Amazon Luxury Stores—A Lifeline and Digital Testing Ground for Luxury Brands
Wednesday, December 2nd, 2020
Recently, Amazon launched its newest offering, Luxury Stores, in an attempt to expand into a sector of the fashion industry that has long been uninterested in selling on the platform due to a range of concerns. The invite-only, mobile shopping experience seeks to address the main concern about brand reputation with no reviews allowed, control over pricing, and a greater effort to police counterfeit goods.
However, the lack of reviews is a significant departure from Amazon’s current experience. It is through consumer reviews that Amazon maintains its tremendous selling power and trusted source of product evaluation and value. Amazon’s decision to not include this signature element of its value proposition to shoppers shows its commitment to creating a curated and exclusive experience that aligns with one of luxury’s main principles: That luxury brands are superlative, not comparative to others in the market.
So far, a handful of brands have signed up, including Oscar de la Renta, Roland Mouret, and, most recently, La Perla. But for some luxury brands that have been hit hard by COVID-19, the platform might be what they need to get new customers as the most important shopping season for luxury retail – the holidays – are well underway.
COVID-19 has hit luxury brands in many ways – store closures, tourism suspended indefinitely, lack of occasions, and high-income households’ job losses, to name a few. Brands that are still family-owned are more likely to test Amazon’s luxury waters because it is their only viable option to reach a new audience. For example, Oscar de la Renta’s CEO, Alex Bolen, relayed to the WSJ that company sales fell 85% in the second quarter of this year. The platform enables luxury brands, like Oscar de la Renta, that have long relied on their boutiques and high-end department stores for sales and distribution to leverage Amazon’s network before they commit to building their own. Since this holiday season is a must-win for luxury brands to keep their doors open, the partnership with Amazon appears to be a lifeline until things return to normal.
In addition to family-owned brands, luxury groups, like Shiseido and the Prada Group, are trying Amazon’s Luxury Stores, too. Similar to Oscar de la Renta, Shiseido’s Cle de Peau skincare line needs a new channel to drive discovery, trial, and sales as its main one, high-end department stores, has been closed for most of the year and is in financial trouble. And for the Prada Group’s Car Shoe, now is the time to expand its digital presence as 78% of Americans plan to shop on Amazon for gifts this holiday season. Clearly, Shiseido and the Prada Group are experimenting with at-risk or niche brands before they make bigger plans to increase their portfolio’s presence on Amazon’s Luxury Stores.
To date, Amazon has done little to promote its Luxury Stores other than a press campaign in mid-September and a social media campaign with influencers and actress Cara Delevingne. For those who want to express interest in shopping Amazon’s Luxury Stores, they can join the waitlist, which is also being used to gauge consumer demand and help persuade new brands to sell on the platform. Regardless, the success of these efforts will likely reveal themselves early next year in multiple ways. New brands could start selling on Amazon Luxury Stores. Launch partners Oscar de la Renta and Roland Mouret could expand product selection or create exclusive collections to be sold on the platform. For publicly traded companies like Shisheido and the Prada Group, stock analysts will also likely ask about their performance on Amazon and their future plans. But for Amazon, the future looks luxe.
Contributed By: Marie Burns, Insight & Strategy, Dallas
Image Source: Unsplash