Fashion and beauty are starting to make peace with Amazon.
From Coach to Clinique, premium brands that once kept their distance are now seeking out the platform. The newest of these is Kiehl’s Since 1851, which went on sale on Amazon on Thursday.
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This shift marks the recognition of two fundamental truths: There are millions of customers on Amazon every day, and many brands are already sold on the platform, either through direct relationships or through the gray market. But while many premium-priced fashion and beauty brands have entered the platform, true luxury players remain few and far between, despite the Luxury Stores section launching in 2020.
Regardless, Amazon continues to work to expand its fashion appeal.
Amazon’s sales of clothing, shoes and accessories reached $56.4 billion in the U.S. last year, according to an estimate from Coresight Research that includes the value of third-party goods sold on the company’s marketplace.
This is according to Coresight, Walmart Inc. It easily makes Amazon the dominant force in fashion, with sales to consumers 90 percent higher than the $29.5 billion gross merchandise value recorded by Amazon.com. (Although Walmart plans to ramp up its apparel business, CEO Doug McMillon told investors this month.)
Brands are still entering the Amazon ecosystem cautiously.
Coach, owned by Tapestry Inc., began selling on Amazon in October, bringing one of the accessible luxury majors to the site, but Tapestry CEO Joanne Crevoiserat said Coach’s Amazon trial was “pretty small.”
“Amazon is important,” Crevoiserat said. “We know that young consumers are searching for and discovering brands on this platform, and we wanted to do our best on this platform.”
“We’re happy with the interaction we’ve seen so far. It’s small, but we’re happy with it,” he said.
Aries is not alone. Hugo Boss, Tommy Hilfiger, Levi’s, Adidas, New Balance, Lacoste and Dr. Martens sells on Amazon and is balancing the benefits of a huge customer base with the risks of foregoing a more direct relationship with the consumer.
According to Coresight, Amazon customers are looking for more than just a brand and prioritize delivery cost and speed, a user-friendly website, and brand and product selection. “More than half of Amazon clothing customers say they prefer Amazon.com because of its lower delivery cost and faster delivery,” the company said.
Amazon has continually worked to improve this experience through AI, AR, and virtual try-on features to personalize the shopping experience while increasing delivery capacity and speed.
Simeon Siegel, an equity analyst at BMO Capital Markets, expects more brands to sign deals with Amazon.
“At the end of the day, as D-to-C or die fades from the conversation and brands internalize that the right wholesale partners can be strong partners,” Siegel said.
But there was also a warning.
“Oftentimes in retail, the quality of the sale erodes long before the actual sale,” Siegel said. “Companies are chasing revenues that are bad for their business and will cost them more in the future than they do today. But the problem is that one dollar today looks very attractive, even if it is two dollars tomorrow.
“Retail is a cycle of overstretching revenues, giving it all back, and trying to reset the base and grow it again,” he said.
After years of avoiding the platform in favor of its own sites, department stores and players like Tmall, Estée Lauder Cos. made a comeback and launched Clinique on Amazon in March. More brands from the beauty giant will follow this year.
On Amazon, it sits alongside L’Oréal-owned brands like Clinique, Lancôme, Youth to the People, IT Cosmetics, Urban Decay and Ralph Lauren Fragrance, as well as brands like Keys Soulcare and Shiseido.
“They’re going to go where the customer is,” Olivia Tong, an analyst at Raymond James, said of Lauder’s shift in strategy.
The new distribution better positions Lauder against competition from both established multinationals and newer independent brands, Tong said.
In its latest quarterly report, Lauder said Clinique’s debut on Amazon “vastly exceeded” expectations and contributed to the brand’s share gains.
Tracey Travis, Lauder’s chief financial officer, told WWD that the e-commerce platform has the potential to be a major venue for the company.
“From a consumer perspective, Amazon has a very broad reach, and as we see channel dynamics continue to change in North America, it is important for us to be able to reach our consumers wherever they want to shop,” Travis said, adding that different channels serve them. different shopping experiences.
According to data from Market Defense, a consulting firm that helps beauty brands sell on Amazon, there were 741,340 searches for the term “Clinique” on the platform in April. During the holiday period before Clinique joined, this number was around 1 million.
Vanessa Kuykendall, chief operating officer of Market Defense, thinks Clinique will be a trendsetter in beauty.
“There are still a lot of brands that are watching and waiting to see the big players and legacy brands make the change,” Kuykendall said. “It’s really interesting how legacy brands like Estée Lauder are falling behind, while highly innovative, perhaps even independent brands and brands that are newer to the market are embracing Amazon.”
Amazon also seems to support L’Oréal. When Lancôme was introduced to the site last year, it found that 73 percent of consumers who purchased the product were new to the brand, according to Jefferies analyst Ashley Helgans.
L’Oréal recently launched Kiehl’s on the platform with the goal of meeting customers where they are, according to Kiehl’s general manager John Reed.
L’Oréal CEO Nicolas Hieronimus also told the audience at CAGNY in February: “After all, there are distribution channels where many qualified consumers shop. I guess you are all Amazon customers…. The results are very good both in terms of perception and recruitment of new consumers, which is very positive for the brand.”
If this is true for premium beauty products and perhaps accessible luxury fashion and accessories brands, pure luxury brands are still largely keeping their distance, even after Amazon expanded its Luxury Stores division into Europe two years ago.
Many European fashion and luxury brands had high hopes but argue that Amazon has not delivered on its promises.
“In the beginning we felt very supported and we were doing good business, but then everything faded away,” said one brand owner, who spoke on condition of anonymity.
“I don’t know if they really understand fashion, and in my opinion, they haven’t focused on improving the business. We expected more support and eventually lost trust in them. “We expected more loyalty, but they failed to achieve this.”
Sally Singer, Amazon’s head of fashion in the US, has left the company. Singer, the former head of fashion management at Vogue, joined Amazon in 2020 and is now president of Art + Commerce in New York.
It had close ties to designers and luxury brands and served as a bridge between the glitzy world of high-end fashion and the algorithm-driven, profit-driven Amazon.
The relationship between European brands and Amazon has never been easy.
Brand executives said they were disappointed that famous luxury brands like Kering and LVMH Moët Hennessy Louis Vuitton never showed up.
“There is no adjacency to highlight the smaller brands already present on the site,” said a current executive who asked to remain anonymous. Another added: “We expected them to come up with the most effective brands, but so far they haven’t.”
Another company chief, who asked not to be named, told WWD that luxury stores make more sense in the U.S. because the wholesale market is smaller due to the closure of many department stores.
An Amazon spokesperson said: “We continue to expand the selection at Luxury Shops on Amazon and have added thousands of new styles this year alone. Amazon has a diverse, fashion-conscious customer base and we’re excited to make luxury products more accessible to a wider audience We’ve seen increased interest among our customers in luxury products, particularly beauty, skincare, fragrance and much-loved designer bags and accessories, including growing our beauty and jewelery assortment and expanding ready-to-wear to include additional menswear styles. “We will continue to listen to customer feedback as we bring products.”
Last month, Amazon began selling pre-owned luxury streetwear through Hypebeast’s new HBX Archives store, giving those who shop on the website access to top names rather than directly from the source.
While luxury remains, it looks like the rest of fashion is finally coming into play.
“Unless you are a super top-of-mind brand, acquiring customers is very expensive when you only have a direct channel,” said consultant Sonia Lapinsky, managing director of AlixPartners. “And then you look at: What is the best, most efficient way to acquire these customers?
“The fact that consumers are comfortable buying fashion from Amazon, it’s hard for brands to resist the exposure and breadth of customer reach they get by going to Amazon,” he said.
“I don’t think brands are blind to the realities of Amazon,” he said. “There are ways we think more savvy retailers are countering some of the disadvantages on Amazon [like] controlling your brand on the site…developing their own storefront.”
It’s one more balancing act that fashion companies will have to achieve.
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