With Amazon new Prime Wardrobe offer the marketplace giant will show retailers how to disrupt yet another industry. In the world of online shopping and fashion, convenience is a key differentiator. It is this exact customer laziness convenience that the Tech-Giant addresses with its new Prime Wardrobe Service.
In essence the service is very straightforward. Amazon Prime customers who order more than 3 pieces receive their goods without being charged for shipping. Upon receiving the cloths, you have 7 days to try them on. Whatever you don’t like you can simply send back (Amazon picks the returns up for you), again free of charge. You just keep what fit best and you liked most.
This service has just recently begun to roll out in the States. It’s not clear whether and or when it will be rolled out to Europe. But one thing is for certain, Amazon has started to tackle an issue that is a big pain for many retailers. The sheer company size and distribution / fulfillment possibilities, enable the Tech Company to offer this service. It will be hard for smaller retailers to offer a similar service level – without involving a third party fulfillment partner.
Rebates should counter returns
The only true issue that Amazon (still) has, is that it is all service and zero product experience. High-End fashion brands will be heartfelt to bring their products onto the Amazon platform. Their cheap brand perception is not something Brands love to be associated with. If they really want to make a big difference in the world of fashion, they will need to convince (some) of the more luxurious brands to get aboard too. Their returns strategy is anything but classy.
One of the focal points of this new strategy to reduce the number of returns is to offer customers bulk discounts on the goods they buy. The strategy has worked wonders for their subscription models. However, it remains to be seen whether it will work on ready-to-wear and high-end collections as well. The things that people generally buy on the marketplace are “never out of stock” (NOS) pieces. These are things such as t-shirts, socks and underwear – or the occasional denim jeans.
As its main returns strategy: Amazon will start to reward its customers with additional percentage discounts if they keep more than three pieces of clothing. Keep three pieces and you are rewarded an additional 10% on your purchase price, at 5 pieces 15% and at 7 pieces a whopping 20% extra.
This seems to be a great short term plan to get as many people as possible on board, but using discounts to raise the number of products sold is generally not the most brand-friendly way to do business. As overstock is a big fashion problem, this might be a good thing to do in the short run.
Will Amazon need partners to pull it off?
Partners and top brands are the most important factor to success. If they manage to get Inditex or H&M to put their products on Amazon, that would be a huge boost to the platform as a whole. The sourcing side of things will be a big challenge. The market reach and fulfillment problems are the ones that they have started to tackle a long time ago. However, if they want to be successful in the long run, they will need a few top brands to join the party.
The question is not so much if, but when the bigger brands will get on board and play along.