Amazon making waves in fashion business - key brands sign on to sell directly on marketplace

Amazon's growth in the apparel market will be driven by three things:

• Key brand partnerships. Fashion brands — especially high-end — have historically been wary of selling directly on Amazon. That's because of Amazon's heavy focus on undercutting competitors on price and its expansive, global reach which can dilute a luxury brand's exclusivity and status. But the e-commerce giant's push into apparel has led to some important names signing on to sell directly through its marketplace — Kate Spade, Calvin Klein, Lacoste, and Nicole Miller have all recently partnered with Amazon, reports The Wall Street Journal.
• It's important to note that many of the brands that have signed on with Amazon have also been resistant to department store partnerships in the past. This shows just how important Amazon has become to retail across categories.
• Private-label lines. After months of speculation, Amazon quietly rolled out its own private-label clothing line on its Fashion marketplace in February. The launch includes at least 1,800 different fashion items for sale under seven different brand names, including apparel and accessories for men, women, and children.
• The quietness of Amazon's private-label rollout can actually help it gain more customers. The marketplace is typically associated with items like electronics, media, and consumer packaged goods (CPGs). This is largely due to its low prices and speedy shipping, which comes in handy when it comes to items that are suited for utility and bought with more frequency. If consumers are unaware that they are buying an Amazon brand apparel item, they may be more inclined to buy it.
• Live shopping program. Amazon premiered the first episode of its live, home-shopping program Style Code Live in March. The show streams for free on Amazon's website and features three hosts who discuss current fashion trends. Similar to other television-based shopping networks like QVC and Home Shopping Network (HSN), Style Code Live will also provide direct links to purchase the products shown on the program on Amazon's marketplace.
• The program is riding the coattails of legacy programs QVC and HSN — both of which have been making extensive e-commerce efforts of their own. As of Q3 2015, QVC's global revenue strictly from e-commerce sales reached $861 million, a 10% year-over-year (YoY) increase from $781 million. This accounts for almost 43% of QVC’s total revenue. And although HSN does not release digital sales totals, the company did say that its e-commerce business totaled 40.5% of its overall business during Q3 2015, compared with 38.8% last year.

Amazon's rapid visibility of its fashion market should be a signal to apparel brands of a viable e-commerce opportunity to reach online shoppers. The company provides these brands with a massive, global audience and shipping resources to help build up online sales. Its apparel business is forecast to grow from $16 billion in gross merchandise volume (GMV) in 2015 to $52 billion in 2020. And compared with its most notable competitors, Amazon has 34% more apparel buyers than Target and 2% more than Walmart.

Amazon is an undisputed e-commerce titan, but it is still adjusting its strategy to reach its customers. And other companies are doing the same as the e-commerce world continues to change.

Consider this latest holiday season gave us the clearest indication yet that there's never been a better time to be a consumer. The rise of online and mobile shopping has given consumers more choice, flexibility, and often better service, and retailers are shifting their strategies to keep up.

Cooper Smith, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on new e-commerce strategies that looks at some of the top trends affecting retailers at each stage of the purchase funnel and how they're responding to those shifts.

Amazon making waves in fashion business, key brands sign on to sell directly on marketplace

Here are some of the key takeaways:

• Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
• Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, according to IgnitionOne.
• Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
• Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
• The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
• Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics.
• Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them do have — brick-and-mortar stores. Buying online and picking up in-store, also called click and collect, made up about 30% of e-commerce sales at Sam's Club in 2015.

In full, the report:

• Looks at how retailers are shifting their ad spending and marketing efforts to keep up with online retail behavior
• Identifies which channels are top performers for referral traffic and new opportunities for reaching consumers
• Analyzes how retailers are responding to the rise of mobile purchasing and where they're falling short
• Examines the evolving delivery landscape and the aggressive moves retailers are making to become their own shipping carriers

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of new e-commerce strategies.