Fashion industry insiders love to count Jeff Bezos and Amazon.com AMZN -0.61% out when it comes to unlocking the secret world of fashion. From their perspective, Bezos may know how to sell clothing, but he doesn’t know fashion, which is why the success Amazon.com has found in retailing more utilitarian and functional products has alluded the company.
Vox Media’s Racked published an in-depth article detailing Amazon.com’s trials and tribulations in the fashion world. It asks, “The e-commerce giant knows how to sell you underwear, but can it fill the rest of your closet?” Among the conclusions, Amazon fits perfectly as a mass-market clothing retailer, but it is out of its league in the high-end, designer world of fashion.
But that is about to change. In April, Amazon.com was awarded a patent for an on-demand apparel manufacturing system to create custom-made clothing to the precise fit and specifications of the customer. The idea is to turn around a made-to-order shirt, jacket, dress or pants in five days. It’s largely viewed as a way for Amazon to grow its share of the fashion retail market from its current $22 billion, or 6.6%, to somewhere in the neighborhood of 16% by 2021, according to projections by Cowen and Company, a stock research firm.
But I see this new patent not just as a retail play, but a warning shot across the bow of the entire fashion industry and its established infrastructure. Let’s face it, there are terrible inefficiencies in the way clothing is made and retailed. Every piece has to be manufactured in a range of sizes and the fashion industry works on a seasonal schedule presenting at minimum two-to-four new collections each year.
Orders need to be placed months before items hit the shelves and then what sells, and what doesn’t, is completely at the whim of the customer. If a style is hot, reorders can take months and by the time another round hits the store, the customer may well have moved on.
Fashion companies and retailers have used big data to somewhat improve their ability to anticipate demand, but in a category as impulse-driven as fashion, past consumer behavior is hardly a predictor of future behavior. The customers have benefited greatly from the fashion industry’s inefficiencies, enjoying cut-rate prices on overstocked styles that don’t sell at full price.
The Amazon custom-made clothing patent is not just a way to build out its fashion retail presence but may be the fashion industry’s answer to eliminating the inefficiencies built into the system. By owning the technology, Amazon can derive revenues not just at the front-end at the point of sale, but in the back-end licensing out the made-to-order capability to other manufacturers, marketers and retailers in search of a better way to give their customers the fashions they really want, rather than have to guess each season with each new collection.
Pundits love to count Jeff Bezos and Amazon.com out, as the New York Times recently stated, “There’s little chance Amazon will come to have in apparel the crushing dominance it has established in, say books, because of the way clothing sales are fragmented among so many retailers.” That may be true about clothing retail, but I think Bezos can find that “crushing dominance” through the back door, rather than the front door of the fashion industry, with high-tech manufacturing solutions.
Jeff Bezos has got what it takes to do it. He knows technology. He understands customers and is prescient at uncovering their unmet needs. He knows operations and how to grow a business from the ground up, as he did with Amazon.com starting in his Seattle garage in 1995.
But what sets him apart is that he isn’t captive by fashion industry’s inbred culture and beholden to its established rules and protocols. Bezos dreams big dreams. He looks at the fashion world from an outsiders’ perspective with a holistic view, not through the narrow lens of just a retailer. That’s why I think Jeff Bezos and Amazon.com are positioned to disrupt the fashion industry from the bottom to the top. Heaven knows, the fashion industry is much in need of a makeover.