Amazon aims to be the belle of the ball gowns
April 15, 2016 05:07 PM
(Bloomberg)—Amazon.com Inc. built a $100 billion business giving online shoppers convenient access to low-cost books, HDMI cables and paper towels. Now it wants to help them buy $7,000 silk pleated ball gowns from designer Oscar de la Renta.
Amazon is teaming up with luxury clothing merchant Moda Operandi to create a seamless shopping experience that starts at Moda’s web store and finishes at its New York or London emporiums. Amazon’s smartphone app alerts sales associates when a shopper has arrived to try on clothes selected online, which can then be paid for using the customer’s Amazon account.
The partnership could help Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide, become a force in apparel, where it has struggled, and pushes its payments operation into brick-and-mortar retail. For Moda Operandi, a six-year-old startup that has raised more than $130 million, the deal is an opportunity to more tightly mesh its online and physical stores—an enduring challenge for retailers large and small.
Fashion retailers are great at visual displays and merchandising that make shoppers want to buy, but fall short at making online transactions simple and easy, a feat Amazon mastered long ago, said Nadia Shouraboura, a former Amazon executive who founded Hointer, a Seattle company that helps traditional chains implement digital strategies in their stores.
“The partnership brings the best of both worlds together online and in store to create the best customer experience,” she said.
Founded in 2010 to make luxury fashion more accessible, Moda Operandi made it possible for designers—established and emerging—to connect directly with consumers. Traditionally, buyers at the likes of Neiman Marcus (No. 36 in the Top 500) and Bergdorf Goodman have attended private fashion shows in person and selected a small number of items to sell at their stores for the next season. Moda disrupted that model by putting those shows online.
Fashionistas hungry for the latest trends—be it a crocodile backpack or a $3,495 pair of velvet platform shoes—get to see designers’ entire collections the day they’re unveiled. They can buy their favorites and sometimes receive them before they appear in stores. More recently, Moda began selling curated collections and opened physical locations.
The Amazon-Moda Operandi venture is the latest example of how retailers and payments companies are combining the convenience of online checkout with the instant gratification of going to a store, a process known as “click and collect.” Shoppers on Moda’s website can log in with their Amazon ID, browse and put items in their carts. When they enter a Moda store, beacon technology signals their presence to an associate who gets all of their information and preferences on a tablet so they can help the customer try on the items they liked and suggest other merchandise that may fit their tastes.
Eager to take on PayPal Holdings Inc. and the credit-card companies, Amazon has used its payments business to get a piece of online transactions outside Amazon.com by letting its 290 million account holders easily conduct business on other companies’ websites. The Moda deal is evidence that Amazon wants to become a big player as a payments processor offline, as well.
Amazon won’t use the payments business to glean data from other merchants, said Patrick Gauthier, the company’s vice president of external payments. “The real reason we are doing this is to solve a customer problem and earn their trust.”
Moda Operandi inventory won’t show up on Amazon’s website, but the partnership could provide a halo effect for the online behemoth’s apparel business. Amazon has been working for years to sell more clothing by sponsoring fashion shows and introducing its own brands of men’s, women’s and children’s apparel.
“High fashion is a category that doesn’t convert very well to Amazon’s website,” said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University. “This is a brilliant play for them to keep focusing on that category and not give up.”