Amazon to Launch Its Luxury Fashion Platform in September

By Mariliana Fotopoulou Friday, August 28, 2020

Amazon (NASDAQ: AMZN) is reportedly proceeding with its plans to roll out a luxury brand fashion platform, which is to be launched in September.

According to Women’s Wear Daily (WWD), the ecommerce giant will launch a new platform that will include several European and American brands. The business model will be similar to Farfetch, where brands can completely customize their virtual stores.

Retailers will be able to cooperate with Amazon’s broad network of suppliers. Amazon, which has a market cap of $1.72 trillion, plans to invest $100 million in the marketing campaign. Additionally, it is building a warehouse in Arizona just for the sake of this project.

Furthermore, the company’s plans to cooperate with film and television companies are also moving forward. WWD notes that the platform had a scheduled launch in the spring that they had to postpone due to coronavirus-related quarantine restrictions.

Another Winning Project for Amazon?

Julie Wainright, Chief Executive of the luxury marketplace RealReal, says that she doesn’t think of Amazon’s new endeavor as a potential threat to her company. Instead, she hopes that the ecommerce giant’s project will boost modern brands that are struggling.

She notes, “The contemporary brands need a lot of help and so if it spurs their growth and helps them in this difficult time, I think it’s great for them."

"The resale market has always had a different rhythm than the primary market, but clearly we need the primary market to succeed in order for us to have a secondary market, so I really do hope it is mostly focused on high-end contemporary and they need help and we support that."

The new project isn’t the first of Amazon’s entries into the retail fashion industry. The ecommerce behemoth launched Prime Wardrobe in 2018, a service that lets you try clothes and shoes before purchasing, and Personal Shopper in 2019.

Additionally, Jeff Bezos’s company also owns an in-house fashion company, The Fix. Amazon has also acquired two fashion companies, Zappos and Shopbop. It is very likely that before deciding to launch its own luxury brand fashion platform, Amazon considered buying an existing one.

Biggest Challenges

While numerous brands will be attracted to Amazon’s new platform, the biggest challenge the retailer might face is in the relationship with customers. In previous businesses, when a client purchases a product, Amazon prefers keeping most of the client’s information to itself.

If Amazon plans to utilize that same system in its new project, it will be tough for the vendor to access the customers for sales or marketing time and time again, since only Amazon has access to the customer’s information. Repeat sales play a significant role in the profitability of brands, meaning this system could become an issue for Amazon’s merchants.

Additionally, customer relationship is more significant in the luxury fashion space compared to other industries as luxury services fuel higher profit margins.

If you preserve information about a customer’s history, it becomes very difficult to suit their needs. However, it is still early to speak about it in detail as it is still not clear how Amazon's new platform operates.

Fresh Record Highs

Amazon’s stock consistently reaches record highs. Shares of the ecommerce giant are trading at $3,437 per share after receiving another boost on reports that they plan to launch a luxury brand fashion platform in September. Amazon stock price gained around 4% in the past two days only.

The AMZN buyers are likely to target $3,470 as their next target as the buying side remains in firm control of the price action. In case the overall risk sentiment further improves, AMZN stock may reach $3,625 next month.

Summary

Amazon plans to launch its new luxury brand platform in September, and while it will undoubtedly attract many vendors, there are concerns about Amazon’s approach and its relationship with customers.

In the meantime, Amazon share price trades at record highs, pushing the company’s market capitalization above $1.7 trillion.

About the Author


Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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