Markets

Is Amazon Ready to Take on Stitch Fix?

Amazon (NASDAQ:) wants to sell consumers every product and service for their homes. Naturally, it’s gotten into the subscription clothing game by offering Prime Wardrobe to millions of Prime members across the U.S. and elsewhere.

One of my favorite disruptors is Stitch Fix (NASDAQ:), the San Francisco-based clothing subscription service, that uses artificial intelligence and data analytics to fine-tune the apparel that’s sent to its subscribers each month. 

I suspect the two companies may soon go toe-to-toe.

A Little Like Stitch Fix

Prime Wardrobe allows members to order up to eight items, and try them all on. That  sounds a little like Stitch Fix. 

In late July, AMZN added an extra feature. 

For $4.99 per month, consumers can get Personal Shopper by Prime Wardrobe.  Personal Shopper generates a profile of consumers’ preferences in terms of style, brand, fit, and budget, and then sends them curated items in-line with those preferences. 

That sounds a lot like Stitch Fix.

If I had a dollar for every time AMZN took a shot across the bow of an industry or company, I’d be a wealthy man.  

However, before you go out and buy some AMZN stock, you might want to consider whether Amazon has the chops to take on Stitch Fix.

Have you ever bought an expensive clothing item from Amazon? I sure haven’t.

The fact that I can try Amazon’s clothing on at home before paying for it is irrelevant. There’s an argument to be made that Amazon is adding the $4.99 service so it can grab even more subscription revenue,  regardless if it helps its Prime customers. 

Seriously, anyone who’s  getting his or her styling cues from Amazon isn’t styling in the slightest, and that’s coming from one of the least stylish people on the planet. 

Is AMZN Any Good at the Apparel Game?

RetailWire recently hosted an online discussion about Amazon’s $4.99 clothing subscription charge. 

“The personal shopper addition is definitely a good step to take if Amazon wants to be serious in the subscription fashion space,” Dave Weinand, CCO of research firm Incisiv, in last week. “Any opportunity to offer a more curated mix of items will increase chances for conversion and lower returns, “

Like a lot of Amazon’s moves, the subscription plan is part power play, part marketing research. AMZN has all the time in the world to conquer fashion, so it’s starting with an affordable $4.99 monthly service until it can figure out precisely what its Prime customers want. 

Remember, most of what AMZN does today is carried out through its Prime membership. On the e-commerce front, it doesn’t do anything without understanding how each move will affect its lucrative members, which is what ultimately drives AMZN stock.

On the downside, the best brands are not going to want to be involved with the project because they’re not going to want to be included in a curated group of items which are primarily drawn from Amazon’s own boring brands. 

“This new fashion proposition seems an odd fit for the big, impersonal Amazon brand,” Michael La Kier, the principal at What Brands Want, a marketing consultancy. “Not saying they won’t have a good business here eventually, but there will be mental hurdles among consumers,” he added. 

The Bottom Line on AMZN Stock

I’m a big fan of AMZN CEO Jeff Bezos. I think he’s brilliant, like Elon Musk. I’ve been recommending Amazon stock as long as I can remember. I continue to believe AMZN stock could hit within the next five years.

I also know that Bezos isn’t afraid to make mistakes as he builds AMZN into the world’s most customer-focused company. 

So, for now, as Prime Wardrobe’s new service  gets underway, I’m going to suggest that this latest move by Amazon should not be viewed as the first nail in Stitch Fix’s coffin.

But the initiative is the first step of the creation of a big revenue generator for AMZN. And that’s definitely good news for the owners of AMZN stock.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

 

The post appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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