The Fashionista Strategy
Quote from Ndubuisi Ekekwe on April 22, 2018, 9:36 PMAmazon sells tons of clothes but has struggled to sell fashion to Americans. But it has found success doing what it does - peddling wears at thin margins. Yet, you cannot take away the power of brands.
To be clear, Chirico wasn’t talking about Amazon’s ability to peddle clothing generally. Amazon has already proved it can sell tons of items such as basic t-shirts, activewear, and underwear. But success with fashion—as in design-driven and trendy items—has remained elusive. [...] Designer brands, particularly high-end ones, shy away from selling on the site in part because they traffic in a perception of exclusivity and prestige, qualities that quickly vanish when selling on a platform as ubiquitous as Amazon. As Chirico noted, Amazon’s presentation doesn’t cast fashion in the best light.
The position of the brands is not new: Apple tried the same strategy with iPhone X and has struggled with sales [people look critically for the extra benefits which are driving the higher cost and cannot really see much. That assessment is possible because they can compare specs online].
With information asymmetry gone due to the internet, sustaining such positions will become challenging. Sure, there would always be brands with us, driving fashionsta margins, but increasingly in areas like clothing, the future looks different. As more people see that they are paying more than 40% on items of largely the same quality (minus the name brand), preferences will evolve.
This is just the beginning - Amazon will win at the end. The next phase will be making it easier to compare name brands with Amazon wears to demonstrate to users what the differences are. Once users do not see much, the brands will get the message.
Spend time to evaluate your online strategy. As noted in my frameworks, there are two things working here: commoditization and Internet Diminishing Abundance construct. Pay attention and smartly model your distribution channel and pricing.
Amazon sells tons of clothes but has struggled to sell fashion to Americans. But it has found success doing what it does - peddling wears at thin margins. Yet, you cannot take away the power of brands.
To be clear, Chirico wasn’t talking about Amazon’s ability to peddle clothing generally. Amazon has already proved it can sell tons of items such as basic t-shirts, activewear, and underwear. But success with fashion—as in design-driven and trendy items—has remained elusive. [...] Designer brands, particularly high-end ones, shy away from selling on the site in part because they traffic in a perception of exclusivity and prestige, qualities that quickly vanish when selling on a platform as ubiquitous as Amazon. As Chirico noted, Amazon’s presentation doesn’t cast fashion in the best light.
The position of the brands is not new: Apple tried the same strategy with iPhone X and has struggled with sales [people look critically for the extra benefits which are driving the higher cost and cannot really see much. That assessment is possible because they can compare specs online].
With information asymmetry gone due to the internet, sustaining such positions will become challenging. Sure, there would always be brands with us, driving fashionsta margins, but increasingly in areas like clothing, the future looks different. As more people see that they are paying more than 40% on items of largely the same quality (minus the name brand), preferences will evolve.
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This is just the beginning - Amazon will win at the end. The next phase will be making it easier to compare name brands with Amazon wears to demonstrate to users what the differences are. Once users do not see much, the brands will get the message.
Spend time to evaluate your online strategy. As noted in my frameworks, there are two things working here: commoditization and Internet Diminishing Abundance construct. Pay attention and smartly model your distribution channel and pricing.