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The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Op-Ed | Dear Fashion, Amazon Isn't Going to Save You

Neither the e-commerce giant nor government is going to save fashion. The industry needs to save itself by embracing substantive, systemic change, argues Lawrence Lenihan.
Rag & Bone Autumn/Winter 2020 show during New York Fashion Week | Source: Getty Images
By
  • Lawrence Lenihan

As the Covid-19 crisis sends the fashion market into a downward spiral, the industry is desperately searching for rescue. In a recent briefing, The Business of Fashion suggested that Amazon could play the sector's knight in shining armour. With its logistical dominance and vast global customer base, Amazon could rescue fashion, especially small independent labels, by helping them re-architect their business models for a world where online is suddenly their only viable sales channel… or so the logic went.

On Thursday, Amazon Fashion launched a digital outlet for high-end, independent brands in partnership with American Vogue. But Amazon is no friend to fashion brands.

Meanwhile, fashion leaders are lobbying for government aid to help the industry hold out for a return to a normalcy that will never arrive. The hard truth is that fashion is not top of mind in terms of critical national importance, nor is it considered deserving of sympathy by the public who will influence the politicians making these decisions.

Most tragically, while the industry awaits these panacean fantasies, it wastes time, energy and resources that could be invested in real, substantive, systemic industry change that could pave the way for a brighter future. Nobody is going to come to save fashion. Fashion must save itself.

Amazon Is Bad for Brands

There is an allegory about a frog who agrees to give a scorpion a ride across a river. The scorpion assures the frog that it will not sting him because, if it did, both frog and scorpion would drown and die. Nevertheless, in the middle of the river, the scorpion stings the frog. As he drowns, killing them both, the frog asks the scorpion, "Why?" The response: "Because it is my nature."

Fashion brands are the frog to Amazon’s scorpion. Amazon saving fashion brands is against its nature; it runs contrary to everything it has done and how it operates. Here are some recent highlights that underscore Amazon’s nature:

  • Every element of Amazon.com is architected for utilitarian, non-branded search. Filters are organised by price, customer reviews, newness or paid placement. Each customer search brings an endless "spreadsheet" of products to sort through, all similarly displayed in tiny images. Everything is designed for apples-to-apples comparisons. Smart brands, like Nike, have realised this and left.
  • Customer intent is critical to Amazon's success, and it uses its ubiquitous presence as leverage to develop brand-competitive private label products. The Wall Street Journal reported a few weeks ago that Amazon was using the sales data from sellers to launch competing products. More than 50 percent of its private-label sales are apparel, jewellery and footwear. Expect more private labels as its thirst for fashion expansion grows.
  • Amazon is designed to enable non-brands to thrive. In a survey of nearly one million product listings on Amazon by Coresight, "generic" was the most significant "brand" and the number of generic clothing listings on the site increased 900 percent from 2018 to 2019. Thousands of manufacturing-oriented "brands" have sprung up that copy branded products, make them cheaply with zero transparency and sell them on Amazon.
  • Brands are forced to sell against resellers. Eighty-seven percent of listings are from third-party sellers, some reputable, some not. The presence of counterfeit products is something that critics, from Adidas to Gap, have faulted Amazon for being lax in policing.

In sum, Amazon is the antithesis of brand.

In sum, Amazon is the antithesis of brand. There is only one brand that is important to Amazon and that is Amazon. Its nature is to enforce commoditisation where convenience, selection and price win — not brand. Where a branded product can stand out, Amazon makes that product under its own brand or private label. Otherwise, it is indifferent to what is sold, so long as something is sold. Therefore, any brand differentiation is ultimately its enemy because brands diminish its power as a dominant logistics provider. Once your customer is on the Amazon site, every ounce of branding you have invested in creating, each element of product differentiation you have built, is ripped away, and your relationship with your customer is hijacked.

Is Amazon evil? No. Not at all. But that does not make it good for the fashion industry. Like the scorpion, it cannot help but act on its nature.

No Saviours, No Bailouts

Paradoxically, the seeds of the fashion industry’s demise have been sown by its success over the past 30 years. Fashion has shipped much of its manufacturing out of the West, emphasised volume over quality, big over small, data over design, trend over innovation, plausible deniability over sustainability. Now, it tries to present itself as worthy of government bailouts by calling out the needs of struggling small, independent designers. But the truth is the industry’s large retailers have been killing these designers for years.

Tragically, so many workers across the industry have lost their jobs permanently. These workers need support with money, healthcare and retraining. But taxpayers shouldn't be required to help large industry players that have created a massive global industry that has adversely impacted our environment, at times abused its workers and, somewhere along the way, lost its creative soul. Covid-19 did not create the crisis in fashion; it just accelerated everything.

Substantive, Systemic Change

For the fashion industry to survive and thrive, it needs to tackle its sustainability crisis, reimagine the role of retail, upgrade its technology infrastructure and rediscover its creative core.

Rather than postponing sustainability initiatives, we must rebuild fashion with sustainability at its core. Not in a group-hug, kumbaya kind of way, but by making sustainability transparent, measurable and verifiable, with companies held accountable for the consequences of their actions. Brands need to care because their customers care. Who doesn't care? Generic product sellers on Amazon!

Covid-19 did not create the crisis in fashion; it just accelerated everything.

Retail will not work in its current form. With the state of logistics in 2020, a retailer's original role as a multi-brand product distributor was lost to Amazon a long time ago and, thanks to Shopify, even small brands can distribute their own products online easily. But a golden age of retail, for large chains and specialty retailers alike, can begin when they embrace their role as marketing and business services partners who add value by genuinely helping to build brands, not just acting as overpaid middlemen.

The technology infrastructure of this industry is 40 years old. “Fashion Tech” investors back companies that use artificial intelligence and blockchain to build end-user solutions that are tiny in scope and minuscule in importance, while completely ignoring the actual core value chain activities from which all change must begin. A new industry can be formed, but only with new infrastructure. Without it, we become hostages to Amazon and others who then control our destiny with their technology infrastructure dominance.

The industry must also rediscover its creative soul. In a world where people have lost their voice, creation-driven brands can be that voice. But not unless the industry can transform its entire value chain to be real-time and on-demand, so brands can react to the world around them at the speed of social media. No more seasons shown six months before delivery, no more inventory. No working capital requirements that makes the cost of creation so high designers cannot take chances. No clothing being incinerated or ending up in landfills when it can't be sold.

Now is not a time for industry preservation; it’s the time for industry transformation. If not, there will be nothing left to preserve. It won’t be easy because every single element of our industry has to be reimagined and reconfigured. It will be painful. Some companies won’t survive. But those that do will be better and stronger and new companies will emerge. Let’s start now.

Lawrence Lenihan is a former venture capitalist and the Chairman and co-founder Resonance.

Disclosure: Lawrence Lenihan is part of a group of investors who, together, hold a minority interest in The Business of Fashion.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.

How to submit an Op-Ed: The Business of Fashion accepts opinion articles on a wide range of topics. The suggested length is 800 words, but submissions of any length will be considered. Submissions may be sent to contributors@businessoffashion.com. Please include ‘Op-Ed’ in the subject line. Given the volume of submissions we receive, we regret that we are unable to respond in the event that an article is not selected for publication.

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