Are Activewear Brands Ready to Compete with Amazon?
As Amazon makes inroads into the Apparel market with the launch of private-label clothing brands, along with acquisitions of companies like Shopbop and Zappos, Activewear could be its next target. Given the e-tailer’s multiple advantages in search and fulfillment, Activewear brands might seem ill-equipped to defend their turf. However, strategic investments in omnichannel and loyalty programs could help them compete with an Amazon private label.
The e-tailer’s most obvious advantage is its ability to offer fast, free shipping, particularly through its Amazon Prime program, which has played an integral role in elevating consumer expectations around fulfillment. While Activewear brands have beefed up their sites in recent years amid an increased focus on DTC e-commerce, a mere 16% of brands in L2’s Digital IQ Index®: Activewear make clear on product pages whether items qualify for free shipping – and free shipping itself is a rarity. Just 46% of brands examined in both 2016 and 2017 offer free shipping across the board, a marginal increase from last year, while another 46% require a minimum order of $75 to qualify for the service. As a result, more than 70% of carts are abandoned, with shoppers citing hidden shipping or return costs as one of the main reasons they reconsidered their purchase.
Rather than trying to compete with Amazon’s impressive fulfillment options, Activewear brands could leverage one asset that the e-tailer lacks: their physical stores, where consumers continue to spend more than online. In theory, digital could act as a connective tissue, bridging the divide between the online and in-store experience. However, few brands have adopted omnichannel features. For example, just 12% of brands with stores in L2’s study let shoppers buy items online and pick them up in-store, a decrease of 2% over last year. Nearly half of U.S. consumers took advantage of click-and-collect in 2016, indicating a clear missed opportunity.
If shoppers don’t abandon their carts when they find out the cost of shipping, they often do so at the point of account signup. By failing to offer guest signups (thus requiring consumers to sign up for site accounts to complete transactions), brands increase the chances that shoppers will reconsider their purchase. However, at the same time, they may be reluctant to allow guest signups, as full account signups yield vastly more consumer data.
The solution may lie in loyalty programs, which not only offer customers an incentive to sign up, but also tend to result in higher purchase sizes. L.L. Bean, Eddie Bauer, and The North Face all offer robust loyalty programs: L.L. Bean integrates a brand credit card that includes other perks like free return shipping and monogramming, while Eddie Bauer’s tiered loyalty program notes on each product page how much shoppers will save, and The North Face similarly indicates how many “PeakPoints” members will earn on each product. These loyalty programs encourage shoppers to return to brand sites, contradicting Amazon’s sway. Yet just under a fifth of Activewear brands have implemented loyalty programs – suggesting that should Amazon enter the arena, consumers who already rely on the e-tailer to buy other products might have little incentive to buy Activewear elsewhere.