Prime Wardrobe: Amazon’s Next Move To Conquer The Fashion Retail Market

by Trefis Team
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“Integrated Retail” appears to be the new mantra for e-commerce companies, as the offline and online channels are being merged to offer a better customer experience. While brick and mortar companies have the advantage of physical stores where customers can try products, online retailers do not enjoy this benefit. Chinese e-commerce giant Alibaba believes that the new retail will be an integrated platform of offline and online channels where customers can enjoy the benefits of a consolidated offering. Amazon (NASDAQ:AMZN) appears to be working in a similar direction, and after acquiring Whole Foods to expand in the grocery segment, the company introduced a new perk for its Prime members called Prime Wardrobe, with a goal to expand in the fashion retail segment. This feature allows Amazon’s Prime members to order clothes to try, and buy if they like them. The company is offering free shipping both ways and a seven day trial period at no additional subscription cost. While this service is somewhat similar to companies such as TrunkClub and StitchFix, Amazon is allowing customers to choose the clothes themselves and is not charging any membership fee for the service. This appears to be an attempt on the part of the e-commerce giant to solve the complexities of buying clothes online, as many customers prefer to try them on before making a decision.

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Gaining A Bigger Share In The Apparel Market

While the online apparel market is growing at a rapid pace and is expected to grow at a CAGR (compounded annual growth rate) of nearly 14% in the next five years, it accounts for less than 20% of the total retail sales in the U.S.  Amazon is the largest seller of clothes online in the U.S. and is likely to achieve a market share of nearly 20% in the U.S. apparel market by 2020. With the introduction of Prime Wardrobe, the company can accelerate this growth and capture a larger market share. Further this can also lure more customers to buy clothes conveniently online instead of trying them out in crowded changing rooms.

Growing Its Base Of Prime Members

Another benefit of the introduction of the Prime Wardrobe is for Amazon to increase its loyal base of Prime members. Prime members are key sales drivers for Amazon, and by offering them interesting perks the company is able to retain and grow its large member base. As customers get hooked to the Amazon ecosystem and use its platform for all their digital needs, these initiatives work as catalysts for its entire business. Amazon works on huge volumes and low margins, so therefore building a large loyal (paying) member base is a critical factor for the company’s growth. Prime members are likely to drive revenues for all its retail products, and Prime Wardrobe provides another reason for them to stay on the Amazon platform.

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