Amazon is reportedly building a platform to sell luxury fashion goods that will launch in 2020, according to Women’s Wear Daily. So far, 12 brands are said to be working with Amazon already, though no names have been announced. Each brand will be introduced individually on the platform. The unnamed platform will launch first in the U.S., followed by an international rollout.
High-end fashion has been a notoriously difficult barrier to break for Amazon, which is often more associated with selling basic fashion items such as T-shirts, footwear, sweaters and jeans.
Luxury fashion brands have traditionally stayed away from larger marketplaces like Amazon due to the perceived hit to their brand equity, concerns about counterfeiting and potential price manipulation. Amazon does have a policy which promises not to discount fashion-related goods unless approved by the brand.
Amazon is building a warehouse in Arizona to support the platform, and is reportedly spending $100 million on its marketing campaign.
The luxury platform would operate similarly to the concession model seen in department stores and specialty retailers, where brands effectively lease space or pay a percentage of sales to run their own mini-shops within the store.
Third-party sellers will have complete control over the appearance of their online space, the products they sell and discounts they offer, according to the report. They’ll also have access to Amazon’s logistics network as well as its customer service resources.
This approach to luxury fashion is very similar to the one taken by Alibaba’s Tmall, which introduced the Luxury Pavilion platform in 2017. Luxury Pavilion sits apart from the main consumer portal and has an entirely different look and feel. The intention is to let brands preserve their identities and exclusivity while still leveraging Tmall’s logistics network. Luxury brands such as Michael Kors and Richemont are among many that have brought their products to Luxury Pavilion in an effort to preserve their cachet.
Online luxury spend is growing slowly but surely, potentially leading Amazon to believe now is the time to capitalize on the category despite the continued hesitation from brands. While the frequency of online purchases has held steady for luxury apparel and fashion accessories, both segments saw increases in the amount consumers spent on those purchases. Average online luxury spend for fashion accessories increased by 5% to $782 per buyer, according to an NPD Group report released in January 2019.