Almost two years ago, yours truly opined that the development of delivery drones by Amazon (AMZN) was an incredibly stupid idea — perhaps the stupidest ever from the e-commerce company — and in no way whatsoever would serve to benefit owners of Amazon stock.
Indeed, the potential liabilities incurred in the act of unmanned, airborne delivery could end up proving very costly in the long run.
In the meantime, Amazon has seemingly tried to dethrone delivery drones as the top dog in my personal list of Amazon’s really dumb ideas.
Namely, its alleged attempts to establish a retail presence in downtown New York (which never happened, by the way), and more recently its decision to hire out its one-hour delivery service to anyone with a car and a smartphone that can pass a background check.
Although each came close, neither unseated delivery drones as the king of idiotic things. This week’s news, however, may well do the deed. AMZN, as it turns out, is thinking about getting into the clothing business … as a designer.
Ralph Lauren, Donna Karen … Amazon?
When you’re talking about anything that could impact the value of Amazon stock then you have to take it with a grain of salt.
But according to BuzzFeed, the company said it would be willing to manufacture and sell its own apparel if it felt like its vendors were missing an opportunity.
Specifically, Amazon Fashion Vice President of Clothing and Shopbop CEO Jeff Yurcisin recently told attendees of this year’s WWD Apparel and Retail CEO Summit:
“For Amazon, we know our customers love brands, many of the brands in this room…and that’s where the lion’s share of our business comes from. When we see gaps, when certain brands have actually decided for their own reasons not to sell with us, our customer still wants a product like that.”
Yurcisin went on to clarify that his employer was willing to offer private-label goods to fill those gaps, making the apparel themselves and then (hopefully) selling them under a brand name other than “Amazon.”
In its defense, Amazon Fashion — a subsite of the overarching e-commerce site — has taken on something of a life of its own and has some potential as a possible venue for a new brand name of its own.
Owners of Amazon stock who are looking for private-label fashion to spur any meaningful growth for Amazon, however, may want to think again.
Amazon Fashion Misses the Point
As someone who’s worked in retail before (department store management), I can say with 100% confidence that the way things seem on the outside looking in aren’t the way they really are from the inside looking out.
While my experience was before e-commerce, the same basic retailing principles apply. The biggest and most important of these? Never assume the customer is going to behave in a rational way or behave in the way he or she says they will.
Yurcisin noted Amazon’s willingness to make and sell products and brands that weren’t represented at its e-commerce marketplace. What Yurcisin and everyone else at Amazon Fashion may be overlooking is if there’s a product gap online then there’s probably a good reason for it. For instance, that kind of merchandise likely doesn’t sell well online.
Another reason Amazon.com may not want to wade into these waters: More so than in any other industry, the brand is more important than the fashion. Indeed, the label may be even more important than the quality of the item in question.
For Amazon to successfully pull off a foray into fashion on the back of its own private label, not only would it have to build its brand names from scratch in a fierce apparel market, it would have to do so without the benefit of in-store displays where they can establish a name for themselves in what’s arguably the most important place to be seen (even if most apparel purchasing is now done online).
Bottom Line for Amazon Stock
The good news for owners of AMZN is even if the company does get into the private level game, it should quickly learn it’s not as easy as it looks.
The bad news is this ill-conceived — and plain weird — notion that it has any concept of how to “do” fashion is another piece of scary evidence that Amazon is running out of growth ideas and is now simply throwing spaghetti on the wall to see what sticks.
Oh, and just for the record … this idea doesn’t displace delivery drones as the dumbest idea Amazon has come up with yet. But, it has earned a solid second place on that list.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.