One question we often get from clients is “Will Amazon disrupt my sector next”? – be it in Fresh, CPG, Beauty, Apparel, or even Industrials.
Amazon recently made several strategic moves, that taken in unison, strongly suggest that Fast Fashion is square and center in its disruption cross-hairs. Can Amazon be a Zara slayer?
First – Amazon is backward integrating to become a private label apparel manufacturer (see Business Insider feature). They are initially launching 1,800 SKUs across 7 brands. This signals an aggressive build out of foundational Brand capabilities such as product design, materials sourcing and brand management, etc.
Second – Amazon just added an A.I. powered app and in-device camera to its Alexa platform (see product page). This will enable consumers to take photo and video of themselves and explore voice based style recommendations. The Alexa engine can also superimpose recommended product images to consumer body photos for real-time VR showrooming. Dubbed Echo Look, the experimental device is the first step in bringing store showrooming, trials and curation to the home. Or anywhere the consumer is for that matter.
Third – Last week, Amazon received a patent for on-demand apparel production (see WWD article). Based on the patent, Amazon can make the product after the order is placed. This will significantly reduce inventory and forecasting challenges. In addition, the solution can batch and pool orders to optimize production vs. lead time. Deploying three to four of these new production centers will allow on-demand orders to be produced and delivered in 1-2 days to majority of consumers in the U.S.
Convergence for Disruption
The convergence of these three moves will enable Amazon to deliver a step-change in Fast Fashion consumer promise.
This becomes abundantly clear if we compared what Amazon could unlock vis-à-vis what Zara, the reigning Fast Fashion king, offers today. See Figure below:
In short, Amazon is a Zara slayer. They could leapfrog Zara on all the key dimensions of Fast Fashion consumer promise. Even more telling, Amazon can certainly out-automate Zara in its production and distribution capabilities for a competitive cost. Amazon can also better postpone production until after orders are placed will further advance Amazon’s cost and working capital advantage.
Fast fashion brands needs to embrace digital, on both the demand and also supply side of their value proposition, or risk being the next target of the Amazon tsunami.
Read original post here on Linkedin.