Name: How Amazon Built A $70 Billion Clothing Business
Uploaded: 2025-12-05T01:56:39.000Z
Duration: 16 min 3 s
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Amazon has become America's go to destination for clothing.

Pandemic fueled E Commerce spending sent Amazon's clothing sales Soaring.

Adverbs of manner

Back in 2020, it further solidified Amazon as the top apparel retailer in the US a spot previously held by Walmart up until 2018.

Nearly 13% of all U.S. clothing sales came from Amazon in 2024.

Its apparel and footwear sales were more than double Walmart's and more than 10 times the competitors online clothing business.

However, for apparel sellers, Amazon is an expensive platform.

That said, its global reach makes it impossible for big brands and small businesses to ignore.

They're really becoming reliant on Amazon for the volume and it's hard to kind of wean themselves off that once they get onto it.

So how has Amazon scaled its clothing business and why has it become such a fashion destination?

Amazon is one of the biggest companies in the world.

If you invested $1,000 in its stock 20 years ago, you'd now have about 100 grand.

Amazon has a $2.5 trillion market cap and does hundreds of billions of dollars in annual sales.

But it was just over a decade ago when Amazon really started to make a push into the apparel space.

It's really been able to leverage its scale and dominance in E commerce to win in apparel.

So everybody knows they got their start as a bookseller, adding new categories and verticals like toys, electronics and apparel.

In 2012, Amazon Fashion ran its first advertisement campaign as the company began courting brands like Vivienne Westwood and Kate Spade.

It also began using customer data to personalized search recommendations and made a concerted effort to hire models and stylists to better illustrate its offerings.

In 2014, Amazon's apparel and footwear segment was estimated to have done about $7 billion in sales.

Within a few years, Amazon began ramping up its own private labels, offering dozens of in house brands and tens of thousands of products.

By 2022, there were over 100 confirmed private label brands.

Some of those initiatives have since been axed to cut costs.

I've heard this from some folks who are close to the company.

That, you know, private label just wasn't profitable for them necessarily.

You know, there are some brands that have done well, like Amazon Essentials and Amazon Basics, which really lean more into like the types of items that you would frequently order and are less experimental.

Amazon would rather sell the same one item a million times than a million unique items.

And that's one of the big challenges with apparel.

Apparel has so many changes, the different looks and seasons, and

that can be a challenge because just as you're starting to ramp up on your advertising and people are really knowing that that product's there, you're coming out of the season.

We have seen major players expanding their presence on the marketplace for years by rolling out storefronts on the Amazon website, and

it continues to this day with companies like Michael Kors and David's Bridal launching storefronts in 2025.

Even Nike has returned after famously exiting the platform in 2019 over concerns of brand control and a push to grow direct to consumer sales.

Brands are trying to work with Amazon because they're worried about unauthorized sellers of their product are going to turn up there anyway.

I think that could have been a lot of the Nike decision to kind of come back.

Even if a brand pulls out, they can't control other sellers who are putting their product up there.

That was especially prevalent when the segment was in its early growth phase for brands like North Face who wanted to clean up unauthorized distribution that was already happening on the site.

Amazon apparel was increasing at a 40% compounded annual growth rate.

Recently, Amazon has been focusing efforts towards its luxury storefront which first launched on the website back in 2020.

In April 2025 it partnered with Saks Fifth Avenue to sell products by high end brands like like Dolce and Gabbana and Belma.

I have been approached by Amazon teams from apparel to get in front of super high end luxury brands.

There is a very concerted effort internally to reach out one by one to these brands and get their founders, get their CEOs, get them on the platform and encourage them to become sellers.

Amazon declined an interview with CNBC for this story, but

said in a comment that it is proud to partner with a wide range of selling partners and brands from small businesses to global names, and

it would continue to invest in tools, services and delivery innovations that help brands grow.

There are two main ways that sellers can be a part of the Amazon marketplace.

The first is Amazon purchases inventory in bulk from a company and then controls the pricing and listing of that product on its own.

That approach used to account for a bigger portion of the marketplace, but

is now by invite only, according to an analysis by Hawk Media, which consults for Amazon sellers.

Typically, only brands doing at least $10 million in sales per year on the platform are considered for this type of relationship, though Amazon said that figure isn't accurate.

In an email to CNBC there's not a lot of brands that are doing 10 million a year on Amazon.

Amazon, as the entity, does not want their cash tied into the inventory.

They want it deployed in operations or in other places.

And they want the brands to take on that onus and responsibility of having their capital locked in inventory.

That leads us to the second way that most third parties are using the platform.

Pay Amazon a fee to sell products on its site.

For the clothing segment, that fee is typically between 5 and 17% depending on the cost of the item.

According to a 2023 FTC lawsuit, sellers pay up to 50% of their revenues to the e commerce giant when all is said and done.

In an answer to an amended filing of the lawsuit, the company said Amazon lacks the knowledge or information sufficient to form a belief as to the truth of those statements and on that basis denies them.

But even if just some sellers have reported paying those fees, why be on Amazon?

The bottom line is Amazon provides sellers access to an enormous number of consumers that they wouldn't otherwise.

With that comes high order volumes that must be processed.

Amazon offers fulfillment by Amazon, an optional service for where additional fees Amazon handles the processing, shipping and returns for them.

That can come with a whole host of other costs like monthly subscription fees, long term storage fees, removal order fees, return processing fees, unplanned service fees, and

While those costs can add up, the services Amazon is offering is more than most small businesses could leverage on their own.

You're a seller that's just launching their business online.

It's sort of like this jump start to starting a business.

And when you compare it to other platforms like Etsy, for example, where sellers largely have their own warehouses and rely on third party logistics companies and carriers like usps, you know, it's a huge advantage.

And that's why we've seen companies like Walmart copy Amazon's Playbook and launch their own fulfillment services as well.

According to a Wall Street Journal investigation, Amazon has also leveraged the third party seller data it has to make dupes or replic because of successful items with its own brands.

Well, I spoke with a company called Peak Design.

They make these camera bags that are very popular in the photography world.

And Amazon made almost exact copy a dupe of one of their most popular camera bags.

And the company put them side by side, did a funny video showing the differences and Amazon ended up having to take that one down.

But in the majority of cases, sellers are small businesses.

They don't know to get patents Sometimes they learn through this process that they need to and they might fall victim to even going under because Amazon has undercut them on prices with a very similar product.

Amazon told cnbc we do not use data about individual sellers that isn't public to determine which private brand products to launch.

And we have a policy to protect seller data that goes further than any other retailer we know of.

That FTC lawsuit mentioned earlier also accused Amazon of anti competitive practices surrounding pricing.

It alleges that sellers are punished if Amazon finds that they are offering a lower price outside of its marketplace.

CNBC looked through more than a dozen products from major brands which were cheaper on Amazon than the brand's own website.

So how does Amazon monitor the prices of so many products across the e commerce world?

Well, all the goods sold on the marketplace have a UPC or universal product code.

That's an identification code that is used across retailers.

So companies like Amazon and Walmart for example, can see what price the other is selling things for.

So the first thing that we tell our clients is make sure you have a set of UPCs that are specific for Amazon and not and that you don't sell to anybody else.

So that's one way to make sure that you're not having these price to price matches.

If Amazon detects that a seller may be offering their price for less elsewhere, you know these sellers will get an alert to their account that essentially says hey, we detected this, you need to fix your pricing on their website.

And if they don't comply with that alert, sellers have told me that what this leads to is essentially Amazon penalizing them in some way, often by threatening to disqualify them from the buy box.

The buy box is the seller that shoppers see when pressing add to cart.

This is critical as the buy box accounts for 98% of all purchases according to the FTC lawsuit against Amazon.

An Amazon spokesperson said other retailers also use similar tools and practices to highlight competitive offers and provide customers value in their stores.

Just like any store owner who wouldn't want to promote a bad deal to their customers, we don't highlight or promote offers that are not competitively priced.

While the company could be facing legal repercussions for these allegedly anti competitive practices, being able to command the lowest prices on the market has undoubtedly aided its success.

We're seeing now is that we're at a bit of an inflection point and the consumer's kind of tired of it.

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How Amazon Built A $70 Billion Clothing Business

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