Amazon's a Better Fit for Clothing Shoppers Than You Think

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By Rebecca Borison

Amazon has long been seen as a predator to brick-and-mortar stores, but operators in one category in particular may have thought they were in the clear. Clothing retailers assumed they'd have an easier time keeping consumers because they'd want to try on clothing before making a purchase.

Unfortunately for those retailers, it's getting harder and harder to buy into that line of thought as Amazon's apparel business continues to grow by leaps and bounds, and customers become more comfortable buying apparel and accessories online.

Amazon (AMZN) will sell about $16 billion in apparel this year, or about 5 percent of the U.S. apparel industry, according to Cowen analyst John Blackledge, and Blackledge predicts that percentage will rise to 14 percent by 2020. Following that trajectory would mean that Amazon would displace Macy's (M) as the No. 1 U.S. apparel retailer by 2017.

But the belief that shoppers will be reluctant to buy clothes online still persists in some quarters.

At a conference in October, panelists were discussing innovations in retail and the connected store, when one speaker singled out clothing retailers.

"Retail is going to win out against Amazon because you're not going to buy your jeans off of Amazon if you can't try them on and touch them, feel them," said Steve Cheney, co-founder and SVP of Estimote, a company that makes beacons that can communicate with customers' smart phones when they're in stores.

But Cheney's comments seem outdated in a world where 69 percent of consumers in the U.S. regularly buy products online, according to Forrester Research (FORR). U.S. consumers spent $52.2 billion online on apparel and accessories last year, up from $28 billion in 2010, according to eMarketer. That number is expected to grow to $86.4 billion in 2018.

"With free returns it's very easy for someone to purchase two items, try them on in the living room, and send back the one they don't like," Gartner analyst Gene Alvarez said. "To think Amazon or another online retailer will not figure this out and make it attractive to consumers is a dangerous position."

Not only does online shopping tend to offer free returns, but it also offers a larger selection compared to a finite physical store.

"Much of what you find in stores may not fit you and isn't exactly what you're looking for anyway," Forrester analyst Sucharita Mulpuru-Kodali said. "Online actually offers you much greater and more appropriate selections online."

Amazon has also been working on ramping up its fashion efforts for years, and is even considering creating a fashion label of its own. At the WWD Apparel and Retail CEO Summit in October, Jeff Yurcisin, vice president of clothing at Amazon Fashion and CEO of Amazon's Shopbop unit, said that 40 million customers shop Amazon Fashion.

Cathy Beaudoin, president of Amazon Fashion, was hired by Bezos in 2008 to help grow the company's fashion business. "We needed to be important to customers in categories that they buy from every day," she told The New York Times.

Amazon has also taken steps to break into the fashion world through moves such as sponsoring the 2015 New York Fashion Week for men and the 2012 Costume Institute Benefit at the Metropolitan Museum of Art, and hiring a former fashion director for Barneys, Julie Gilhart, as a consultant for three years.

And while there are many online retailers that sell clothing, Amazon, as always, maintains a key advantage with Prime. Prime members can easily get free shipping and returns, which makes it that much easier to buy a dress and return it if it doesn't fit.

Sure, there may always be a group of consumers that prefer visiting a physical store and shopping at a designer brand as opposed to, but the idea that clothing is inherently safe from the threat of e-commerce is becoming increasingly untenable.

"While there will always be a desire to try things on in the flesh, the increasing availability of next day delivery and free returns means customers can act on the instant gratification of buying online at any time, in any place," ABI Research analyst Patrick Connolly said. "As a result, clothing cannot rest on its laurels."
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