The Local Label Hub is Amazon’s latest initiative designed to win over the fashion industry. In the US, it partnered with the CFDA to bring American designers on the platform. And in the autumn, it launched Luxury Stores, an invite-only app currently available to Prime members in the US, to sell luxury brands like Oscar de la Renta in a dedicated environment. Still, Amazon has yet to become a key part of fashion brands’ e-commerce strategy, thanks to its alignment with mass goods and focus on volume. At the same time, fashion-specialised online marketplaces like Farfetch have gained market share. The Local Label Hub extends its reach to British designers who, while they may be smaller in scale, have an attractive customer base of fashion shoppers Amazon wants to court.
“Amazon is quintessentially about large volumes,” retail expert Richard Hyman says. “This is really about collaboration with businesses whose brand equity is built on very small volumes. You cannot mass-market exclusivity,” Hyman adds.
Amazon has proven willing to test multiple fashion storefronts and brand partnerships to chip away at the industry. This fragmented approach is in response to fashion’s own fragmented nature, says John Ghiorso, founder and CEO of Amazon consulting agency Orca Pacific. “There’s a big difference between a $500 cocktail dress and a pair of Levi’s, and you have to find different strategies to be successful in those categories,” he says.
At the same time, more fashion retailers are modelling after Amazon’s own marketplace model, and Amazon needs to find a way to compete as a mass retailer and a niche player simultaneously, Ghiorso says. “Amazon is concerned about this death by a thousand cuts phenomenon with niche marketplaces. Working with the right designer is part of it, but the other part is the experience has to be noticeably different. They’ve yet to go in with both feet.”
The impact of this new venture is yet to be seen, Hyman says. Until now, fashion and groceries are among the sectors that Amazon has neglected. The series of new ventures could be Amazon’s way of understanding the market and establishing the wants and needs of the market. “The wants in fashion [are] vastly greater than any other sector where there’s a much higher level of needs-driven transaction,” Hyman says.
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