Amazon Prime Wardrobe is a big blow to brick and mortar retailers.

Brick and mortar stores will have a hard time competing with Amazon Prime Wardrobe.

Selling clothes over the Internet is hardly a disruptive idea. Free shipping and free returns have been par for the course since the early days of Zappos, even if the economics of this arrangement have always been a bit murky. Stitch Fix and MTailor took us a step further by adding curated assortments and online sizing. But the relatively small innovation of combining all of that with Amazon's distribution network, customer base, and pricing leverage could actually take online apparel shopping to a whole new place. Add to that the ease with which Amazon can include other incentives to shape your behavior, such as offering discounts and other services, and Prime Wardrobe suddenly looks like a potential game-changer.

I've made it clear that I think that Amazon is underestimating the challenge of trying to integrate Whole Foods into their network.

But Amazon Prime Wardrobe won't face the supply chain challenges that are involved with the Whole Foods integration.

In fact, it doesn't look like Prime Wardrobe will require any changes to Amazon's supply chain at all. With Whole Foods, you are dealing with locally sourced perishables that need to be moved in tubs and on pallets. With Prime Wardrobe, you are sending a box with a bunch of singles in it. For example, it might have one shirt, one pair of pants, two socks, two shoes and a belt. It's really just a new way of packaging and promoting the kinds of merchandise that Amazon is already excellent at selling and shipping. If anything, they may be packing a few more items into the box that they were sending you anyway!

I think this is a clever move by Amazon, and a natural next step in the evolution of their business. What started as an online bookstore has grown into a huge global supply chain that is driven by data and technology. This degree of horizontal and vertical integration allows Amazon to roll the financials from all of its supply chain activities together, even if some of them might actually be unprofitable.

But it's a different story for Amazon's competition - the brick and mortar retailers. And that's what makes this move so tough for them to counter. These folks are forced to play a zero sum game when negotiating with their carriers and suppliers. And all of them are worried. Seriously. We all know that no one will really deliver or return packages for free; but without the end-to-end control that Amazon has developed, it becomes a vicious fight between brands and transportation providers to squeeze dollars from each other.

With the distribution network that Jeff Bezos and his team have built, Amazon Prime Wardrobe is a clever (and low-cost) strategy for capturing additional sales for their products, and pushing more volume through their supply chain. They have been steadily growing capacity, and this is a simple way to crank up demand. In the near term, I think Prime Wardrobe will be a big win for Amazon. And I think it will also be a benefit for Prime subscribers. But for Amazon's competitors, this makes an already tough game just a little bit tougher.

About the Author: Daniel Stanton is President of SecureMarking(TM) and Associate Professor of Operations Management at the Jack Welch Management Institute. He is also the author of Leading Projects and Business Acumen for Project Managers on LinkedIn Learning.

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