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Amazon.com Inc. (AMZN) Shares Jump On “Fashionable” Sales

Amazon.com (AMZN)

Amazon.com Inc. is bold and it takes on new ventures with a mandate to succeed. Amazon has upended the retail space to become the leading ecommerce store and the firm is not resting on its laurels. Analysts are predicting that Amazon will become the leading apparel retailer in the U.S.in the next two years in a move that will outpace Macy’s. Macy’s is the current leading apparel retailer in the United States.

Amazon.com (AMZN)

Fortune reports that research analysts at Cowen & Co are positive that Amazon will become the top retailer in the clothing category in the next two years. The analysts say Amazon will sell clothes worth $27.77B in 2017 to outpace Macy’s sale.

Shares in Amazon were up strongly on Monday morning. At time of writing shares in the e-commerce concern were selling for $529.76, up 1.39 percent for the day so far.

In 2011, Macy’s had 5 times more sales than Amazon in the clothing category. This year however, Cowen analysts project Macy’s apparel sales at $22.2B while Amazon’s apparel business will reach $16.34B.

Amazon is growing its apparel business

One of the key reasons Amazon  is set to supplant Macy’s in the apparel business line is the vast variety that it offers. The Cowen analysts posit hat Amazon has about 343,000 different (in size, color, and brand) kind of apparel in comparison to Macy’s selection of 85,000 items. Walmart comes second with 292,000 clothing items, Target and Nordstrom have35, 000 items.

Amazon’s vast selection provides buyers more choice that makes it easy to keep up with the latest fashion styles and trends. Amazon presents shoppers a selection that ranges from A through Z while Macy’s small selection forces buyers to choose between A, B, and C. In essence, people are more likely to visit Amazon than Macy’s when shopping for clothes.

Then, there is the added perk of discounts and free shipping when you shop at Amazon. Adrian Weidmann, principal at StoreStream Metrics says, “The two primary drivers for this prediction are the ease of determining discounted pricing and free shipping and returns. These factors trump in-store purchases by a wide margin. Retailers need to figure out how to compete with this reality.”

Amazon and Macy’s eye each others business

Amazon  and Macy’s have been eyeing each other’s business for quite a while. Last week, Macy’s threw a punch at Amazon when it launched same-day deliveries in 17 markets. Macy’s same-day delivery in 17 markets trumps Amazon’s same-day delivery in 14 markets.

Macy’s has more than 900 location in the U.S. from which drivers can up packages from the nearest store to an address. In contrast, Amazon has only 50 distribution centers and it can’t just compete with Macy’s on the network scale.

Max Goldberg, president of Max Goldberg & Associates says, “Macy’s has led the way in retail omnichannel and in-store use of mobile devices. They should continue their focus in these areas, building strong relationships with customers. Same-day delivery will add to their arsenal. By staying focused on consumer needs, Macy’s will continue to be profitable regardless of the growth of Amazon.”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.