kitschy, in-your-face women’s activewear, is virtually neck-and-neck with 16,743 listings.

Also among the most-listed are the usual suspects such as Gildan (No. 4; 14,085 product listings) and Hanes (No. 6; 12,854), reflecting consumers’ reliance on Amazon for basics. However, Adidas ranks No. 10 with little more than half of Nike’s product pages (8,579) while landing in the middle of the pack is No. 5 Calvin Klein (13,623), which famously announced its exclusive-product partnership with Amazon for Holiday 2017.

Perhaps because they pose less of a risk in terms of fit, women’s tops and tees earn the designation of most-listed apparel category, with 138,001 products. Similarly, for men, shirts—which include polo shirts, casual shirts and tees—account for 109,043 listings, emerging as the second-biggest category.

Not surprising, given Nike’s and adidas’ prominence across the site, activewear makes a strong showing, accounting for 76,930 men’s items and 51,992 listings for women. In fact, active apparel listings far outpace those in categories considered to be “staple” items, such as jeans and sweaters. In line with the popularity of athletic apparel, one quarter of surveyed consumers indicated purchasing activewear on Amazon over the past year.

Though there’s a vast amount of choice when it comes to apparel inventory on Amazon, there are far fewer brands in the mix. Coresight’s data revealed that 30 brands are responsible for nearly 30 percent of all apparel across the e-commerce site.

Even fewer appear to be executing a comprehensive product and category strategy. Of 2,798 apparel brands active on Amazon, just 72 list upwards of 2,000 products, while 189 list greater than 1,000. It’s reasonable to assume that Amazon is but part of the channel mix for many brands, though there’s a clear opportunity for labels to broaden their presence and grow sales.

Of note, included in that “30 for 30 percent” group are a number of premium brands, such as Ralph Lauren (No. 12), Tommy Hilfiger (No. 24), Columbia (No. 27) and Hugo Boss (No. 29), which could indicate Amazon’s increasing importance to brands beyond mass-market basics.

Last year, Calvin Klein put the fashion world on notice when it partnered with Amazon on a holiday strategy that saw the e-commerce giant hosting a dedicated store, offering exclusive products, for the iconic American brand on its website. Given that vote on confidence, it makes sense that Calvin Klein seems to have a larger wholesale agreement with Amazon, with 38 percent of its apparel products listed and fulfilled directly by the e-commerce company, with the remainder executed by third parties. By contrast, just 12 percent of Adidas listings, 21 percent of Tommy Hilfiger, 59 percent of Columbia and 15 percent of Hugo Boss are first party listings. Note that just 1 percent of Gildan and 6 percent of Hanes products are listed directly by Amazon.

Coresight’s research indicates that Amazon’s private-label strategy seems to target not just specific product categories—such as the dress-heavy listings for Lark & Ro—but also distinct consumer demographics.

In recent years, Amazon has made no secret of its fashion ambitions, debuting its in-home try-before-you-buy Prime Wardrobe service and the Echo Look device, which takes photos and videos of the user’s outfits and offers fashion feedback and advice. What’s more, a small number of brands, sensing the opportunity, have added their own skills to the popular Alexa voice assistant. Using the Perry Ellis skill, for example, men in need of style advice who want to be dressed appropriately for a specific occasion can query Alexa to be sure they’re event ready.