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Kiehl's joins Amazon as a fashion and beauty giant

Kiehl's joins Amazon as a fashion and beauty giant

 


Fashion and beauty are starting to make peace with Amazon.

From Coach to Clinique, premium brands that once kept their distance are now seeking the platform. The most recent is Kiehl's Since 1851, launching Thursday on Amazon.

This change marks the recognition of two fundamental truths: there are millions of shoppers on Amazon every day and many brands are already sold on the platform, either through direct relationships or on the gray market. But while many high-end fashion and beauty brands have adopted the platform, true luxury players are rare, despite the launch in 2020 of the Luxury Stores division.

Regardless, Amazon continues to strive to broaden its fashion appeal.

Amazon's sales of clothing, shoes and accessories reached $56.4 billion in the United States last year, according to an estimate from Coresight Research, which includes the value of third-party products sold in the Amazon marketplace. business.

That easily makes Amazon the dominant force in the fashion industry, with consumer sales more than 90% higher than the $29.5 billion in gross merchandise value recorded by Walmart Inc., according to Coresight. (Although Walmart plans to expand its clothing business, CEO Doug McMillon told investors this month.)

Brands are still entering the Amazon ecosystem cautiously.

Coach, owned by Tapestry Inc., began selling on Amazon in October, bringing one of the big names in accessible luxury to the site, although Tapestry CEO Joanne Crevoiserat said Amazon's trial of Coach was “pretty restrained.”

“Amazon is important,” Crevoiserat said. “We know that younger consumers are searching for and discovering brands on this platform, and we wanted to do our best there. »

“We are pleased so far with the engagement we are seeing. It’s small, but we’re happy with it,” she said.

The Coach store on Amazon.

Coach on Amazon.

The coach is not alone. Hugo Boss, Tommy Hilfiger, Levi's, Adidas, New Balance, Lacoste and Dr. Martens all sell on Amazon, balancing the benefits of its huge customer base with the risks of forgoing a more direct relationship with the consumer.

Amazon shoppers are looking for more than just a brand and prioritize delivery costs and speed, a user-friendly website, and brand and product selection, according to Coresight. “More than half of Amazon clothing shoppers say they prefer Amazon.com because of its lower shipping costs and speed,” the company said.

And Amazon has been constantly working to improve that experience with AI, AR, and virtual try-on capabilities to personalize the shopping experience while increasing delivery capacity and speed.

Simeon Siegel, an equity analyst at BMO Capital Markets, expects to see more brands signing on with Amazon.

“Ultimately, as D-to-C or death disappears from the conversation and brands internalize that good wholesale partners can be powerful partners,” Siegel said.

But he also had a word of warning.

“Too often in retail, the quality of the sale erodes long before the actual sale,” Siegel said. “Companies are chasing revenue that is bad for their business and will cost them more in the future than they earn today. But the problem is that a dollar today seems very attractive, even if it costs two dollars tomorrow.

“Retail is a cycle of overextending revenue, giving everything back and trying to reset and regrow the base,” he said.

After avoiding the platform for years in favor of its own sites, department stores and players like Tmall, Estée Lauder Cos. turned around in March and launched Clinique on Amazon. Other brands from the beauty giant are expected to follow this year.

On Amazon, Clinique sits alongside L'Oréal-owned brands including Lancôme, Youth to the People, IT Cosmetics, Urban Decay and Ralph Lauren Fragrance, as well as lines such as Keys Soulcare and Shiseido.

“They're going to go where the customer is,” Olivia Tong, an analyst at Raymond James, said of Lauder's change in strategy.

Tong said the new distribution better positions Lauder against competition from established multinationals and new independent brands.

In its latest quarterly report, Lauder said Clinique's Amazon debut had “significantly exceeded” expectations and contributed to the brand's market share gains.

Tracey Travis, Lauder's chief financial officer, told WWD that the e-commerce platform has the potential to become an important venue for the company.

“Amazon has a very broad reach from a consumer perspective, and as we see channel dynamics continue to evolve in North America, it is important for us to be able to reach our consumers wherever they want to shop” , Travis said, adding that different channels offer different shopping experiences.

According to data from Market Defense, a consultancy that helps beauty brands sell on Amazon, there were 741,340 searches on the platform for the term “Clinique” in April. During the holiday period, before the arrival of Clinique, there were around 1 million.

Clinique on Amazon

The Clinique store on Amazon.

Vanessa Kuykendall, director of operations at Market Defense, believes Clinique will be a pioneer in beauty.

“There are still many brands watching and waiting to see the big players and legacy brands make the change,” Kuykendall said. “It's really interesting that traditional brands like Estée Lauder have held back while very innovative, maybe even independent, brands and newer brands to the market have embraced Amazon.”

Amazon also appears to be giving L'Oréal a boost. When it rolled out Lancôme on the site last year, it found that 73% of consumers who purchased a product were new to the brand, according to Jefferies analyst Ashley Helgans.

More recently, L'Oréal launched Kiehl's on the platform, also with the aim of meeting customers where they are, according to John Reed, chief executive officer of Kiehl's.

Kiehl's is now on Amazon.

And Nicolas Hieronimus, CEO of L'Oréal, declared to the audience at CAGNY in February: “Finally, there are distribution channels where many qualified consumers buy. I assume you are all Amazon shoppers…. The results are very good, both in terms of perception, but also in terms of recruiting new consumers and this is very positive for the brand.

While this is true in the high-end beauty sector – and perhaps for accessible luxury fashion and accessories brands – pure luxury brands are still largely keeping their distance, even after Amazon expanded its Luxury Stores division to Europe two years ago.

Many European fashion and luxury brands had high hopes, but say Amazon has failed to deliver on its promises.

“At first we felt very supported and we were doing good business, but then it all faded away,” said one brand owner who spoke on condition of anonymity.

“I don't know if they really understand fashion, and I feel like they're not focused on growing the business. We expected to be more supported and ended up losing confidence in them. We were counting on greater loyalty, and they didn't keep their promises. »

Sally Singer, head of Amazon's fashion department in the United States, has left the company. Singer, former head of fashion at Vogue, joined Amazon in 2020 and is now president of Art + Commerce in New York.

She had close ties to designers and luxury brands and served as a bridge between the glossy world of high-end fashion and the algorithmically powered, profit-driven Amazon.

The relationship between European brands and Amazon has never been simple.

Brand managers said they were disappointed that major luxury brands from Kering and LVMH Moët Hennessy Louis Vuitton never arrived.

“There’s no adjacency to elevate the smaller brands already on the site,” said a current manager who asked not to be named. Another added: “We expected them to come up with high impact brands, but they haven't yet. »

Another business leader who asked to remain anonymous told WWD that luxury stores make more sense in the United States because the wholesale market is smaller due to the closure of many department stores.

An Amazon spokesperson said: “We continue to expand the selection in luxury stores on Amazon and have added thousands of new styles this year alone. Amazon has a diverse and engaged fashion customer base and we're excited to make luxury items more accessible to a wider audience. We have seen growing interest from our customers in luxury products, particularly beauty, skincare, fragrance and pre-owned designer handbags and accessories. We will continue to listen to customer feedback as we introduce more luxury items to our stores, including expanding our beauty and jewelry assortment, and expanding ready-to-wear to include other styles of men's clothing.

Last month, Amazon began selling pre-owned luxury streetwear through Hypebeast's new HBX Archives store, giving shoppers on the website access to high-profile names, but not directly to the source.

HBX archives look like

Luxury streetwear from the HBX archives.

Courtesy

While luxury resists, the rest of fashion finally seems to be getting in on the act.

“Customer acquisition is very expensive when you only have a direct channel, unless you're a super brand that happens to be at the top of the list,” said consultant Sonia Lapinsky, managing director of AlixPartners. “And so you ask yourself: What is the best and most effective way to acquire these customers?

“As the consumer has become comfortable with buying fashion on Amazon, it's hard for brands to resist the exposure and breadth of customer access they get by going on Amazon,” she said.

“I don’t think brands are blind to the realities of Amazon,” she said. “There are ways to counter some of the downsides on Amazon that we think the savviest retailers are doing [like] control your brand on the site… develop their own storefronts.

This is just another balancing act that fashion companies are going to have to do.

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