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Focus: Can Amazon finally become fashionable?

The model is wearing Amazon's own-brand jeans (Find)
The model is wearing Amazon's own-brand jeans (Find)

Natasha Tinsley, a design engineer in London, bought a pair of Superga trainers off Amazon last week. “It must have come up as the cheapest in my size on Google I wouldn’t normally buy clothes there,” the 27-year-old says.

For Amazon, Tinsley’s experience is uncommon. The online behemoth is used to being the go-to retailer in everything from books to garden tools, hoovering up shoppers from rivals in every market as it builds up with little regard to profit. It is is now the fifth-biggest player in British retail, accounting for more than £4 in every £100 spent last year as shoppers pile into its speedy Prime service (this week demand for its Prime Day toppled the site).

But founder Jeff Bezos’ retailing phenomenon has long struggled to crack fashion, battling for credibility in a category where being cool is as important as rapid delivery.

Amazon is taking steps to tackle this. It launched an ad campaign for its own brand Find (pictured) last year and has at least five other labels in the UK and on the Continent. These include Iris & Lilly — which sells lingerie — and cocktail dress brand Truth & Fable although the company is tight lipped on the precise number of brands it has.

There’s more: its photo studio in trendy Hoxton, one of Europe’s biggest, boasts 21 booths and an editorial suite where 500,000 images are processed each year. It is undergoing its first makeover since it opened in 2015 to accommodate growth. And it has local language fashion websites and teams on the ground in France, Germany, Italy and Spain.

Bezos, now the world’s richest man, once said that, in order to be a $200 billion business, Amazon would have to learn how to sell clothes and food. Now that it has turbocharged the latter with last year’s £13.7 billion acquisition of upmarket grocer Whole Foods, fashion appears to be next in line.

The giant recently introduced Prime Wardrobe, which lets customers try the clothes before they buy (something that Asos is trialling too). And there are rumours that it tacitly plans to turn clothing manufacturing on its head after it patented an “on demand” system: it would make the clothes once an order has been placed, not before. The vast troves of data it holds on its customers — and possibly body measurements in the future — would allow it to do this at a mass scale.

So should traditional fashion retailers — everyone from Next to Topshop — be quaking in their boots?

Amazon is already making rapid gains. Household names such as New Look and Ted Baker have begun to sell directly via Amazon, while lots of smaller, independent brands shift their wares via the marketplace. Big-name labels which have previously held back from selling through Amazon are finally succumbing, sports giant Nike being the latest to tap Amazon’s huge customer base at the potential expense of margin and competition with itself.

Sofie Willmott, a senior retail analyst at Global Data, warns: “It could steal shoppers away from their website.”

Amazon’s vice-president for fashion in Europe, Susan Saidman, counters: “We’re not a competitor-obsessed company. We might benchmark competitors to see what they’re doing well but it’s not about trying to beat the competitors, it’s about trying to make the customer happy.” Amazon could rake in up to $85 billion (£64 billion) from fashion globally by 2020, Nomura estimates. (Though it doesn’t disclose figures for Europe, Amazon’s international arm saw sales rise 21% to $15 billion in the past quarter.)

But, despite its efforts, the money it draws from its own brands is not yet substantial, Saidman says. Own label products are becoming a more common battleground as retailers seek to differentiate themselves. Ailing department stores Debenhams and House of Fraser have thrown their efforts behind expansion in it and John Lewis last week said it wanted to create a £500 million own-brand fashion business, and for half of its products to be either own brand, or exclusive.

For Amazon, the question seems to be when, not if, it will finally burnish its fashion credentials. Success in the US and India has been tough to replicate in a fragmented European market.

“Would I like to be growing faster? Sure. Am I disappointed with how fast we’re growing? No,” says Saidman.

“In Europe it’s a much more developed market, similar to America, where you progress from the mom-and-pop stores to the big box stores to malls and eventually the online, and so it’s a different trajectory for us than a country like India [where Amazon Fashion grew quickly from a low base].”

That’s partly because shoppers in Britain don’t see Amazon as the place to buy clothes and shoes from. Only 15% of consumers would think of browsing the website for blazers and suits, recent figures showed, and 42% would still simply go there for books.

“Amazon is definitely a threat because of its sheer dominance but it’s held back by the fact that it doesn’t have that reputation as a fashion retailer,” says Willmott.

It’s not helped by the fact that the website isn’t easy to browse and its indiscriminate offering puts people off. If you type in “black dress” on Amazon’s search box, you’ve got 141 pages of dresses to choose from.

Willmott adds: “It’s not inspirational. You do see much more editorial content, the imagery has improved, but it has a long way to go.” Andreas Inderst, an analyst at Macquarie, adds: “With all due respect to them, it’s the Wild West there — you have hundreds of sellers and therefore, as a result, hundreds of results.”

In his most recent letter to shareholders, the 20th since the behemoth went public in 2007, Bezos wrote: “Amazon has become the destination for millions of customers to shop for fashion… We’ve had some success over the years… We’ve also had billions of dollars’ worth of failures along the way.”

Which category its fashion foray sits in could depend on Bezos sprinkling some of his trademark magic, and investors’ cash, on the venture.

Asos downplays the challenge

If Amazon does become fashion’s dominant player, High Street retailers rather than online rivals will suffer, the City reckons.

Asos is seen as one of Amazon’s prime rivals, selling many of the same brands. But, though there are similarities between the two, the product overlap is fairly limited — about 5% — says Andreas Inderst of Macquarie. “While Asos is not completely immune, the biggest threat is around mainstream, undifferentiated bricks-and-mortar retails. That’s what Amazon is targeting.”

Asos’s chief executive Nick Beighton adds: “You never underestimate any competition, let alone Amazon. They are putting a lot more effort into clothing… but we are targeting a very different [demographic] segment, fashion and attitudes than Amazon.”