When Amazon purchased a 10,000 square-foot warehouse in Williamsburg to use as fashion photography hub, most brands were skeptical of its grandiose ambitions. Louis Vuitton’s chief executive Yves Carcelle told Vogue UK in 2012 that it would never sell the brand on Amazon, because of the vertical, exclusive retail model of “direct control” they pioneered. Many others believed consumers would never be interested in buying luxury goods placed alongside detergent, even if Amazon provided more convenient and faster fulfillment than any luxury e-commerce site. Tony King, founder of luxury branding agency King & Partners told Digiday “A consumer doesn’t go to Target and then stop at Valentino. Right now, it’s like having a physical store like a Walmart asking luxury brands to fill it with their products. It’s not going to happen — it needs to overhaul.”
Four years later, Amazon is expected to surpass retail giants Nordstrom and Macy’s in apparel and accessories sales in 2017. By 2020, Amazon sales are anticipated to be double that of macy’s.
Where did Amazon go right? It targeted mid-priced or aspirational luxury brands (e.g. Theory, DVF, Joie, Parker, Vince) that had cache but were more about being inclusive than exclusive. LVMH still has a “no-engagement” policy with Amazon, but it matters less each time a new mid-level luxury brand signs on. Amazon’s ambitions are grander, as it launched seven in-house brands in February and set aside a budget to advertise just its Fashion arm.
Amazon’s advantage lies in its fulfillment capabilities, built out to near perfection across categories. Ninety-percent of American consumers say a convenient return policy and free shipping are the most important characteristics of an online shopping experience, both of which have been historically challenging for fashion brands. As 60% of luxury purchases are now influenced by a digital experience, brands lagging in omnichannel and e-commerce capabilities may find upside in working with Amazon.