Friend or Foe? Is a relationship with Amazon.com a risk?

Chico’s FAS, a major US women’s clothing chain, plans to close at least 250 stores. Since May 2018, Chico’s-branded micro site has been selling on Amazon.com, which now sells around 2,300 Chico’s styles, from crease-proof trousers to fine-knit sweaters, representing nearly six times more product offerings than when it started.

Nike, Under Armour, Lands’ End, Levi Strauss… and more are distributing clothing and accessories through Amazon.com, attracted by more than 100 million members of Amazon’s loyalty club Prime and its advanced delivery network.

According to retailers and industry analysts, the risk in this relationship comes if Amazon uses data from customer purchases to help it quickly build out its own private label clothing brands – in effect stealing market share from its current retail partners.

To sell through Amazon, Chico’s and other clothing retailers can either sell product to Amazon in a traditional wholesale relationship or sell directly to consumers as third-party merchants, paying a (is it17 percent?) referral fee on clothing and accessories sold.

Retailers pay Amazon extra to store and ship their orders under the ‘fulfillment by Amazon’ model.

Amazon has also developed its own private label apparel brands. According to TJI Research, Amazon had 109 of its own brands in clothing, shoes and jewelry categories at the start of 2019.