Amazon, Flipkart or Snapdeal — all of them sell a large amount of fashion brands on their platform. But since these brands are obviously not owned by them, profit margins are pretty bleak, a hurdle which continues to remain unbridged by almost every Indian ecommerce store. Amazon however, has a different take on that.
The online retailer had earlier expressed interest in setting up a fashion label of its own sometime back. Now it is contemplating the strategy to launch its own brand into the market.
Speaking at the WWD Apparel and Retail Summit on Tuesday, Jeff Yurcisin, vice president of clothing at Amazon Fashion stated,
For Amazon, we know our customers love brands, many of the brands in this room…and that’s where the lion’s share of our business comes from.
Yurcisin also happens to be the CEO of Amazon’s Shopbop unit. He added that
When we see gaps, when certain brands have actually decided for their own reasons not to sell with us, our customer still wants a product like that.
Till now Amazon’s strategy has been to rope in existing brands to sell their products through its online platform. That is also how other online retail stores function. By offering low prices and substantial discounts online retailers have managed to sell more and generate profits online. But if you want to cut out a profit percentage share with the brands then its a clever idea to start your label to make more profits. Amazon seems to have decided to do just that.
Clothing and food seems to be the two key areas Amazon is targeting to start with. As reported by the Wall Street Journal earlier, Amazon decided to go ahead with the food sector by launching a slew of its own label dealing with grocery products.
As far as clothing is concerned, Amazon has an uphill task up ahead. Yurcisin acknowledged this fact and added that Amazon Fashion that sees over 40 million users shop on its platform would be ideal to launch its label.
Across the sector, online retailers make a profit within the range of 30% to 40% by selling fashion products. But on the other hand the profit generated by selling private label is anywhere between 55% to 65%. Simply put, selling your own label generates more profit than selling someone else’s brand.
Even though Amazon wants to head on its own direction, it is reluctant to leave behind its partners. Yurcisin clarified that though Amazon sells products by lowering selling prices it does, however, work “just like any other retailer”. “We buy at full price, try super-hard to sell at full-price,” he said.