Amazon.com Inc. over the last eight months rolled out a series of Amazon-owned private-label apparel brands. The lines follow through on plans previously hinted at by Amazon executives, and represent a way for Amazon to become a bigger force in apparel, a segment where it’s been limited by the reluctance of some higher-end fashion brands to sell to Amazon.
KeyBanc Capital Markets analyst Edward Yruma identified the brands in a research note released earlier this week based on his research. Amazon has not commented or confirmed the brands directly, but Internet Retailer located trademark applications filed by Amazon Technologies Inc. for six of the seven brands dating to March 2015. Amazon did not respond to inquiries.
The brands, product types and number of products live today are: Franklin & Freeman (men’s shoes, 180 products); Franklin Tailored (men’s suits, ties and accessories, 250 products), James & Erin (women’s casual apparel, including a James & Erin Plus line, 200 products), Lark & Ro (women’s dresses and blouses, 171 products), North Eleven (women’s accessories and outerwear, 38 products), Scout & Ro (children’s apparel, 108 products), and Society New York (women’s clothing, handbags and accessories, including a plus-sized line, 891 products). Some product listings for the Lark & Ro brand say they were added as early as June. The other brands were added in August, based on product listing dates displayed on product pages.
The highest-priced item in the Lark & Ro line is $120, for a cashmere sweater. At Scout & Ro, the highest-priced item is $29.50. All the private-label items are eligible for Prime shipping. Some brands are listed as shipped from and sold by Amazon.com, and others are listed as sold by Amazon.com LLC (MyHabit) and Fulfilled by Amazon. MyHabit, an Amazon subsidiary, is a flash-sale site for designer goods.
Apparel is a high-margin product category, and Amazon has sold apparel since 2002, when it launched its Apparel & Accessories store. But it has gotten more aggressive in recent years. An estimate from investment banking firm R.W. Baird & Co. says the number of clothing and accessories SKUs on Amazon.com—including those offered by marketplace sellers—grew 87% from Q3 2014 to Q3 2015, accounting for 6% of all products available on the site.
Another investment firm, Cowen Group, estimates the gross merchandise value of U.S. apparel sales transacted through Amazon in 2015 at $16.34 billion, accounting for 5% of U.S. apparel sales. Cowen projects Amazon’s apparel sales will grow to $27.78 billion in 2017, the year it says Amazon’s apparel business will surpass that of the current No. 1, Macy’s Inc.
But the e-retailer has had trouble convincing some fashion brands, particularly at the higher end of the market, to let it sell their goods on Amazon.com. It has been working to make shopping for apparel on Amazon more appealing, renaming the Apparel & Accessories store as Amazon Fashion, opening photo studios in New York and London and investing in advertising, such as ads for Amazon Fashion in Vogue and a billboard in New York’s Times Square.
Adding private-label lines seem to be another way for Amazon to develop the market. “We believe greater brand cooperation with third-party seller restrictions and an owned brand approach will be necessary to penetrate the apparel market in a more meaningful way,” Yruma writes in the KeyBanc research note. “We expect the challenges the company has faced in courting the fashion community to remain, but we think Amazon will continue to evolve its strategy.”
Syama Meagher of retail consultancy Scaling Retail says she can see the appeal of private label to Amazon, but thinks the e-retailer will need to do more before consumers will view it as a fashion destination. “If you are any retailer missing a category and you can do it cheaper, it is a good money-making opportunity,” she says. “But what it looks like is Amazon saw what their best sellers were and introduced their own versions.”
The price points for the brands are generally in line with what consumers would find shopping with J.C. Penney Co. Inc. or Kohl’s Corp. The average price for a Lark & Ro dress is $66 and tops are about $31, according to Yruma’s pricing analysis. “I feel like some consumers will see a cheap price, but the way consumers are leaning is toward more of a relationship [with brands],” Meagher says. “I think Amazon is trying to service a hole in their market, but they are doing nothing to build those brands in and of themselves.”
The apparel brands are not Amazon’s first venture into private label. It launched a line of patio furniture under the Strathwood brand in 2004, and launched home goods under the Pinzon brand and electronics accessories under the AmazonBasics brand in 2009. Amazon is the No. 1 e-retailer in the 2015 Internet Retailer Top 500 Guide.
For more on Amazon’s moves to develop apparel sales, read “Amazon’s foray into fashion” from Internet Retailer magazine’s January 2016 issue. Sign up for a free subscription to Internet Retailer magazine here.