Why a $4 Billion Clothing Company Set Up Exclusive Line For Amazon Prime

Just following the money - like the 79 million Prime members in the US. JL

Jason Del Rey reports in Re/code:

Carter’s executives emphasized that their company has similar arrangements with Walmart and Target. But it says a lot that Amazon is now on equal footing with those brick-and-mortar giants on apparel deals like this one.“[I]t's the first brand we've done that's 100% focused on the digital experience for digitally savvy millennials and a more affluent Prime customer.” Among shoppers aged 18 to 34 in 2016, Amazon was the No. 1 site for apparel sales.

In the latest signal that Amazon is being taken seriously as a challenger in apparel to big-box retailers and department stores, the Carter’s company has created a new kids’ clothing brand that it’s selling exclusively to Amazon and its Prime members.

In the spring, Amazon quietly introduced Simple Joys by Carter’s, a line of baby and kid clothing sold in multi-piece bundles. Carter’s is one of the largest kids’ clothing companies in the U.S., with a market cap of $4 billion, selling onesies, pajamas and other baby and children’s attire under the Carter’s and OshKosh B'Gosh labels.

On the company’s last earnings call in late April, Carter’s executives emphasized that their company already has similar arrangements with Walmart and Target. But it says a lot that Amazon is now on equal footing with those brick-and-mortar giants on apparel deals like this one.

“[I]t's the first brand we've done that's 100 percent focused on the digital experience for digitally savvy millennials and a more affluent Prime customer,” Brian Lynch, president of Carter’s, said on the earnings call.

Prime has as many as 79 million members in the U.S., according to a recent Morningstar estimate.

The Carter’s deal comes as Amazon has emerged as legitimate threat to big-box and department stores that sell low- and mid-priced clothing and basics — think Macy’s and Kohls, as well as Walmart and Target. Nike just ended its long-held refusal to sell to Amazon by inking a deal to offer some of its product catalog to the online giant.

Among shoppers aged 18 to 34 in 2016, Amazon was the No. 1 site for apparel sales — a category which included everything from underwear and socks to jeans and baby clothes. Despite that, it still doesn’t have a reputation as a fashion destination, despite a ton of effort over the past five years — it recently canceled a live fashion and beauty video show — though it is making moves to try to change that.

Amazon has unveiled a handful of its own fashion brands over the past two years, and recently began testing a try-before-you-buy option for up to 15 apparel items at one time. It has also created an Alexa-powered device — called the Echo Look — meant to help keep track of wardrobes and provide outfit advice.