Why Amazon Needs to Stay Out of Fashion Retail

Last Updated Jun 23, 2010 2:54 PM EDT

Do we really need another place to buy clothes online? Amazon (AMZN) is apparently so encouraged by double-digit growth in women's retail it's re-launching its clothing and shoe business with a focus on haute looks that will compete directly with such established high fashion destinations as Net-A-Porter.

The trouble is not that Amazon is trying to compete with the likes of the online house Natalie Massenet built from nothing into a $183 million enterprise that she sold (but still leads) to Richemont, the Swiss luxury goods group. The problem is that by purveying posh frocks, "it" bags, and covet-worthy footwear, it will be going head-to-head with its own.

For those who may have missed it, Amazon shelled out $928 million last summer to snag Zappos, the shoe retailer with the megawatt culture of customer service (free shipping both ways, call us!). Later, Zappos CEO Tony Hsieh came clean about the acquisition, admitting he was actually reluctant to give up his company but eager to grow with Amazon chief Jeff Bezos' support -- a friendlier proposition than his own board.

Hsieh may have been thoroughly sincere about his selling out to fostering the "science of happiness." But with the launch of this new fashion site it looks like Bezos is drawing a line in the sand between Amazon and Zappos -- perhaps positioning to unload it (and its cheerful customer care associates) on the next investor to come along. This may come back to bite Amazon as Zappos attracts over 3.1 million visitors in the $100K earning range.

Amazon also owns Shopbop.com, a high-end clothing and accessories retailer. When the independent Shopbop was acquired, Amazon appeared to be aiming at the luxury market, one that eluded it thus far because such shoppers don't want to slum it in a low rent online marketplace. That would be the equivalent of a Chanel devotee scouring the flea market for a Prada bag. Though some of the brands carried by Shopbop are part of Amazon's current offerings, its new site will undoubtedly have crossover but perhaps not the cachet. And that continues to be an important motivator in getting chicsters to click and buy.

One of the reasons Net-a-Porter is so successful is its air of exclusivity. The site is well edited, offers magazine-like editorial in addition to the items, and the transactions are finessed by details such as shiny boxes frosted with ribbons that bear the posh frocks. Given Amazon's current apparel site (an amalgam of its signature navigation and a weak attempt at showcasing the clothes) the retailer is going to need a major redesign to come up against the competition.

But it's going to take a lot more than software developers and graphic designers to set itself apart from even eBay, which launched two snooze-worthy fashion sites earlier this year. Amazon would do better to concentrate on further developing Shopbop and Zappos. Why reinvent the wheel when each has legions of loyal fans? For the cost of a few good tech tweaks (faster and better calling up of similar products, rapid zoom and 360 degree views, etc.), each site would draw even more shoppers irresistibly drawn to buy even more shoes, skirts, and slacks. Which would even replace the cost of all that free shipping.

Image via Amazon.com