Here’s Why Amazon Might Be Looking To Venture Into The Intimate Apparel Segment

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After rolling out private clothing labels for women and recently launching a private-label men’s clothing collection named “Buttoned Down”, Amazon (NASDAQ:AMZN) is now reportedly venturing into the intimate apparel segment.  The Wall Street Journal reports that the company plans to start selling its own line of competitively priced women’s intimate apparel on its U.S. website.  Amazon already sells intimate apparel from several department-store brands.  However, its private label undergarments appear to be based on the strategy of  securing market share through lower prices, even at the cost of sacrificing margins.

Selling lingerie online is not an easy proposition, given that consumers look for fit and feel of the garment before a purchase. However, Amazon’s strategy to offer the garments at a much lower price compared to competitors can attract customers to “try” the garment through an online purchase and eventually stick to its platform based on the quality of the product. Also, as millennials look for convenient and private ways to try and purchase undergarments, Amazon venture into this segment could well  be timed right.

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Attracting Millennials Through An Intimate Shopping Experience

Many millennials find shopping for intimate apparel in departmental stores frustrating and intruding. They prefer to buy these garments online where technology allows them to select the desired products and return them if they proce to be ii-fitting or unsuitable. While a lot of online start-ups are looking to fill this gap by offering lingerie online, Amazon would have an advantage in this space. It has the deep pockets to market this concept and the data and tools to offer customers the right information regarding size and fit.  Furthermore, with the price advantage, the company can lure customers to “try” the product once, without a significant financial loss. Lingerie is a $ 13 billion industry growing at a rate of 3.3% every year. While Victoria Secrets is the leading brand in this segment, Amazon has the potential to grab a sizeable portion of this market with a model that appeals to millennials and those looking for a more private experience to shop for lingerie.

As Amazon expands its e-commerce offerings, apparel is likely to become a significant segment for the company. Apart from private labels for men’s and women’s apparel, the company is also reportedly developing its own line of workout apparel.  The company is already the largest seller of clothes online in the U.S.  and Amazon is likely to achieve a market share of nearly 20% in the U.S. apparel market by 2020. According to a survey conducted by Morgan Stanley, 60% of consumers said that they would buy more clothing on Amazon if it sold a wider selection of well known, fashionable clothing brands. As it taps into the growing trend of online shopping for apparel, Amazon is likely to grow revenues by expanding the range of garments available on its platform.

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