Amazon Looks To Disrupt High-End Fashion Industry Next
Amazon (NASDAQ:AMZN) convincingly dominates the e-commerce market, and is one of the top players in the market for e-books and electronic goods around the world. It continues to enter new categories and disrupt the traditional brick-and-mortar retailers in the online space by offering the same products at deeply discounted rates. This week it entered the high-end fashion niche and now offers fashion products online for sale on its platform. [1]
See our full analysis for Amazon’s stock here
Fashion is one category where Amazon hasn’t had much luck so far. It made a couple of high-profile acquisitions such as Zappos, Shopbop, and started Endless.com and MyHabit, to get into the fashion apparel space, but since the fashion model doesn’t exactly lend itself to discounting, or product commoditization, Amazon failed to attract the kind of audience it expected.
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With this new attempt, Amazon is leveraging all its strengths — technology, data analytics, presentation, warehousing efficiencies, personalization and marketing — and most of all, its deep pockets, to disrupt the fashion industry. It has partnered with many high profile brands like Michael Kors, Vivienne Westwood, Catherine Malandrino, Jack Space and Tracy Reese to get inventory to sell on its website. With Amazon’s scale and reach, we expect them to see a huge boost in sales despite the fact that they will have to discount their products. If this new foray takes off, it might also help boost Amazon’s sagging profit margins, greatly boosting its overall value.
Amazon also recently launched AmazonSupply, which is aimed at business, scientific and commercial customers and offers products like abrasives & finishing, cutting tools, fasteners, fleet & vehicle maintenance, hydraulics, pneumatics & plumbing, janitorial & sanitation, lab & scientific, materials, occupational health & safety, office, power & hand tools. We expect it to continue to venture into new categories and grow its revenues in the coming years.
Amazon competes in the e-commerce and e-content space with players such as eBay (NASDAQ:EBAY) and Apple (NASDAQ:AAPL). We currently have a $222 Trefis price estimate for Amazon, which stands close to its market price. Its e-commerce business accounts for almost all of its value.
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