Amazon focuses on fashion with first clothing campaign as it celebrates unexpected profit

Amazon is to launch its first fashion based campaign in the UK as it looks to build on growth in its apparel business following a strong quarter that saw the online retailer post an unexpected profit.

Amazon saw revenues increase 20% in its second quarter to $23.18bn while net income was $92m compared with a loss of $126m a year ago. Amazon boss Jeff Bezos said the results prove the firm has been “working hard for customers” through the launch of services such as same-day delivery and its voice command service Echo.

Speaking on a conference call yesterday (24 July), CFO Brian Olsavsky also said the company was “thrilled with the results” of Prime Day – a celebration of its 20th anniversary that offered members of its Prime subscription service access to thousands of offers and deals.

There had criticisms aimed at Prime Day for offering promotions on random products. However Amazon said orders were up by 266% and Olsavsky dubbed it “Christmas in July”.

“It surpassed all of our expectations. Any metric we look at, everything was a huge success. Customers save millions. New Prime members have signed up in higher rates than we’ve ever seen. People bought more devices than on any other day. So it’s a great success,” he said.

He also pointed to a “pipeline of invention” for Prime, including improvements to its instant video and music features. He said engagement of Prime Instant Video customers is high – with higher pickup in retention rates and free trial conversions.

“We’re very happy with the linkage between our digital offerings in the Prime customer base,” he added.

Focus on fashion

As it steps up its fashion offering, Amazon has opened a photography studio in Shoreditch and taken on model Suki Waterhouse for the campaign. It has also appointed its first creative agency for Amazon Fashion in Joint, which will create ads around products and seasonal ranges.

Amazon has an equivalent facility in New York. The London studio will produce thousands of photographs and videos a day to promote all the brands and products sold on its websites across Europe.

Sergio Bucher, vice president of Amazon Fashion EU, told the Evening Standard: “Our aim is to make Amazon the best place to buy fashion online. The opening of our new fashion studio illustrates our ambitions. Our new studio will enable us to produce more than half a million images a year.”

Speaking on the call, Olsavsky said Amazon is “super excited” about its apparel business, which has seen strong growth in recent quarters. However he didn’t disclose numbers.

“[The apparel] business, it’s growing very well. We like our position in it. We think our website is very tuned to selling online. So we’re very happy with that. It is a big business for us, not only in North America but also internationally.”

Brian Olsavsky, Amazon CFO

Future investment

Amazon has made a series of investments in the past 20 years that have impacted its profitability and analysts looking for a sign that this quarterly profit will now be a consistent theme could be disappointed as the online retailer looks to continue to spend.

Olsavsky said Amazon will invest in strengthening Prime by putting money into exclusive video content, music and delivery as well as devices such as its Kindles and TV.

“We know those devices drive customer engagement and sales,” he said.

Amazon will also continue to invest in AWS – its cloud computing arm which saw revenues increase by an impressive 407% compared to a year ago.

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