An unlikely company is crushing America's biggest clothing stores

An unlikely company has suddenly catapulted to the top of the fashion world: Amazon.

Amazon is now the biggest seller of clothes online in the US, with its apparel sales totalling $16.3 billion last year, Bloomberg reports.

That's more than the combined online sales of Macy's, Nordstrom, Kohl's, Gap, and Victoria's Secret parent L Brands in the same period, according to Bloomberg.

Amazon is now second only to Walmart in terms of overall apparel market share, according to Morgan Stanley analysts.

Apparel market in the USFacebook/Amazon Fashion

The company's rise as a leader in apparel sales has been swift and relatively quiet.

Amazon made one of its first major pushes into the category 10 years ago with the purchase of clothing website ShopBop. Three years later, Amazon bought online shoe retailer Zappos for $850 million.

11 PHOTOS
Unbelievable finds from Amazon Fashion
See Gallery
Unbelievable finds from Amazon Fashion
MI IM Slip On V-Cut Out Stacked Heel Bootie, more colors available (Amazon)
BUY IT
French Connection Mozart Mix Knits (Amazon)
BUY IT
3x1 Women's WM3 Crop Selvedge Jeans (Amazon)
BUY IT
Steve Madden Women's Edit Bootie Casual, more colors available (Amazon)
BUY IT
BB Dakota Women's Zalika Faux Suede Coat (Amazon)
BUY IT
Wildfox Academy Stripes Dreams Sweater (Amazon)
BUY IT
Stuart Weitzman Highland Over-the-Knee Boot, more colors available (Amazon)
BUY IT
Jack by BB Dakota Pradera Cotton Twill Army Jacket (Amazon)
BUY IT
J Brand Women's Maria Velvet Flare Pants (Amazon)
BUY IT
Guess Women's Kielo Faux Fur Vest (Amazon)
BUY IT
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Over the past couple years, Amazon has ramped up its investment in fashion by launching its own private-label clothing brands and sponsoring the first ever New York Men's Fashion Week.

The company has also hired executives from luxury fashion companies, such as Barneys New York fashion director Julie Gilhartogue — whom Amazon reportedly hired as a consultant — and vogue editor Caroline Palmer.

Amazon FashionFacebook/Amazon Fashion

Also in the last few years, Amazon has started to shift its fashion strategy toward offering more high-end designer names, such as Zac Posen and Stuart Weitzman.

That shift has had some industry experts scratching their heads. Luxury fashion websites are typically well-merchandised and highly curated — not things that Amazon is necessarily known for.

Amazon FashionFacebook/Amazon Fashion

But Amazon's strategy appears to be working.

Morgan Stanley analysts estimate that Amazon's apparel sales grew by $1.1 billion in the most recent quarter, while department stores Nordstrom, Sears, Macy's, Kohl's, JCPenney, and Dillard's collectively lost $225 million in apparel sales in the same period.

Amazon FashionFacebook/Amazon Fashion

Department store executives have blamed declining apparel sales on the weather and consumers' changing shopping habits, which in recent years have gravitated more toward big-ticket items like televisions and vacations over clothing.

The apparel market has only grown 1% annually in the last 15 years, according to Morgan Stanley.

Apparel Market in the USFacebook/Amazon Fashion

But department stores' loss so far has been Amazon's gain, according to Morgan Stanley analysts.

"We expect online (primarily Amazon) will continue to take share from department stores, but at an accelerating pace over the next five years given new evidence that Amazon is gaining traction in fashion," the analysts wrote in a recent note

In a 2012 interview with the New York Times, Amazon CEO Jeff Bezos gave a simple reason for why Amazon was investing in fashion: "Gross profit dollars per unit will be much higher on a fashion item," than with cheaper products, he said.

NOW WATCH: Shake Shack's millionaire founder Danny Meyer looks for these 2 things when hiring people

Best items on Amazon under $25:

18 PHOTOS
Items on Amazon under $25
See Gallery
Items on Amazon under $25

Slow cooker crock pot, $20.99

Photo: Amazon

World’s strongest coffee, $18.99

Photo: Amazon

Toilet golf game, $11.99

Photo: Amazon

Potato chip bag resealer, $15.99

Photo: Amazon

Lifestraw water filter, $19.90

Photo: Amazon

Stuffed hamburger press, $10.29

Photo: Amazon

Camera lens coffee mug, $11.99

Photo: Amazon

Miracle berry tablets, $25.00

Note: These tablets transform ordinary foods into the extraordinary -- and mask sours food to taste sweet. 

Photo: Amazon

Ice luge, $21.30

Photo: Amazon

Glass ziplock bag, $16.85

Photo: Amazon

2nd skin unisuit, $25

Photo: Amazon

Retro corded iPhone handset , $20.99

Photo: Amazon

Unicorn mask, $16.98

Photo: Amazon

Venus fly trap, $14.99

Photo: Amazon

4,500 live ladybugs, $14.25

Photo: Amazon

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

See Also:

SEE ALSO: Target's biggest problem isn't a customer boycott

Read Full Story

Markets

DJIA 21,899.89 196.14 0.90%
NASDAQ 6,297.48 84.35 1.36%
S&P 500 2,452.51 24.14 0.99%
NIKKEI 225 19,434.64 50.80 0.26%
HANG SENG 27,401.67 246.99 0.91%
DAX 12,192.62 -36.72 -0.30%
USD (per EUR) 1.18 0.00 0.30%
USD (per CHF) 0.97 0.00 -0.36%
JPY (per USD) 109.05 -0.68 -0.62%
GBP (per USD) 1.28 0.00 -0.19%

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.