Why Amazon Will Disrupt Fast Fashion

Will Amazon's private label retail strategy win over Millennials?

Amazon as the Mother of the On-Demand Economy 

We will have to see, however for some context as Caroline Fairchild points out, the on-demand economy is nearly $60 billion now, and if retail sales is nearly $5 trillion, this means as ecommerce grows into its more "unified commerce" self it raises the bar in the level of convenience that Millennials expect. Things like personalized matching of products with consumers and same day delivery are hard to compete with. 

The On-Demand Experience Facilities Millennial Moments 

This means companies such as Amazon, Airbnb, Uber set a new bar and unified standard in consumer convenience, like a post-customer experience sort of level of retail efficiency. The expectations of Millennial shoppers is disruptive. 

Remember, Millennials need a deal, and they expect immediacy. Independent retailers or ecommerce startups are rarely able to create conditions that even remotely resemble the new online marketplaces that they, Millennials, enjoy the most.

If ecommerce does only 7% of sales now, it's also the fastest growing sector and with more digital touch points soon like Virtual reality (VR), retail can expect to enter an age of unified commerce with a bang. 

Amazon can and Will Take On Fashion 

RetailDive took a look at Amazon's bet on private label fashion. While the rising tide of on-demand platforms like Postmates continues to grow, they still live in effect, in Amazon's gigantic shadow.

This is the advent of Millennials folks, these consumers mean brand disloyalty and disruption based on convenience and the entry into unified commerce that is more omnichannel than ever before. This will only accelerate as we approach the 2020s. 

When in February, Amazon launched seven new private label brands, basically heralding a push of Amazon on fashion retail and independent stores. Eminently affordable, fast fashion is in for a ride with its confident brand taking on stores that have shown big box catastrophe marked by store closures such as Kohl’s, Wal-Mart, and Macy’s. In the new economy, monopolies slay giants to become dragons.

Amazon as a Monopoly Millennials Cannot Hate 

 Amazon is still new enough of a brand for Millennials not to hate. The convenience still trumps the ethics of this disrupting giant. The utility is too invaluable, it's like boycotting Google, not only is it impossible, it would be self-detrimental. So Amazon remains, a titan killer that can go after the Wal-Marts' of this world, they do this because they can. Millennials are not opposed to this kind of ruthless entitlement, it's all part of the disruption game.

Independent Retail Cannot Compete Directly 

 Independent retail, the ecommerce smallbiz and the brick-and-mortar stores, obviously cannot grow or even hang on to higher rents indefinitely. At least, they cannot compete on many levels, they can only build a small-box experience that's more personable that remains a more emotionally and socially fulfilling customer experience. 

Millennials Hooked on Personalization & Convenience 

If Amazon, is the first choice of Millennials by habit, the predictive analytics they have and the data augmented retail technologies (DART) at their disposal means they can apply the same formulas to nearly any vertical and win. Their power over data is unmatched and Millennials have become accustomed to it. Private labels of Amazon can acquire others, and merge companies to become powerful forces. Make no mistake, Amazon's fashion presence is growing. Its clothing and accessories grew 87% since Q3 2014 in one year. There's little doubt that Millennials are primed to follow. 

Not Just Customer Centric, Millennial-Centricity is Key 

Amazon has a kind of mega-brand recognition with Millennials that's what any solution what's to be, the diamond rated go-to solution for any consumer need. As live streaming of video works on Facebook, Amazon has the same thing in Retail, a loyal shopper base and high volume traffic. When Amazon truly does penetrate as the high-margin discretionary income category it is, we'll know that it was indeed inevitable and a sign of the preference of Millennials. I've been writing for quite some time about the importance of Retail to adapt to the presence of Millennials, to not much avail. 

Amazon's experience with supply channels means it can compete with the H&Ms and Forever 21s of this world with a shipping prowess that makes Independent retailers look like amateurs. Millennial apparel brand loyalty already dropped 15% after the five years following the 2008 economic situation, and has likely decreased further since then.

Amazon's customer convenience and ability to create better products will of course prevail. Millennials are increasingly product-centric and not brand centric. The additional perks of the ecosystem of Amazon, really do provide additional value that's hard to find anywhere else. 

If the verdict is Millennials care less about brands, the marketplaces that offer the most convenience, superior products, and perk experiences (as done via predictive analytics), truly offer a more unified commerce experience (UCE) that mean Millennials care about what Amazon will do, by default. 

You didn't have to attend #shoptalk16 or know much about #Amazon to realize how easily they can appeal to Millennial shoppers who are set to gain purchasing power as parents and as they continue to mature in their careers taking over management roles in society. 

Amazon has the Big data and personalization leverage that few brands can compete with, in fact, resistance really is futile against ruthless competitor like Amazon. Google, Amazon, Apple and Facebook are monopolies for a reason.

However Amazon's sophistication is not yet as cutting edge as Google, as design friendly as Apple, as able to attract talent as Facebook, but that Amazon is able to offer unparalleled convenience is an enormous value prop dominance, and convenience in Retail is so beyond dispute, that Millennials have no choice but to embrace it. 

Amazon in Fashion?

It may take Amazon some time to figure out Millennials, you cannot simply track, plug and play. You have to offer an in-store customer experience as well that's fun. Amazon will have to play the brick-and-mortar game to be successful. This is because fashion is about discovery, tactile experience, the revelry of enchanting moments of how would I look in that, that Ecommerce can rarely mimic. VR fitting rooms may be a good intermediary, to unify the click and brick realities of shopping for an ecommerce giant. 

For Amazon, it's source vs. private label and really, it has to do both to be successful. Amazon plans to fill gaps, with its own products. Amazon will start by serving the under-served segment. By taking on fashion, Amazon will only solidify its position as being an anti-Christ of Retail and adversary of independent retailers. That's nothing new, but it almost feels like Amazon enjoys the drama. Amazon in the history of retail then, is the necessary-devil we need to learn from. She's the data-centric behemoth independent retailers need to study. She's the unified commerce corporation who Millennials cannot help but follow. 

Amazon will have its own method of taking on Fast Fashion and cutting into their profits. While Calvin Klein is with Amazon, H&M or Forever 21 don't need to be. So Amazon will go after them, because that's where Millennials are shopping. If Amazon has taught us anything, it's that it knows how to take on its competition and win. 

So it is just a matter of time before Amazon opens retail stores, entertainment centers, namely apparel stores? Almost for certain, inevitable. That's when unified commerce gets real, when data-centric brands come full circle and provide a better cloud/omnichannel/VR/physical customer experience than ever. The "on-demand" component, is just symbolic of a stage towards unified commerce.

Credit to retail strategist and speaker, Carl Boutet, for making me enamored with the term unified commerce. 

Do you think Amazon will open its own Retail brick-and-mortar (physical) fashion and apparel stores?