Tough Times Mean Unusual Measures
With the current global economic crisis stemming from the COVID-19 pandemic, many luxury fashion brands are considering novel ways of marketing and selling their merchandise. Many labels such as DVF, La Perla and Omega have closed stores in an attempt to reduce operating costs. Stuck between a rock and a hard place, and desperate to increase sales, some brands have even taken to selling their wares on Amazon.
A Marketing Monster in the Making?
In the past Amazon has failed miserably to make any headway in selling luxury fashion. However, the e-commerce giant is now trying to take advantage of this troubled time to woo luxury brands to their site. For brands that are underpinned by exclusivity and individuality, selling on Amazon could be an unwise move. Amazon is not a Net-A-Porter, Matches Fashion or Farfetch and will never be. Using it as a transactional platform could easily change the perception of the brand in the eyes of the consumer.
If Amazon is successful in capturing a piece of the online luxury market, will these luxury third party players become less relevant? Also, how will the profit margins of these brands be impacted after Amazon has taken its slice of the pie?
Exclusive and Mobile
U.S. luxury fashion house, Oscar de la Renta, was the first to partner with Amazon in August this year, and it is questionable whether the acclaimed designer, who died in 2014, would have approved. But now his brand is available on Luxury Stores, part of Amazon’s exclusive mobile app offering. Only Prime members in the United States are eligible to purchase from Luxury Stores and by invitation only. Christine Beauchamp, president of Amazon Fashion, revealed to Vogue magazine:
“Mobile shopping is incredibly important for our customers. We find that the Amazon fashion customer overwhelmingly shops fashion in the mobile experience, so we began it with mobile, where our customer begins. In fact, in the past year [Amazon] customers have ordered over a billion fashion items on mobile.”
Roland Mouret Signs Up
British luxury fashion designer Roland Mouret was hot on the heels of Oscar de la Renta, signing up to Luxury Stores within days. Mouret told The Guardian that “all of my customers are on Amazon”, emphasising that “we are all Amazon customers now.”
Up to this point, Mouret, like most luxury designers, has been an advocate of showcasing his designs in high-end boutiques and flagships. But as shopping habits change, so must the marketing mix. Mouret added:
“Amazon is not to blame. The fashion industry made its own mistakes. We created too much product, we paid too much attention to fashion week and not enough to the consumer. We created a monster. Direct-to-consumer partnerships could offer a lifeline to independent brands that could otherwise fail.”
Skipping London Fashion Week
The designer of the famous Galaxy dress chose to skip the catwalk at London Fashion Week this year. Instead, the new collection will be revealed in a one-minute video on Amazon Prime. Mouret said:
“Will I miss fashion week? That’s like asking a drug addict if he misses the parties where he took drugs. We made bad decisions. It wasn’t sustainable.”
Hard Times
As with many luxury fashion brands, financially Roland Mouret is having a bad break. The brand’s accounts for the year ending 30 December 2018 show a turnover of £16.7 million, down almost £3 million from the previous year. Worse still are the operating profits and losses. In 2017, Roland Mouret has an operating profit of £460,000. In 2018, this had turned into a massive loss of more than £3 million. No surprise then that fashion shows have been cancelled and that the brand is available on Amazon.
Amazon the Innovator?
Is Amazon’s Luxury Stores an innovation? Not at all. Luxury Stores simply mimics Tmall, a Chinese digital platform that has been operating for years. Tmall, owned by Alibaba, uses Luxury Pavilion as an integrated marketplace to sell premium brands to VIP customers. Burberry opened its flagship store on Tmall as early as 2014. Many brands have since realised the potential of the China market and by the end of 2019, over 130 luxury fashion brands were available to buy on Tmall. The onset of COVID-19 has further enhanced Tmall’s appeal with exclusive brands such as Cartier, Montblanc and Prada joining this year. Amazon plans to soon have 12 ready-to-wear and accessories labels on its Luxury Stores platform. So far, there are only 2.
A Tough Nut to Crack
Will Luxury Stores pan out for the giant? While the app ventures into exclusivity by being invite-only, Amazon, by design, is meant for the masses. Fashion conglomerates LVMH, Kering and Richemont or brands such as Hermes or Chanel are unlikely to allow their sought-after merchandise and brand image to be devalued by being sold on Amazon. In January 2020, LVMH CEO Bernard Arnault stated that he would not allow its products to be listed on Amazon, citing issues with counterfeits as one of many reasons.
For the serious players in luxury fashion, there is a world of difference between Net-A-Porter, Farfetch and Amazon. The former are respected online fashion retailers, the latter is a go-to online convenience store. For Amazon, Luxury Stores, currently with only a handful of fashion brands, will surely be a tough nut to crack.
