The notion that Amazon will push deeper into apparel and make it a strategic focus was amplified Tuesday when the e-commerce giant unveiled a line of private-label dress shirts for men.
Amazon announced Buttoned Down, a private-label shirt brand with a starting price of $39.99 and available to members of Amazon Prime. The company said it plans to expand into dress pants, sport shirts and sweaters in the future. Analysts have been watching Amazon closely as it continues an expansion into the apparel category.
“Growing consumer acceptance of apparel via e-commerce, as well as the high-value/low-volume characteristics, make this an attractive product category,” said a research note from Pacific Crest Securities. “We think that apparel may serve as one of the single biggest incremental growth opportunities within the retail business.”
Pacific Crest said the Buttoned Down launch is significant for two reasons. First, the offering is being billed as a Prime exclusive. “We think that the attractive pricing of the men’s dress shirts may serve as a compelling incentive for a Prime membership,” the investment bank said. “Second, we think the launch shows that Amazon is interested in using private label to fill in areas of apparel that lack strong, national, wholesale-focused brands.”
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Amazon stock rose 0.75% to 770.42 in the stock market today, getting back above its 10-day line. Amazon has climbed 4% so far this week as it works on a two-month consolidation, but it’s still below its 50-day line since it reported weaker-than-expected Q3 earnings and cautious guidance on Oct. 27.
Pacific Crest pegs the U.S. apparel market at about $400 billion and says disruptive distribution and business-model changes provide an opportunity for Amazon to make inroads in the market.
The move follows the Monday announcement of Amazon Go, a high-tech convenience store in Seattle, where Amazon is based. The 1,800-square-foot store is in beta-testing for now; it opens to all in early 2017. Amazon Go takes dead aim at the physical-store world and poses an increasing threat to Wal-Mart and others.
Amazon also reportedly plans to open dozens of small retail storefronts in shopping malls over the next year, designed to showcase its hardware devices, such as the Kindle and Amazon Echo.
With the continuing aggression of Amazon, Wal-Mart intends to bring online ordering of groceries and curbside pickup service to nearly a quarter of its roughly 4,600 U.S. stores by the end of 2017, Wal-Mart executives recently said.
Date: December 12, 2016