Amazon as clothes horse: Who would've thought it?
The online leviathan is emerging as the nation's top online fashion retailer, according to a new report by 1010data Consumer Purchase Panel, a New York-based analytics platform and data provider.
The downward spiral of such department store chains as Macy's and the Gap is largely due to Amazon.com's growing might as an apparel powerhouse, said the report, which backs up an earlier analysis by Morgan Stanley.
Amazon fashion sales from January to April of this year were up 70 percent compared with the same period in 2014, while total units sold were up 89 percent, according to the 1010data report, which will be released on 1010data's blog next week.
"That means they moved 89 percent more things - strictly fashion sales - on Amazon," Tim Wilson, vice president of consumer insight sales at 1010data, said on Thursday. "What we're seeing is Amazon being extremely aggressive in the fashion space. In typical Amazon form, it's very thoughtful and methodical in its approach and showing its ability to again take over a category.
"Online content is king, and what garners consumers' attention is content. Amazon is not just relying on traditional reach. It's created a mini-TV show focused on different products and brands and on their website, like a mini-QVC," Wilson said. "They are being really creative . . . and really gaining share and growing rapidly."
"I think there's so much opportunity for invention there," Amazon CEO Jeff Bezos said last month about the online giant's fashion potential.
A recent analysis by Morgan Stanley found that online stores, led by Amazon, had added almost as much yearly apparel revenue ($27.8 billion) since 2005 as the $29.6 billion in sales that the department stores had lost.
While traditional brick-and-mortar retailers struggle to stay afloat, online shopping continues to boom across all categories, including fashion.
In this case, "fashion" is defined as any clothing or accessory.Amazon sells goods using two business models. One is Amazon Marketplace, where third parties can sell on the Amazon website with their own clothing lines. The other is Amazon Direct, where the retailer sells directly to the consumer, and where it is focusing its efforts.
It's working. The pace of growth in fashion sales from Amazon Direct is outpacing Amazon Marketplace, according to the 1010data report.
Amazon Direct went from 10.3 percent of online dollars in 2014 to 13.5 percent in 2016, while Amazon Marketplace decreased from 26.3 percent to 21.5 percent.
As more U.S. households join Amazon's Prime membership program and the retailer expands its fashion offerings, Amazon could come to control nearly a fifth of U.S. apparel sales by 2020, up from about 7 percent today, the Morgan Stanley report concludes.
Nordstrom made some headway in the 1010data report, moving from third to second place behind Amazon Marketplace in online share of dollars, while Macy's fell to fourth from second, and Gap Properties stayed in fifth place, though dropping in online share from 9.5 percent to 9.1 percent.
"Traditional stores see their online sales growing, but their growth is not keeping up with the rest of the market," Wilson said. "So a place like Macy's online market share is dropping, and therefore their place in the consumer mindset is dropping."
By the end of the decade, department stores, which 10 years ago accounted for a quarter of apparel sales in the U.S., will have just 7 percent of the market, according to Morgan Stanley.
Morningstar analyst R.J. Hottovy, who covers Amazon, wrote in October 2015 that "Amazon is increasingly becoming the starting point for online purchases, akin to a mall anchor tenant."
Amazon gets a glowing review from Dave Bontempo, 31, of Warminster, who does outreach and business development for Ambrosia, a drug and alcohol treatment program, in Philadelphia and Bucks County.
An Amazon Prime Member since early 2014, he buys all his business attire and work shoes from Amazon.com. He even got his wedding ring there.
"I stopped going to department stores two years ago," Bontempo said. "If you know what you're looking for - as far as size and cut - it's super fast and easy. And I get free shipping."