Amazon in big apparel move with ‘try-before-you-buy’ service
Amazon is ramping up its efforts in the apparel market — and challenging brick-and-mortar retailers — with an initiative designed to solve one of biggest drawbacks associated with buying clothes online.
The retailer is preparing to launch a service, currently in beta mode and called Prime Wardrobe, that enables Amazon Prime members to order (and try on) from three to 15 items of clothing before they actually buy any of the items — with no upfront charge or added fee. Shoppers can keep the merchandise for seven days, returning unwanted pieces and paying only for the items they keep.
Some analysts pointed out the new service with its free return will only add to Amazon's already considerable shipping costs. But the online giant has its eye on the prize.
"For now, Amazon appears content to absorb costs and weathering the storm until it becomes the number one fashion retailer in America," Cooper Smith, research director, L2, told Chain Store Age. (For more of his comments, click here.)
Here’s how Amazon Wardrobe works: Prime members browse and order merchandise that features the Amazon Fashion Prime Wardrobe logo. More than a million pieces of clothing and accessories are eligible, according to Amazon, with brands ranging from Calvin Klein to Levi's.
To place an order, customers must select at least three items, which are shipped free of charge. As an incentive to encourage sales. Prime members who keep three or four items will receive a 10% discount off their order. If they keep five or more items, the discount jumps to 20%.
Unwanted items can be shipped back in a return-ready resealable box that has a pre-paid returns label. Packages can be left on shoppers’ doorsteps, or brought to a UPS shipping location. Returns are also free.
While the program has yet to launch, there is already speculation about how Amazon could expand the service. The online giant could link Amazon Fashion and Prime Wardrobe with Alexa’s conversational commerce functionality, a move that would help consumers make fashion choices via the Echo Look camera and artificial intelligence (AI)-powered style checks, according to Seeking Alpha.
Amazon is certainly not first out of the gate with a “try before you buy” online concept. Some retailers, from Stitch Fix to Trunk Club to the new bridal start-up Floravere have even built their business models around the experience. But unlike some of these other players, Amazon Wardrobe does not charge a styling fee. Also, shoppers pick out their own clothes.
Similarly, electronics giant Best Buy recently launched its version of a try-before-you-buy program. Through a partnership with Lumoid, Best Buy’s program enables shoppers to give electronics gear — from cameras and audio equipment to fitness trackers — “a trial run” at a fraction of the cost of making a purchase.
Commentary: Amazon accelerating e-commerce disruption of apparel
Apparel is at a tipping point. E-commerce currently accounts for 17%-20% of total apparel sales in the U.S. Historically, when e-commerce surpasses the 20% threshold of a retail category Amazon comes in and makes a big wave, because Amazon is the main beneficiary of e-commerce capturing half of all growth in online retail. We’ve witnessed it time and time again in both media and electronics, and now it’s happening in apparel.
Amazon will accelerate e-commerce disruption of apparel by launching new services, such as Amazon Prime Wardrobe which was announced Tuesday. Dressing rooms have been a competitive advantage for traditional department stores, but now Amazon is offering dressing rooms as a service and putting them in shoppers’ homes. This is yet another nail in the coffin for traditional department stores.
The last hurdle Amazon still has to overcome is how to handle the lavish cost of free returns for customers. Over time, Amazon will use predictive analytics to make better, more accurate product recommendations (like it does for household items with Prime Pantry). For now, Amazon appears content to absorb costs and weathering the storm until it becomes the number one fashion retailer in America.
Whole Foods Markets CEO expects Amazon deal to evolve the brand
The ink is barely dry on Amazon’s acquisition of Whole Foods Markets, yet the natural grocer’s CEO implied that “big ideas” are already in the works.
During a town hall meeting for employees on Friday following the announcement that Amazon would purchase Whole Foods Markets for $13.7 billion, the natural foods grocer’s CEO John Mackey revealed that the deal positions Amazon to open new formats. “Over time, there could be other formats that evolve that wouldn’t be branded Whole Foods Market, they wouldn’t be our standards,” he said in a transcript filed with the Securities and Exchange Commission.
He also reported that Whole Foods Market stores and brands will maintain the quality standards that the brand has built its reputation on. “The integrity we have behind our products and our brand, those are going to be intact,” Mackey added. “They don’t want to change those things.”
Jeff Wilke, Amazon’s CEO of Worldwide Consumer, who was also at the meeting, concurred. “We admire the quality standards of Whole Foods,” he added. “And I think it would be crazy to change them.”
As expected, Whole Foods’ employees had questions. One of the more candid ones was what made the grocery chain so attractive to the online giant. Wilke expressed that Amazon was most impressed by Whole Foods’ innovative take on changing the way people thought about food.
“We have enormous admiration and respect for that. And the worst thing that we could do would be to ask you to change it in some discontinuous way,” he said.
“We want you to continue to do what you do best. We admire what you’ve built, and what you’ve already achieved, and continuing the mis-sion that you’ve been on for four decades,” Wilke said. “[Whole Foods] is going to help us in lots of ways, and make us a better company.”
The merger is also an opportunity for Whole Foods to step up its customer engagement game. For example, Mackey is already considering how to leverage Amazon’s expertise to drive a more customer-focused shopping experience.
“Amazon does many things better than Whole Foods Market. We do some things better than them. But they do a lot of things better than us,” Mackey explained.
“One thing they do better is they are more customer-centric than we are,” he said. “And one of my takeaways is that, by God, we’re going to be-come as customer-centric as Amazon. We’re going to import their passion about that.”
Technology will also play a stronger role for Whole Foods going forward — an area where the grocer has been lacking. Not only will the retailer be stepping up its game with technology, Mackey expects it to improve the shopping experience.
“[Amazon’s] at the forefront of technology, and we are a little behind,” Mackey said. “I think that we can expect that we’ll go to the front of the class, eventually, in the grocery business, from like, the class dunce to the class valedictorian.”