Land's End is adjusting its selling strategy
Apparel retailer Lands' End saw a decline in total sales during Q2 2016, with its e-commerce business continually faltering since 2014.
However, in the wake of its lackluster performance, Lands' End found a new opportunity to drive online engagement and conversions. The retailer has partnered with Amazon to sell directly on its marketplace, CEO Federica Marchionni announced on the earnings call. The company's decision to partner with Amazon will facilitate access to a massive user market that it can leverage to reinvigorate its online operations.
Sales at Lands' End are continually struggling:
Total revenue is declining: Total net revenue for Lands' End during Q2 2016 declined nearly 7% year-over-year (YoY) totaling $292 million. The company has been averaging this same decline in total revenue since 2014.
E-commerce is also trending downward: Revenue from online sales totaled just over $246 million, marking a 7% YoY decline. The retailer's online business has been steadily declining since Q3 2014.
Without highlighting what contributed to Q2's online sales decline, Lands' End outlined several plans to drive up digital engagement. The company recently launched sections on its website that segment specific product lines like Canvas by Lands' End and Lands' End Sport. This could help more clearly direct shoppers to the items they're looking for when browsing the site, which should increase conversion rates.
Furthermore, Lands' End is launching its new mobile app just ahead of the upcoming holiday season, Marchionni noted on the call. However, after nearly two years of declining online sales, these branded e-commerce initiatives aren't likely to drive a recovery on their own.
Partnering with Amazon to sell directly on its marketplace could help Lands' End turn things around. This significantly widens the potential audience for Lands' End, thanks to Amazon's global reputation and customer base. Amazon is continually taking market share in the online apparel industry with its own private-label clothing lines and key partnerships with brands.
In fact, Amazon’s apparel business is expected to grow from 5% of the total US apparel market in 2015 to 14% by 2020, according to Cowen & Company. The decision to partner with the e-commerce giant puts Lands' End in a powerful position to leverage Amazon's continually growing customer base. As Amazon continues to gain market share across product categories, while maintaining its powerful reputation in fulfillment and seller relations, more traditional apparel retailers may look to the e-commerce giant to help revive faltering e-commerce businesses.