Because if your initial USP is price, immediately there’s a lot of status brands that don’t align with that.
Amazon Fashion as a department within the ecommerce giant has not enjoyed the quick success of books or electronics.
You can track the decisions made as being based on price, then product clones, and most recently the move into luxury brand exclusivity. Brand teams would rather not touch it. Commercial teams see their next bonus depending on it.
As in-store retail collapses due to Covid-19, we examine the evolving history of Amazon Fashion: From Price To Exclusivity.
Big Picture Stats
- Last year in 2019, Amazon orders for clothing, shoes, and jewellery combined exceeded home and kitchen purchases.
- In terms of Top 100 product searches, only 3 make the list from lifestyle: backpack, shoes, socks.
- There are currently 150 million Prime subscribers, a 50 percent increase from 100 million in April 2018 (VentureBeat, 2020).
- The majority of Amazon’s sales comes from North America. However…
- From a global perspective, we shouldn’t forget that Amazon is the #1 marketplace in India, a country with 330 million online shoppers, with more coming online everyday as mobile internet rolls out beyond the cities.
- In Europe, the combined retail numbers from Germany and the U.K. dwarf all of the other stores.
So How did We Get Here? The Historical View
- Amazon began as the place you went to buy books, then electronics, and it branched out from there. Those categories were driven by price and customer service.
- We all know that electronics (the most popular category) and kitchen goods are very strong areas, but apparel arguably has the most growth potential because Amazon Fashion has struggled historically with it.
- When we ask the question – why the historic struggle and recent improvements? Because if your initial marketplace USP is price, then immediately there’s a lot of status brands that don’t align with that. Or at least, not comfortably. However, when you see Jeff Bezos rubbing shoulders at the Oscars and Emmys with celebrities, and investing in premium TV shows, it widens the brand canvas.
- They might need to do more of that if the Luxury Stores invite programme is to be a success. But in the year of the pandemic, retail infrastructure you can rely on becomes a solid reason for market place sellers to get onboard.
- “Luxury Stores is currently offered in the U.S. by invitation only to eligible Prime members.” I’d imagine it will have to succeed in the US before they would roll it out in other markets.
Best Practices for Fashion Brands
- GET READY: The quality of your product data and content comes from your attention to detail. Yes automation is great but you must create a workflow that includes quality control. People make mistakes. Plan how to catch them before you miss a weekend’s worth of sales because someone was more concerned with a newer, lesser priority.
- TURN ON THE ADVERTISING: 23% of Amazon visitors don’t have a specific product in mind. Search ads combined with display will perform better providing they are professionally managed. Sometimes we have to be exposed to a brand or product many times before it persuades us to buy. It’s like when you hear a song for the first time. Great advertising should wear in over time. Coke ads around the holiday season is a classic example of this idea.
- WORK WITH TALENT: Invest in the talent to successfully manage your Amazon Advertising. Do not under-estimate how competitive things are now. This is not the time for rookies to be in charge of your operation. Marketplacepulse.com state that Amazon numbers for 2020 have almost a million new marketplace sellers this year. That’s over 86,000 in the UK, and over 150,000 in the US. To paraphrase the entrepreneur Jay Abrahams, ‘if you invest in talent you’ll only cry once. If you go cheap, you will cry a lot more than that’.
- BRANDING MATTERS: Amazon provides this incredible retail infrastructure at a time of national crisis but you still need to give people a reason to care. Branding is why NIKE came off Amazon directly. And yet Levi’s have had great success. So it’s not a one size fits all situation. The reason for people to care enough to buy must be present. To quote buzzfeed, “a dozen women’s clothing brands and (inexplicably) seven denim brands”.
- EYES WIDE OPEN: If you’re going to sell on a marketplace you need to have an action plan for when there’s an Amazon Basics style version of your product. ALLBIRDS shoes found that out.
Challenges for Fashion Brands
- Creating organic visibility for products
- Sustainable Growth – managing Amazon Advertising in a scalable, profitable way
- Finding market insights and opportunities in a way that can be turned into action
- Can you win marketshare? Can you defend what you currently have from others?
- How much experience and knowledge can you retain if a key member from your in-house team moves on?
- Cost of international expansion
- How selling on Amazon fits within your organisation – if it’s treated as a lower priority it will likely generate lower results
Amazon’s New Luxury Stores – The Pitch
Why join the platform? Primarily for the commercial opportunity. Second, if you’re not visible and your competitors are then, unless you have a stronger brand story, your brand and sales could decline over time.
It’s where your future customers are. 150 million Prime subscribers means it is simply too big to ignore unless you are of the size of NIKE or Disney. There is sales to be had. With nearly a quarter of visits not having a specific product in mind, luxury brands are beginning to see more pros than cons.
Is it a good idea to start a fashion or lifestyle brand on Amazon? That really depends on your USP. If you aim for price, it’s likely to be a battle you can’t win. There’s an argument that your product listing would need the same kind of critical acclaim proof that electronics products enjoy. Established brands can essentially use Amazon in Q4 to cash-in on brand marketing they’ve done elsewhere throughout the year.
In luxury, being expensive is a given and in terms of desirability that’s a challenge for new brands because the aim is to tap into how you feel, not what a journalist said. Fashion and lifestyle brands want just enough social proof so that it’s cool – and not so widespread that it could be perceived as common. In cars it’s the Tesla principle of getting onto a waiting list and even then you might not get one.
Ecommerce Marketing: Lessons From The World Outside of Amazon
Longterm, the profitability of paid media is relative to your current level of brand desirability.
Harvard Business Review have well documented the higher cost of acquiring new customers than existing ones. Once you go beyond your level of brand desirability, you have to spend even more money to convince people to buy into your brand. That means there is always a point at which your profitability declines as you reach people with less brand affinity.
This has been infamously described by Andrew Chen as ‘The Law of Inefficient Click Throughs’.
We’re advocates of micro influencers with a highly engaged audience, as well as high quality content marketing to drive inbound organic traffic. Micro influencers are worthwhile when you have a product or service that they are genuinely enthusiastic about. That means they genuinely want to wear that cool jacket when they’re out and about – as opposed to only for the social feed. Word of mouth has always existed, it’s simply evolved in the digital era.
Amazon Seller Pivot – The Fashion Angle
The impact of Covid-19 and the global pandemic has utterly shaken the retail world to the core. Over at VisualCapitalist.com you can see the fastest growing and declining ecommerce categories from March 2020 compared to March 2019.
Amazon sellers in rapidly declining markets, I would imagine, by now have looked at how to pivot into upwardly mobile categories. The huge numbers of people working from home, unable to socialise with friends in a normal way due to Covid, has dramatically changed the needs of consumers.
Categories such as home improvement and exercise equipment are in constant demand. Other categories have seen demand plummet as day-to-day behaviour changes.
In terms of Amazon Fashion, leisurewear and loungewear have seen an increase in popularity. Here at McGarry we use the Merchant Words insights tool to see the latest Amazon Fashion latest trends. It’s not unusual for PR and ad campaigns to result in an uplift in queries within Amazon – something many will miss if they only look at Google and Facebook for uplift.
Prime Day 2020 stats give us clues as to what to expect over the weeks ahead.
- Average spend on Sponsored Brand ads was up 263% year-over-year on the first day of Prime Day, and up 238% on the second day.
- Average CPC for Sponsored Brand ads was also up 23% on Prime Day year- over-year.
- The first day of Prime Day had a higher ROAS for Sponsored Products than the second day, up 43% week-over-week.
With Black Friday and Cyber Monday week approaching, and the holiday season right around the corner, the ever-changing popularity of products from kidswear, womenswear to menswear continues to be a moving target. As always, attention to detail is the best silver bullet tactic at your disposal.