Amazon Prime members can now buy clothes, try them on at home and send back any they don’t like. The transaction must be expensive for Amazon.com Inc. (NASDAQ: AMZN), but it has been marching into the clothing business as aggressively as it did in books long ago, then consumer electronics and move recently streaming entertainment. Lose money in a market, undermine the competition and maybe make money in the sector later.
Prime Wardrobe is a service that further cements the relationship of Amazon to its Prime members, who number over 100 million worldwide. It gets added to streaming media, free shipping, a music service and free photo storage. Prime is critical to Amazon’s success because members shop more at Amazon than non-members do.
The try clothing before you buy offer could hardly be more enticing. Order, try on and send back what you don’t want in the same box in which Amazon sent it. There’s even a preprinted label to get it back to Jeff Bezos.
Amazon probably can’t resell a lot of the clothing people have seven days to try on and look at. Even if it can, the clothing has to be inspected, refolded and repackaged. And there is the cost of free shipping. In theory, Amazon loses money on many of these sales. In some cases, people will send back every item.
Amazon does have to worry about the losses. They are less than a rounding error on its financials. On the other hand, the management at the likes of The Gap and J.C. Penney have one more thing to make them panic.
Even if Amazon makes very few sales, it has blitzed its way into another large market.