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In 2012, on the first Monday in May, Jeff Bezos stepped onto the red carpet at the Metropolitan Museum of Art in New York City for the annual Costume Institute gala — the fashion world’s biggest, best, most exclusive event — wearing a black Tom Ford tuxedo with a white pocket square and patent leather shoes.
The Amazon founder was dressed to impress. His company had sponsored the blockbuster evening, along with that year’s accompanying exhibit, “Schiaparelli and Prada: Impossible Conversations.” As honorary chairman of the gala, Bezos was stationed at the top of the museum’s stairs, greeting industry celebrities and actual celebrities alike alongside Vogue editor-in-chief Anna Wintour, designer Miuccia Prada, and actress Carey Mulligan.
Bezos was dogged about allying his e-commerce juggernaut with the fashion community, and his efforts didn’t just pertain to philanthropy. Leading up to the Met Gala, the tight-lipped CEO told the New York Times that Amazon was making a “significant” investment in fashion. Though Amazon had previously acquired a few fashion e-commerce companies, Bezos was now keen on building a dedicated fashion hub on its own flagship site. The hub, to be known as Amazon Fashion, would have a special landing page to direct shoppers to clothing and accessories and promote Amazon partnerships with fashion brands; it would also have its own merchandising and editorial teams.
In anticipation, Bezos hired Cathy Beaudoin, a Gap executive who started the now-defunct shoe site Piperlime, to head up the project known as Amazon Fashion; Julie Gilhart, a former fashion director at Barneys, was brought on as a consultant. Amazon convinced designers like Michael Kors, Vivienne Westwood, and Tracy Reese to sell their products on Amazon Fashion, and the company was in the process of building a 40,000-square-foot photo studio in Brooklyn where it could shoot original photography for the site.
But even with all these efforts — and the Tom Ford tux — Bezos was decidedly out of his element at the Met. While he told model Elettra Wiedemann, who hosted the event’s very first (and last) livestream, that Amazon “really wanted to participate in this gala as a way of showing our commitment to this industry,” he had also admitted to Bloomberg earlier that morning that “before we got involved, this event wasn’t on my radar at all.”
A photo of Bezos looking bored, with his bowtie slightly askew, surfaced on Vogue and eventually hit tech blogs, where he was teased for not being able to fake his interest in fashion for very long, even if he was dining next to Scarlett Johansson and Mick Jagger.
Five years later, Bezos and Amazon have not backed off their aggressive pursuit of fashion. Since 2015, the company has sponsored New York Fashion Week: Men’s. Last year, it premiered a 30-minute HSN-style shopping show called Style Code Live that airs live every weeknight on Amazon.com and picked up The Fashion Fund, the documentary-style show about the process behind the CFDA/Vogue Fashion Fund competition that previously ran on Ovation TV, and Hulu before that. These days it’s also sponsoring international fashion weeks, notably in India and Japan.
Plenty of brands have entered into official partnerships with Amazon since the Met Gala, too. There are now dozens of premium fashion labels selling their wares directly on the site, including Stuart Weitzman, Kate Spade, Rebecca Taylor, Milly, Frye, Marc Jacobs, Gucci, and Ferragamo. (Hundreds more brands are sold by third-party sellers via Amazon’s massive free-for-all marketplace.) Even Gap CEO Art Peck told investors he was open to wholesaling to Amazon — an unusual move for the once-dominant company.
With its newly robust list of brands, Amazon seems to be making good on what Beaudoin told the Seattle Times back in 2013: “We want to be a great department store, like Bloomingdale’s, Nordstrom, and Saks." It’s worth noting that while Amazon is on the upswing, those great department stores are in serious trouble.
According to the U.S. Department of Commerce, department store sales shrunk from $67.56 billion in 2011 to $60.65 billion in 2015; meanwhile, Amazon’s clothing and accessories sales nearly quadrupled from $4.3 billion to $16.4 billion during that same period. Macy’s is currently the largest fashion retailer in the country, but according to finance firm Cowen & Co., Amazon will soon replace it, with a projected $28 billion in apparel sales this year.
So yes, when it comes to Amazon’s fashion ambitions, this is just the beginning.
In 1994, at the age of 30, Jeff Bezos left his executive position at an investment firm on Wall Street and moved to Texas. It was the start of the dot-com era, a time when internet usage was growing at an annual rate of 2,300 percent. According to the story Bezos repeats in the rare interviews he grants, he made a list of 20 items he guessed could sell easily online, which first and foremost included books.
Bezos and his wife MacKenzie eventually relocated to the Seattle area, where big tech companies like Microsoft were based. He launched Amazon out of his suburban garage with his first four employees in July 1995. The company’s initial $300,000 investment came from his parents, according to Josepha Sherman’s 2001 biography Jeff Bezos: King of Amazon.
Within its first month of operation, Amazon was seeing $20,000 of sales each week selling books to users in all 50 states and more than 45 countries. Customers flocked to the user-friendly site that became known for speedy shipping, personalized recommendations, and a community of avid reviewers. It also got a little help from a new search engine company called Yahoo that sent users to Amazon via its “What’s Cool” list.
By 1996, Amazon employed 151 employees and was bringing in $15.7 million in net sales. The company filed for IPO in 1997, and in 1999, Bezos was named Person of the Year by Time for single-handedly invigorating online shopping.
Within a decade of going public, dethroning Walmart, the world’s largest company by sales, became the goal. This is where clothes come in. “The manifest destiny of Amazon is to be the biggest retailer in the world,” says Brad Stone, author of The Everything Store: Jeff Bezos and the Age of Amazon. “They run this blueprint again and again each time they enter a category. Bezos understands that if Amazon will ever come close to the sales of Walmart, he’ll have to add groceries and apparel.”
In 2006, according to the Wall Street Journal, Bezos traveled to New York to meet with designers “but apparel executives were reluctant to entrust their brands to a retailer known for cut-throat prices and a utilitarian approach to displaying products.” Left to his own devices, Bezos began the clothing crusade on his own.
He first bought Shopbop, which was estimated to bring in some $30 million in annual sales at the time thanks to loyal return shoppers who appreciated the site’s well-merchandized selection of cool, contemporary brands. The next year Amazon launched the shoes and accessories e-commerce site Endless.com, which was meant to face off with Zappos. But ultimately Amazon couldn’t contend with the site, a customer favorite for its then-unusual free shipping and returns policy, and it ended up buying the company instead in 2009 (Amazon shuttered Endless.com in 2012).
In 2011, Amazon debuted the membership-based flash-sale site MyHabit, a move to directly compete with Gilt Groupe, which was thriving at the time and boasted a valuation of approximately $1 billion (Amazon shuttered MyHabit last year). Amazon introduced the contemporary menswear website East Dane under the Shopbop umbrella in the fall of 2013. That same year, that giant photo studio in Brooklyn opened, and in 2015, Amazon opened another such studio in London. The Amazon Fashion project was in full swing — because despite all of his high-profile launches and acquisitions, Bezos realized that building out a dedicated fashion space on Amazon was the only way to truly maximize profits. This is largely due to Amazon Prime, the website’s two-day-shipping subscription, which Stone says “turns people into Amazon addicts.”
“Amazon Prime is the engine that drives Amazon,” he explains. “It capitalizes on irrational human behavior, where people are maximizing their membership. The whole point of getting people to sign up is for them to always be on the Amazon site, buying more.”
Plus, clothes are lucrative. As Bezos told the New York Times back in 2012, “gross profit dollars per unit will be much higher on a fashion item.” American shoppers spent $273.67 billion on new clothing last year, according to Euromonitor, of which Amazon currently has a 6.6 percent market share. The bulk of Amazon’s clothing sales, however, are currently in the functional basics category, meaning socks and undergarments.
Retail consultant Sucharita Mulpuru thinks Amazon would fit perfectly as a retailer “that competes with Old Navy and Macy’s,” but John Blackledge, a senior research analyst at Cowen, says Amazon is clearly after the mid-to-upper market with its fashion venture “simply because of the ticket on luxury.”
“Apparel has some of the highest margins, and in luxury fashion, Amazon knows people who want something unique won’t mind spending a bit more for it,” says Blackledge. It certainly helps that a whopping 70 percent of upper-income households in the U.S. (those earning more than $112,000 annually) are Amazon Prime members.
One former Amazon employee, who worked on the fashion team and agreed to speak to Racked on the condition of anonymity, says the company’s aggressive foray into the space is about them wanting to be at the “center of every conversation.”
“As they enter and take over literally every single industry, this is just another way of Amazon being relevant,” the former employee says. “They know that a lot of shoppers don’t see them as a credible source for fashion, but they are taking this very seriously and trying to get designers on board so they can have another piece of the pie.”
On the brand end, it’s not surprising that so many fashion companies are choosing to wholesale with Amazon. Amazon has logistics down, from top-of-line fulfillment centers to sophisticated backend tech, and these are companies that need to expand their own e-comm footprints, given the slowdown of in-store shopping. Better to get aboard the Amazon train than have to shutter hundreds of stores or declare bankruptcy like their peers.
“These days, there are two ways to describe retail: a shit show, and Amazon,” says Scott Galloway, an adjunct professor of marketing at NYU’s Stern School of Business. As Blackledge explains, “Amazon is the only one that’s not stuck in the vicious cycle of declining foot traffic that’s leading to declining sales that’s forcing stores to close. They are in a constant virtuous cycle.”
“In many cases, fashion companies are turning to Amazon because it’s a life support at this point,” adds Mulpuru. “They see the dying retail environment, and then they raise their eyebrows when they see Amazon’s growth and eventually cave out of desperation.”
For smaller brands, there’s also the benefit of exposure. Scott Studenberg, one of the partners behind the contemporary line Baja East, which was a CFDA/Vogue Fashion Fund finalist and sells on Amazon, puts it simply: “It’s a brand that has one of the biggest reaches in the world.”
“I was at a party in LA with Kate Hudson, who was wearing this amazing gray, strappy jersey dress,” he continues. “I said, ‘I love your dress!’ and she said, ‘Oh, I got it on Amazon.’ Kate Hudson! It just shows all the different types of people that are shopping on Amazon, whether it’s for groceries or a dress.”
Chris Gelinas, the designer behind the brand CG, who was also a CFDA/Vogue Fashion Fund finalist, admits he was initially hesitant about selling on Amazon because “it represented a different type of shopping, and I was already concerned about online because my clothes are so tactile.” After Amazon worked with Gelinas to create a landing page for his brand, he was sold.
“It shifted when I saw how much effort they put into storytelling,” he says. “They put a lot of work into shooting the clothing so they could capture the core message and hone in on the idea of clothing being crafted and authentic. There were definitely certain stigmas it carried for me, but that didn’t last beyond seeing the attention and space Amazon was giving to a brand as new as mine.”
Gelinas adds that while CG is simultaneously keen on growing its direct-to-consumer business, “I now have a customer base I couldn’t ever even have thought of accessing without Amazon.” That exposure doesn’t just come from Amazon’s own enormous platform or its digital advertising efforts, which increased 224 percent last year — during the 2016 holiday season, it spent more on TV ads than Walmart and Target, according to WWD.
“They put my clothes in a television commercial!” says Gelinas. “At the end of the day, getting my product into the hands of the people who want it is all I’m after, and there are now women all over the world who can access CG because it's sold on Amazon.”
Even brands that don’t necessarily need the exposure say an Amazon partnership is valuable. Shoshanna Gruss, the designer behind womenswear label Shoshanna, sells her clothing at stores like Neiman Marcus and Saks Fifth Avenue. She also sells her three largest categories (swim, ready-to-wear, and evening) on Amazon.
“Brands were nervous to try selling on QVC or do an exclusive line for Target. Now they’re lining up to do either,” says Gruss. “It’s important for these brands to adapt with the digital world. Amazon Fashion was the next step for us, as customers look to Amazon for everything and it has such a large reach. Everyone trusts Amazon, so getting our product in front of loyal Amazon customers really opens more doors for us.”
For every CG or Shoshanna that openly (and glowingly) talks about its partnership with Amazon, though, there are many, many more that refuse to discuss their relationship with the e-commerce giant. Out of the 50 brands that were contacted for this story, nearly every single one declined to participate; Kate Spade, Rebecca Minkoff, Marc Jacobs, See by Chloé, Stuart Weitzman, Mara Hoffman, Rachel Comey, Lacoste, and New Balance are just some of the brands that comprise this list. Other companies agreed to participate but backed out at the last minute out of concern for Amazon’s reaction. (Amazon also ignored multiple interview requests from Racked.)
“No one wants to talk about Amazon because it’s a dirty little secret that they are slowly migrating to the platform,” says Harriet Greenberg, a partner at Friedman LLP. Galloway, the NYU professor, suggests that “no one looks at Amazon and thinks that it’s a great partner. It’s considered the evil empire.”
And while there are high-end brands selling products on Amazon, the selection is often limited to entry-level items like handbags, sunglasses, and perfume. Fashion companies, ultimately, are saving the good stuff, like clothing and footwear, for higher-end retailers.
“Everyone in fashion looks down on Amazon, and as a brand, you don’t want to be shouting that you are selling there,” says Nivindya Sharma, a senior editor at trend forecasting agency WGSN. “There’s a balance between wanting sales and wanting exclusivity, which is why you’re seeing many brands offering a limited selection and selling premium products elsewhere. It’s all about perception.”
For all of Amazon’s investment in Amazon Fashion, there are technical challenges that impede its growth, in terms of both potential partners and shoppers. For one, the Amazon Fashion landing page remains largely difficult to navigate. There is a master list of designers, but it’s buried deep within the site and does not differentiate between brands that sell via Amazon directly and brands that sell through a third party. Finding products from current seasons is also impossible.
“Amazon’s algorithm is complicated,” says Galloway, “but it generally favors what sells the most. So if you search booties, it’ll likely show you what’s three years old, and not the new shoes sold on Macy’s or Net-a-Porter. That’s not great for fashion labels constantly putting out new collections.”
“They have this front page with some content and it looks nice, but then you start clicking and it’s like, ‘Oh god!’” says Sharma, the WGSN editor. “There’s no editing, the filtering is dodgy, and I’m just put off completely. Maybe I’ll buy something if I can find it, but I don’t know if this is a recipe for a loyal customer base.”
Blackledge confirms that according to consumer reviews of shopping for clothing on Amazon last summer for Cowen, everyone’s main complaint is the site’s functionality — “a challenging user experience” is how one shopper put it. Amazon might have grown to prominence in the early aughts because it was user-friendly, but the site hasn’t progressed much; in fact, it’s only gotten harder to use as it’s become inundated with a never-ending flood of merchandise.
“What we heard from shoppers is that while they go to Amazon to replenish goods or search well-known brands or items, the site really falls short in curation and the browsing experience,” says Blackledge. “It’s just like, come on, how can you not have a beautiful digital presentation? You’re Amazon!”
The former Amazon employee says that even though the company had a strong roster of buyers, merchandisers, and software engineers on the fashion team during her time at the company, there were often clashes over making Amazon Fashion “prettier,” or at least making it look less like Amazon.
“Because the culture at Amazon is so different from fashion,” the former employee says, “it was really slow to adapt to change and listen to, say, people from Bloomingdale’s who wanted to study new brands and who’s buying what in the market.”
One womenswear designer, who spoke to Racked on the condition of anonymity, shared that she’s frustrated with how Amazon surfaces cheaper versions of designer items. For example, on the Amazon page for Stella McCartney’s $908 platform Oxford shoes, a similar $32.99 pair is displayed in the “Customers who viewed this item also bought” unit right below the product description.
“It feels like they are taking our products because they are a never-ending pit,” the designer says, “but at the end of the day, they just care about the sale, and not about the integrity of the brands or products that are even on the site. If it really cared about promoting and boosting fashion, it wouldn’t offer knockoff stuff.”
Like other e-commerce marketplaces, Amazon is also home to plenty of counterfeit products that boast fake designer labels; its unwillingness to remove these products has stirred controversy. Over the summer, CNBC reported Birkenstock was ceasing distribution on Amazon due to the myriad other sellers listing counterfeit Birkenstocks on Amazon. This is particularly distressing to brands because Amazon fulfillment centers have been known to mix inventory from partners with those from third-party sellers, meaning that counterfeits can make their way to customers who bought authentic brand merchandise.
"The Amazon marketplace, which operates as an 'open market,' creates an environment where we experience unacceptable business practices which we believe jeopardize our brand," David Kahan, the U.S. CEO of Birkenstock, wrote in a memo. “Policing this activity internally and in partnership with Amazon.com has proven impossible.”
Reflecting on Birkenstock’s decision, Galloway agrees that Amazon’s counterfeit problem has hurt the site’s reputation in the eyes of potential partners. Why would Louis Vuitton or Tory Burch ever confidently enter into a relationship with Amazon when there are countless counterfeit products imitating their brands on the site?
“A website like Net-a-Porter would never sell counterfeit goods,” says Galloway. “It just wouldn’t happen.”
Just two weeks ago, Amazon Marketplace vice president Peter Faricy told Reuters the company would be rolling out a counterfeits removal program that will allow companies to register their logos and intellectual property and then flag sellers listing illegitimate products. The fact that Amazon took so long to take action, says Galloway, “shows you a difference of culture.”
“You would think Amazon, which has the most sophisticated technology, could easily weed out these fakes and unverified sellers simply by creating some sort of algorithm,” he says. “But Amazon has an ethos where it wants to instead shrug its shoulders and turn a blind eye as long as it’s making money.”
One of Amazon’s recent maneuvers in its multi-pronged approach to winning the fashion game involves rolling out as many as eight in-house labels, including at least five womenswear lines: Society New York, Ella Moon, Lark & Ro, James & Erin, and North Eleven. It also offers men’s suiting and children’s clothes, with athleisure, bras, and quite possibly plus-size on the way. These launches were informed by data the company collected about what customers are buying on Amazon; it decides which categories to launch private labels in based on existing consumer behavior.
The in-house labels have been met with little fanfare. They are hard to find on the site, and there have been plenty of complaints regarding quality and sizing. The marketing around the brands has been confusing too, with no clear indication as to what differentiates one from another. Lark & Ro merely offers that it’s for “women constantly on the move, who want to look stylishly pulled together from day to night,” and the clothing for Ella Moon is apparently “globally inspired, everyday beautiful.” The other women’s lines don’t have any brand descriptions at all.
“While we’ve learned to never bet against Amazon, building a successful private fashion label is a challenge they have never faced,” says Greg Portell, a partner at A.T. Kearney. “It takes years to build a brand and to figure out the precise marketing for it too. Do people even want to be seen in Amazon clothes? This is harder for them than it looks.”
The former Amazon employee says rolling out private-label brands based solely on data instead of design or merchandising expertise is a perfect example of how Amazon doesn’t understand the industry.
“There are people at Amazon who actually love and breathe fashion and care about cool new things,” the employee says. “But at the end of the day, Amazon is numbers-driven.”
In the fall, LVMH CFO Jean-Jacques Guiony said on an earnings call that his company’s brands, which include Céline, Fendi, Givenchy, Dior, and Louis Vuitton, would not be working with Amazon. (LVMH also owns a majority stake in Marc Jacobs, which does in fact have a partnership with Amazon.)
“We believe the business of Amazon does not fit with LVMH full stop and it does not fit with our brands," said Guiony. “There is no way we can do business with them for the time being." LVMH is planning to launch an e-commerce business of its own, where all of its brands can live.
Amazon is well aware of its downmarket reputation and flawed user experience, and it appears to be actively working to fix it. The company recently put up a job posting for a senior manager of product management, a role whose end goal will be implementing solutions to help “customers navigate through our selection of hundreds of millions of items,” which “remains one of the biggest customer experience challenges for Amazon Fashion.” This candidate will define “the product vision, goals” and influence “senior leaders within Amazon Fashion and across Amazon to communicate the team’s vision, strategy, goals, status, and customer impact.”
Nadia Shouraboura, a former Amazon executive who now runs retail tech brand Hointer, says it’s not a matter of if luxury brands will cave to Amazon, but when.
“I know that customers will be able to shop for Chanel and Dior on Amazon soon — just like fashion houses are obsessed with creating timeless looks, Amazon is obsessed with creating the perfect online shopping experience, effortless and unmatched, so it's going to happen,” Shouraboura says. “In several years, customers will be able to stream the latest runway show on [an] Amazon video service and tell Alexa to ship favorite outfits to their homes for one-hour delivery in time for an evening event.”
Stone, the Amazon author, likens the situation to what happened when Amazon began selling tech products: Companies like Sony and Samsung pledged to never sell on the site, only to cave when they couldn’t hold out any longer. Stone believes that “just because these luxury brands aren’t selling on Amazon today doesn’t mean that one day they won’t have to.”
“It’s a brave new world, and anyone who thinks Amazon isn’t going to be number one in fashion is not being honest,” says Greenberg of Friedman LLP. “Just look at the numbers. The products will go where the customers are, and they are on Amazon.”
There’s also a belief that Amazon could take over in-person shopping, too; after all, 85 percent of shoppers prefer to shop in stores. Plenty of e-commerce companies have since expanded into physical locations: Warby Parker, Birchbox, Everlane, and ModCloth, to name a few. Amazon has already debuted its own bookstores, and grocery stores are next.
“Of course Amazon will have brick-and-mortar clothing stores — customers told us they want to be able to touch and feel clothing before buying, and Amazon has always listened to customers,” says Shouraboura.
So what does this mean for the rest of retail? Will Amazon eventually clobber clothing stores, like they did bookstores? Is everyone destined for doom? According to Blackledge of Cowen, “This isn’t winner takes all. It’s a win and take most.”
Because retail is fragmented — a segment that’s always had countless players — analysts don’t think Amazon will fully take over the shopping sector the way it did with books. Plus, “fashion is an emotional purchase that makes shoppers feel a certain way, and Amazon takes away that feeling,” says Laura Sossong, a senior consultant with Boston Retail Partners.
“Getting something in an Amazon box just waters down that experience,” echoes WGSN’s Sharma. “I really think there will be those who will spend the extra $50 to shop at a nice store, or buy something on a beautifully curated website that will ship items to you in a nicely wrapped box.”
Ultimately, Amazon is not and will never be a fashion company. “Technology does not always mean creativity, and that’s why there’s continued opportunity for merchants facing off against Amazon,” says Richard Kestenbaum, a partner at Triangle Capital LLC. “Amazon might be a big fat pipeline into consumer’s homes, but that’s not the same as creating inspiration. Selling Fruit of the Loom is not the same as selling Oscar de la Renta.”
Chavie Lieber is a senior reporter at Racked.
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