Jeff Bezos' fashion forayNovember 16, 2012: 8:03 AM ET
Can the online retailing juggernaut conquer couture?
By JP Mangalindan, writer
FORTUNE -- To hear Cathy Beaudoin tell it, Amazon as a purveyor of fashion just makes sense. Some of the same customers who buy Kindles or Cuisinart appliances on the site also enjoy their Gucci and Prada, so why not sell those goods all in one place?
You'd expect that kind of rationale from Beaudoin, Amazon's (AMZN) president for fashion. But even she initially had her doubts. Beaudoin was running Gap's Piperlime shoe site (which she founded) when Amazon CEO Jeff Bezos invited her to build a virtual equivalent of Melrose Avenue or Via Monte Napoleone. "It's was no-brainer, as a customer, to buy everything on Amazon, but I had never bought clothing or shoes," she admits.
That was four years ago. Today Beaudoin's portfolio includes Shopbop, a women's apparel site and MyHabit.com, a Gilt-like flash sale site launched last year. Then of course, there's Zappos.com, the popular, independently run shoe site Amazon paid $1.2 billion for in 2009.
Shoppers can find upscale brands such as Tracy Reese and Kate Spade on Amazon's sights. But the rarefied world of luxury apparel has been more elusive.
Much of the problem simply has to do with Amazon itself. Its reputation as a marketplace with cutthroat pricing doesn't sit well with some labels, whose fat profits clash with Amazon's anemic margins. Louis Vuitton CEO Yves Carcelle has said the French label will "never" work with Amazon, for instance. Alexander McQueen chief Jonathan Ackroyd obliquely suggested the company's Wal-Mart-like reputation as a mass supplier of goods might dilute his company's online prestige. Observers like Forrester analyst Sucharita Mulpuru remain outright baffled. "Where Amazon does really well is selling underwear and socks," she says. "So if you are Hanes or Jockey, then sure, that's the perfect brand for Amazon."
But just as Amazon has done in the past, it's plowing ahead. Earlier this year, the company opened Amazon.com/fashion, an area that bears little resemblance to the rest of the site. Shopping for a dress, Beaudoin reasons, is very different from shopping for a DVD, and the online experience should vary accordingly. So the section emphasizes thousands of original photos organized into magazine-like editorial spreads. Next spring, the company opens a 40,000-square foot photo studio in Williamsburg, Brooklyn that will also act as the company's permanent foothold among the fashion elite. And despite the naysayers, several big names like Catherine Malandrino, Vivienne Westwood, and Michael Kors are already onboard. In which case, there just may be room for Amazon on the catwalk after all.
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