As the go-to aesthetic for the last few years, activewear has been running hot with tons of new and established labels launching fitness-inspired collections. Now, thanks to Amazon, the category may be running scared.
The e-commerce juggernaut is reportedly planning to leap into activewear in a small but significant way, according to Bloomberg.
Insiders say Amazon has tapped some powerhouse vendors to create its new private label brand. The pieces will be made alongside Nike, Lululemon and Under Armour in Taiwan’s Eclat Textile Co. It’s also tapping a Uniqlo and Kohl’s factory Makalot Industrial Co. in Taiwan.
With experienced factories in place and a former product developer for Nordstrom’s Zella active brand and Nike leading the charge, Amazon may have all of the ingredients for a runaway success.
Though sources say the initial orders are small, SinoPac Securities Corp. analyst Silvia Chiu, who was the first to note Amazon’s involvement with Ecat, told the publication, “The contribution this year will be small, but the potential is high.”
And it seems Wall Street agrees, as news of the new athleticwear collection had hearts racing and stocks sinking on Friday. Lululemon shares fell off by 4.9% on the news, while Under Armour dropped by 2.8%.
The jitters reflect Amazon’s rising dominance when it comes to private label in general and its own apparel brands specifically. Nineteen of the retailer’s top selling private label items fall under its AmazonBasics label, which is also the site’s third best selling brand overall in the U.S. with items like electronic peripherals, batteries and office décor and supplies topping the list, according to One Click Retail. Apparel is the company’s best-selling private label category outside of AmazonBasics. The lines, which include Buttoned Down, Mae and Goodthreads, are gaining ground with $21 million in sales so far this year. Amazon’s Lark & Ro is the largest of the group with $10 million in sales year to date.
Amazon’s apparel sales—both direct and through its marketplace—reached $22 billion or 6.6 percent of the market, according to Cowen and Company estimates. The stock research firm predicts that by 2021 Amazon will make up 16 percent of all apparel sales.
The e-commerce site’s growth comes at a time when apparel retail is in turmoil and some athletic brands have taken a stumble. Nike, for instance, has made headlines this summer with more than 2,000 job cuts and a reduction in SKUs. The company also raised eyebrows with its decision to sell on Amazon.
While some question if the move will undermine the athletic company’s brand and wholesale partners, others say the reality is, you have to be where the customer shops—especially given Amazon’s willingness to work around brands to obtain stock and create its own product to fulfill consumer demand.