Amazon has launched a US private sale website for designer clothes, branching out into a much-hyped new retail area with members-only shopping and time-limited “flash” sales with discounts of up to 60 per cent.
The world’s biggest online retailer opened the site called MyHabit.com on Tuesday, competing with start-ups including Gilt Groupe and Rue La La that have won well-off young female customers with their brief sales and urgent marketing.
Amazon promised a rolling series of cut-price deals – available for 72 hours each – from more than 800 brands. The first offers on the site, visible in videos of twirling models, were from smaller brands such as Doo.Ri and Badgley Mischka.
In their glamour and exclusivity private sale sites seek to set themselves apart from a parallel internet phenomenon: group discount sites such as Groupon, which enable mass market hunting for time limited discounts on everyday products and services.
The hype around private sale sites – generated by their operators and customers as well as internet fashion sites – still far exceeds their ability to generate profits, according to independent retail analysts.
“We listen to our customers very closely and we heard they’re interested in the private sale space,” said Maria Renz, chief executive of MyHabit, explaining Amazon’s decision to create the site, which it had not discussed publicly until Tuesday.
The site will be the biggest test yet of Amazon’s ability to project and protect fashion brands, which are a world apart from the commodity-type products such as books, toys and electronics on which it built annual sales that last year reached $34bn.
In October last year, Amazon paid almost $100m to acquire BuyVIP, a fashion sales site based in Spain with a presence in seven European countries which is being run separately from MyHabit.
While other private sale sites get most of their business from women in their 20s and 30s with reasonable disposable income, Ms Renz said of MyHabit’s target market: “I’d describe it more broadly as men and women who are interested in fashion.”
Retail analysts say the profitability of existing private sale sites is constrained partly by a high level of product returns and the difficulty of re-marketing them in secondary sales or offloading them to other outlets.
True to Amazon’s cagey disclosure policy, Ms Renz did not comment on financial forecasts for MyHabit.
Asked how MyHabit would differ from rival sites from the viewpoint of customers, she said: “The affiliation with Amazon is a plus in terms of the trust they’ve placed in Amazon [already] that we’ll fulfil the order when we say we will.”
Customers will also get free shipping – made possible by Amazon’s existing logistics network – and will be refunded with credits they can spend on Amazon’s main site as well as MyHabit.
Karen Yau Smith, vice-president at Gridley & Co, an investment bank that specialises in online retail, said: “One of the biggest challenges for Amazon is that it is great at the consumer experience … But the flash sales game is very different. The bread and butter is having great relationships with a wide range of brands.”
Source : Financial Times