Amazon has eyeballed several hot startups for acquisition in a wider fashion push

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Amazon has been focusing attention on areas like media streaming, its faster delivery and pickup services, hardware and enterprise via AWS. But it’s also making an effort to reboot one of the more legacy parts of its business: fashion.

TechCrunch has learned from multiple sources that the e-commerce giant has eyed up several startups in the fashion sphere as potential acquisitions to update and expand its presence in the category. Everlane, Le Tote, Rent The Runway, Third Love and PreeLine are among the names we’ve heard in connection with the effort.

“They are losing big time in apparel and are anxious to acquire brands,” one founder approached by the company told TechCrunch. Amazon did not respond to requests for comment, and all the companies mentioned here declined to comment about any talks.

The range of these companies speaks to how Amazon is looking to address several parts of the equation when it comes to selling fashion online.

Apparel and accessory site Everlane and lingerie startup Third Love are both vertically integrated businesses, selling items that they have designed and manufactured themselves. Le Tote and Rent the Runway are in the business of Netflix-style clothing rentals, sometimes called recommerce, where you wear and then send back items. And Preeline is a social platform where people can connect with like-minded consumers to share opinions and discover new items.

Amazon has been looking to build up its own in-house muscle in at least one of these areas already. Following in the footsteps of major physical retailers like Nordstrom, Macy’s and Target, Amazon has been working on a number of its own private-label brands, with smart/quirky names like Franklin & Freeman, Lark & Ro, and North Eleven, designed and manufactured under Amazon’s direction and (of course) sold and distributed by Amazon. Of the 399 job openings in fashion that Amazon is currently advertising (399!), 25 specifically mention Amazon’s private label business.

Part of the reason that Amazon is interested in acquiring third-party brands and building its own private-label business is because the company has typically had a hard time shaking its no-nonsense and decidedly unsexy image as a purveyor of cut-price books, electronics and just about anything under the sun — an image that has kept some fashion brands away from selling through the site, and keen fashionably-minded shoppers from visiting and buying there.

“Right now, there is no way that some of the top brands would want to be seen for sale on Amazon,” one source said.

But in a kind of e-commerce, corporate version of Pygmalion, Amazon has been trying to change this. The company has built photo studios in hipster neighborhoods in New York and London to put together shoots and editorial to better sell items online. It has sponsored Fashion Weeks both in New York and India (also helping to raise its game in the latter country). And in addition to the company’s own private label advances, it’s finally been wooing some bigger brands, too.

“Dozens of brands now sell directly to Amazon,” the WSJ wrote earlier this month, “including department store stalwarts such as Nicole Miller, Calvin Klein, Kate Spade, Lacoste and Levi Strauss.” It’s also apparently taking a very un-Amazon approach with this new stock: it’s selling full price.

And on top of all this, the company has been looking at ways of leveraging some of its other assets to differentiate what it presents in terms of fashion commerce. One of the more recent and notable developments there has been the debut of Style Code Live, a daily video program that lets viewers shop for highlighted items on Amazon (and chat about them) while the show is streaming.

The other thing that is notable about these startups that Amazon has looked at for acquisition is that they are the essence of customer loyalty and recurring sales, with sites like Le Tote directly built around subscriptions, but the others donning strong brands that encourage repeat visits and purchases, too.

“They are trying to break the mould and the one-off relationship,” one source said of Amazon’s interest in smaller online brands with loyal followings. “With fashion it needs to be more of a brand play and longer-lasting relationships, not just ‘come to my site to buy a pair of boxers or a regular white t-shirt."”

Loyalty is something that Amazon has been very bullish about as a way of growing its business, specifically around its Prime service, which gives shoppers free, fast shipping and exclusive access to certain digital content and other goods in exchange for a monthly fee. It’s a guessing game how many Prime members Amazon has. One estimate from this past January put the number at 54 million in the U.S. alone.

On the other side of the equation, building e-commerce businesses of any size is notoriously hard, with even large operations often failing to make decent (or any) returns, never mind the challenges for smaller outfits that lack scale. (Indeed, consignment marketplace Threadflip suddenly folded in January and sent its business over to Le Tote, which appears to still be going strong.) That pressure (or more positively, the scaling opportunity) could lead some smaller businesses to consider offers from Amazon.

Amazon itself is no stranger to considering startups for acquisition when it starts to eye up a new business area, be it delivery, food ordering, or video.

But while Amazon’s push into fashion is on the one hand somewhat recent, it also goes back years, as a reference point in a more general mantra about how the company needs to focus on the essential, recurring items of modern consumerist life. “In order to be a $200 billion company, we’ve got to learn how to sell clothes and food,” CEO and founder Jeff Bezos has reportedly said, according to Brad Stone’s 2013 book about the company, The Everything Store.

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Amazon has eyeballed several hot startups for acquisition in a wider fashion push
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