Yesterday Amazon launched its Wardrobe program, which lets shoppers fill boxes with clothes and accessories to try on at home. As the e-tailer continues to encroach on the territory of traditional retailers, its latest move signifies that apparel may have reached a crucial tipping point.
Once a sector reaches 20% e-commerce penetration, clear winners start to emerge – specifically Amazon, which generates over half of online retail growth. This has already happened in media and electronics, and now it’s happening in apparel, where e-commerce now accounts for 21% of sales in the US.
By launching new services like Wardrobe, Amazon can accelerate this disruption. 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 – putting yet another nail in the coffin for retailers. While 11 brands in L2’s Digital IQ Index: Department Stores offer completely free shipping both ways for any order, none of them has a designated at-home try-on program except for Net-a-Porter and sibling Mr Porter, and that program – to be launched this year – is reserved for top-spending clients.
However, the last hurdle Amazon must overcome is the potentially huge cost of free returns for customers. Over time, Amazon will likely use predictive analytics to make better, more accurate product recommendations, as it already does for household items with Prime Pantry, thus reducing the cost of returns. For now, Amazon appears content to absorb costs and weather the storm until it becomes the top fashion retailer in America.
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