Amazon's New Wardrobe Service Is Latest Threat for Apparel Stores

By Khadeeja Safdar, Suzanne Kapner and Laura Stevens Features Dow Jones Newswires

Amazon.com Inc. is giving shoppers another reason not to visit stores. The online giant is rolling out a free service to let its Prime members try on clothes at home, its latest attempt to crack into the fashion world.

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The new service, dubbed Prime Wardrobe, is a threat to traditional sellers of apparel, especially department stores, that are struggling to get shoppers to visit stores. It also challenges online players, such as Nordstrom Inc.'s Trunk Club and startups like Stitch Fix, which ship boxes of clothes for people to try on at home. Shares of several retailers, including Nordstrom and Gap Inc., fell about 3% Tuesday afternoon.

The service announced Tuesday would allow Amazon Prime members to fill a box with three or more eligible apparel items from its website, try them on at home for seven days and ship back what they don't want free. Customers aren't charged for the purchase during the trial period and they are offered a discount of up to 20% on what they keep.

"The reason this program is such a wake-up call for traditional retailers is the fitting room was the one place where an offline retailer could differentiate itself from an online pure play," said Joel Bines, the co-head of AlixPartners LLP's retail practice. "A good sales associate [in a store] can make all the difference."

Apparel is a notoriously difficult and costly segment for online retailers, where return rates can approach 40% for some items. Amazon, which already sells apparel from several department-store brands, is now the second-largest apparel seller behind Wal-Mart Stores Inc. after taking market share from Target Corp. and several department stores, according to a research note published by Morgan Stanley in April.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com, Suzanne Kapner at Suzanne.Kapner@wsj.com and Laura Stevens at laura.stevens@wsj.com

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(END) Dow Jones Newswires

June 20, 2017 13:20 ET (17:20 GMT)