It is not hyperbole to state that Amazon (NASDAQ:AMZN) has changed the world in its 26-year existence. Seeking to become “Earth’s most customer-centric company,” it sells virtually everything you can think of online. It also has other products and services, such as the Kindle e-reader, Alexa virtual assistant, and Amazon Prime video streaming and subscription service.
This drive to focus on the customer, innovation, and long-term thinking has made Amazon into the powerhouse it is today. It still tries to stay one step ahead of its competitors, recently expanding its personal shopping subscription service that has the potential to further enlarge its reach and appeal.
Amazon has extended its subscription-based offering to focus on menswear. Under its Personal Shopper by Prime Wardrobe, Prime members pay $4.99 to receive eight clothing items per month, which are personally selected based on the customer’s personal preferences. The subscriber keeps what they want and can return those they don’t like.
The good news is that it expands the online retail giant’s subscription service that was previously aimed at women. The move is a clear shot at Stitch Fix (NASDAQ:SFIX), and Amazon has some advantages such as a broader selection of brands, including its own private labels.
Stitch Fix has 3.5 million active clients, putting it way ahead of Amazon’s subscribers, which reportedly number in the thousands. However, Amazon will undoubtedly close the gap, as it now offers a wider range of products to men.
Stitch Fix’s management has noted it is capitalizing on the evolving apparel retail selling environment that has seen several brick-and-mortar retailers disappear, which supports the thesis for long-term growth. While other apparel retailers were struggling, Stitch Fix has been growing its revenue, more than doubling over the last five years from $730 million to $1.7 billion. Even when it held back advertising, its revenue grew by better than 8% in its latest fiscal year, which ended on Aug. 1.
With evident growing demand for this type of service, it comes down to Amazon being able to execute on its vision. And with over 100 million Amazon Prime members, Amazon has a huge pool to draw from for its personal shopping service.
Amazon has contributed to shaking up the apparel industry, which has been just one victim of the so-called “Amazon effect.” The company has been growing its online apparel sales much faster than physical retailers are able to.
Its position has only been strengthened by the pandemic, since more people have turned to online shopping. While the company didn’t break out apparel sales, its total sales for the second quarter, ended June 30, rose by 40% to $88.9 billion.
Amazon’s agility and strong results are not lost on investors, who have sent the share price up by 65% this year. With its ability to move swiftly into an attractive market, the strong price gains shouldn’t discourage long-term investors from jumping in, however.