Amazon.com (NASDAQ: AMZN) has already completely disrupted the traditional retail space, helping Amazon stock to rise tremendously. Amazon’s share of total U.S. retail sales hit 5% last year. In 2019, Amazon’s share of all online U.S. retail sales will reach 47% percent, according to eMarketer.
Despite Amazon’s unprecedented retail success, its new Prime Stylist service suggests Amazon is looking to take even more business away from physical retailers. If AMZN is able to take a bigger piece of the retail pie, that will be very good news for Amazon stock.
What Is Prime Stylist?
Prime Stylist is Amazon’s new offering which is supposed to provide personalized shopping assistance. It’s geared primarily for Amazon’s female online shoppers. Users fill out a personalized shopping profile by answering questions about clothing size, preferred look, brand preferences and budget. From there, Amazon’s staff of professional stylists select outfits from Amazon’s massive trove of apparel offerings.
Customers are allowed to view and approve the selections before they are shipped. Once customers receive the selections, they are given seven days to try on the outfits and return them if they are not satisfied. AMZN will presumably be relying on its human stylists, but will likely also incorporate customer data and artificial intelligence.
At this point, Prime Stylist is still in the testing phase. However, following the launch of Prime Wardrobe last year, AMZN seems to be very serious about clothing.
Why Prime Stylist Matters for Amazon Stock
Amazon has already gone toe-to-toe with brick-and-mortar mall retailers and won on pricing, convenience and selection. The only area in which traditional clothing retailers still have the upper hand is personal touch. Many shoppers like to receive personalized fashion recommendations. They like to know that another human being thinks their outfit looks good, especially if that person is a professional stylist.
Many shoppers also enjoy the process of trying on apparel before buying it. That shopping experience has traditionally been available only in in-store dressing rooms. However, AMZN is actively encouraging Prime Wardrobe and Prime Stylist shoppers to try on outfits at home. The company is making returns free and easy in an effort to change shoppers’ mindsets about the traditional shopping experience.
Wall Street analysts are already gushing about the long-term potential of Prime Stylist.
“For Amazon apparel broadly, we think that the site has been lacking is curation/merchandising,” KeyBanc analyst Edward Yruma says. “We think Amazon has recognized this and has improved photography and storytelling, and Prime Stylist can be another strong step to enhance its capabilities,” he added.
The Impact on Amazon Stock
Prime Stylist is just in its infancy, and investors shouldn’t expect it to make a huge impact on Amazon stock right away. However, longtime owners of AMZN stock know Prime Stylist is right out of the Amazon playbook. Prime Stylist doesn’t need to be a big money-maker for Amazon. Amazon’s e-commerce and cloud business are firing on all cylinders, so it can be patient.
AMZN is slowly shifting the way shoppers think about clothing shopping by subtly challenging the traditional model. It’s the same approach Amazon is taking to smart speakers with its Echo device.
Customers who buy these new products start out thinking, “Oh, I wanna try out this crazy new thing.” Soon, they think, “Wow, this cool new thing isn’t really that weird.” Finally, they say, “Jeez, I can’t remember life before this new thing.”
Amazon Stylist may not be a big deal for Amazon stock in the near-term. However, it’s just one more way that the company is suffocating traditional retailers. That strategy could end up being huge for Amazon stock in the long-term.
AMZN has already captured nearly half of all online retail sales. If Jeff Bezos has his way, Amazon’s share may reach half of all retail sales.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.