Could the future of fashion mean less consumer choice?

Growing fashion/apparel sales has long been part of Amazon’s ambitions.  One strategic acquisition that they made in this space was the purchase of Shopbop in 2006.  Since then, Amazon has developed a number of other tools, products and services to significantly grow Amazon Fashion.  Based on many estimates, Amazon owns 50% of the online apparel market, which is substantial but still provides ample room for growth. Plus the size of the market is going to continue to grow, especially considering only 8% of luxury buying today happens online (and it’s expected to grow to 25% by 2025).

To help continue to scale Shopbop/Amazon Fashion, I would love to be able to buy a Shopbop subscription box — let’s be honest, they sometimes know me better than I know myself. So why not put all of that knowledge to good use by delivering a box of clothes, shoes, accessories that they think I will like each month. I’ll try on the items at home, keep what I like, return what I don’t.

There are three industry trends at play that make this the right time to execute on this idea:

  1. Acceleration to e-commerce.  The number of e-commerce deliveries increased in 8 weeks by what was expected to happen in the course of 10 years.

  2. Personalization:  There is a move towards personalization with everything from creating your own Nike’s to customized skincare.  Consumers want goods, services and experiences that are customized for them.

  3. Curated subscription boxes (inside and outside of apparel): Whether it’s Literati for children’s books or a wine of the month club, subscription boxes have increased in popularity, yet, only 15% of online shoppers have enrolled in one or more subscription program, to me, that means there’s still opportunity here.

More details on the idea

Shopbop and Amazon Fashion sit on a treasure trove of people’s own shopping behavior (i.e. what they’ve actually bought, not just what they say they might want to buy when taking a survey or a quiz), including their personal style (i.e. bohemian, minimalist, modern etc), what colors or patterns they prefer,  what size they are in shoes vs. tops vs. bottoms, how much someone is willing to pay for an item, how much they spend on various apparel types, what brands they like and how frequently they purchase.  Based on all of this data that they sit on top of, I believe the next generation of Shopbop and Amazon should include an auto-generated box of clothing and accessories sent to customer’s door (oh and by the way, this same idea could apply to many other categories that Amazon operates in). 

Let’s say Shopbop decided to execute on this idea, te target customer for this product is the current Shopbop customer with the goal of increasing share-of-wallet.

I’ll use myself as the example here. I have been a customer of Shopbop since 2008.  

There are 5 main reasons why I have been a loyal shopper.  As a consumer, these are the attributes that differentiate Shopbop versus many of the competitors, and it’s these same reasons that give Shopbop the right to win on a recurring, subscription box business:

  1. Superior range of 1,000+ brands on their sites, from affordable to luxury, from established to up-and-coming.  And while it’s subjective, their curation from each brand is fantastic.  The foundation of their offering provides the breadth and depth it would take to curate compelling, interesting and engaging boxes for consumers that balance items from their tried and true brands of choice with discovery of new brands.

  2. Best user experience.  They’ve invested heavily into their mobile app experience in particular.  They have made navigation, search, following brands and “liking” items very intuitive, providing a strong foundation on which to build this subscription box business.

  3. The more you spend, the more perks you get.  There are two perks in particular that are of value to me:  early access to sales and early access to newly added items.

  4. Amazon prime shipping and easy + free returns.  You get free two day shipping on Shopbop as part of your Amazon Prime subscription.  You also get free returns that they make very, very easy and convenient.  This makes the return of items in a box business very convenient for customers (and removes that as a barrier to try the subscription).

  5. Personalization/recommendations:  while it isn’t entirely clear from the user’s standpoint how much data they’re using to personalize the experience, the recommendations across the experience are solid and it’s this data that would serve as the basis for the algorithm that they use to populate each customers’ box. 

What’s the business opportunity?

Using my own data and transaction history from Shopbop that is comprised of 70 transactions over the years (don’t judge me!), I would estimate that a subscription box could improve LTV by at least 25% for their loyal customers (back of the envelope math below on how I got there).  While I don’t believe that will be the case for every user of Shopbop, I do think it would be realistic to assume this level of a lift for anyone who has enrolled in Shopbop’s loyalty program (as a proxy for their most loyal customers).

Sample customer data

Originally written in Spring 2021 based on a project I worked on, but thought it would be interesting to post here.

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What does fall fashion look like in the middle of a pandemic?