Tuesday, July 2, 2002
SEATTLE POST-INTELLIGENCER STAFF AND NEWS SERVICES
Amazon is getting some new clothes.
The company, which has held the line on product expansion for the past nine months, will open an online apparel store this summer or in early fall, in time to fix any problems before the holiday shopping season begins, according to retail industry executives who have been approached by Amazon.
The move will help Amazon fill in one of the most glaring holes in its product mix, and one that has become popular with online shoppers. According to comScore, an online research firm, consumers spent $5.3 billion on the Web on apparel and accessories last year, roughly 10 percent of total merchandise spending online.
Patty Smith, an Amazon spokeswoman, would not confirm the company's plans, other than to note that Amazon's chief, Jeff Bezos, "has said it's an area we'd be getting into at some point."
The final structure of the apparel store is still in flux, but retail executives who spoke on condition of anonymity -- because they did not want to alienate a potential retail partner as powerful as Amazon -- said the company had been actively seeking partners who would sell their goods through Amazon's site in a sort of online mall.
Seattle-based Nordstrom and Gap -- and perhaps Gap's sister companies, Banana Republic and Old Navy -- presumably will be included in the initial rollout, among other large retailers and smaller accessories companies. Nordstrom spokeswoman Brooke White declined to comment, although she said the company remains committed to its own online retail and catalog operation.
That formula would be a departure for Amazon, which until now has allotted space within a given category to one merchant, such as Bellevue-based Expedia for travel or Toys "R" Us for toys. But such an arrangement would not work well in apparel, because no single apparel maker offers a spectrum of goods broad enough to satisfy Amazon's 34 million customers and 37 million monthly visitors.
Nor, analysts said, would it be a particularly good idea for Amazon to try to build an apparel store on its own, to compete with the likes of LandsEnd.com, EddieBauer.com and other Web sites of established retailers and catalog merchants. Analysts have long said that clothing is one of the more difficult things to sell on the Web, given the importance of an item's fit and feel, and the customer service problems that accompany such sales. (Customers send back roughly one-third of the apparel they buy online, analysts say.)
Similarly, it would be unlikely that Amazon could persuade experienced catalogers and retailers to hand off their warehousing and shipping operations to Amazon, as have retailers such as Toys "R" Us and the Virgin Entertainment Group. Analysts said the apparel companies that shoppers would most want to see on Amazon have already refined online and shipping operations of their own.
That is just one reason Amazon's search for merchant partners has been difficult, said Carrie Johnson, an analyst with the technology consulting company Forrester Research. "Amazon went to a lot of premium-name apparel catalogers, but it was asking for too much," Johnson said. "It was acting like a portal -- asking for too much money upfront and too big a piece of the transaction."
These retailers are already paying AOL, Yahoo! and MSN so much money, they don't need another distribution deal that sucks a significant portion of their marketing budget," she added. "And it's not clear whether customers will want to buy apparel from Amazon, so no major brand wants to be the test-tube subject."
But some retail executives, who spoke on condition of anonymity, said Amazon's terms were not particularly onerous, and that the company had shown a fair amount of flexibility during more recent negotiations. Still, the partnerships would require an upfront investment by retailers, to integrate the technology between the parties and these executives were not sure whether Amazon would bring them a meaningful number of additional sales, or whether it would attract customers who would have gone directly to their online stores to shop.
The Amazon partnership would also require significant staff attention, these executives said, to ensure that Amazon maintained the retailers' customer service standards. While Amazon receives generally good marks for customer service, catalog retailers often take pride in their willingness to spend a half-hour on the phone with a customer to resolve an issue. Amazon's site is set up to discourage phone calls.
There is precedent for selling apparel on Amazon -- although the transactions themselves occur outside Amazon. ELuxury, a division of LVMH Moet Hennessy Louis Vuitton, has occupied space on Amazon's site since November. As part of that arrangement, Amazon customers who click on the eLuxury link are taken to an eLuxury site within Amazon, so eLuxury handles the transaction. (Through a spokeswoman, eLuxury executives declined to comment.)
The Target Corp., too, sells apparel on its Amazon-based store, with Target handling the sales, shipping and customer service. Beginning this summer, Target plans to rely more heavily on Amazon to conduct the transactions, ship products and handle customer service inquiries.
But the fact remains that neither Target nor eLuxury is a powerhouse apparel brand, which Amazon needs to anchor the new category. It is highly unlikely, though, that a company so widely cited as the exemplar of online shopping would roll out an apparel store lacking marquee names. If the initial deals Amazon offered did not entice many retailers, analysts and executives agreed that the company probably would change its stance enough to attract a greater number of well-known merchants.
Whoever joins the first incarnation of Amazon's clothing store probably will have plenty of company if the first selling season goes smoothly.
seattlepi.nwsource.com |
