Amazon’s grip on the apparel industry is only increasing.
Amazon’s Apparel and footwear sector’s market share reached nearly 13% in 2024, with sales more than doubling to more than $67 billion walmart’s According to some information, a business of about $32 billion wells fargo Industry note published in September. The company expects Amazon’s sales in this area to exceed $72 billion in 2025.
If you look purely at online sales, it’s more than 10 times larger than Walmart.
The company’s apparel and footwear sales exceeded $35 billion, making it the top U.S. clothing retailer for the first time in 2018, according to Wells Fargo and Euromonitor.
Amazon’s foray into the fashion category began meaningfully in 2012, when it began courting brands such as: kate spade And then Vivienne Westwood appeared on that platform.
This division of Amazon grew at a compound annual growth rate of 40% over the next five years. By 2018, brands such as nike, north face, carters, Calvin Klein and J. Crew were all looking for ways to partner with Amazon. At the same time, the company began to focus on its own private label brands.
Excitement surrounding its clothing line smoldered after the company decided to start winding down its private label business amid reports of declining sales in 2022. Most of that segment is currently focused on basics, closet essentials such as T-shirts, underwear, and socks that fall under the brand “Amazon Essentials.”
“Amazon would rather sell the same item a million times than a million unique items, and that’s one of the big challenges for apparel,” said Oscar Barbarin, managing director of Hawk Media, Amazon’s seller consulting firm.
Currently, Wells Fargo estimates that Amazon’s private label business accounts for only about 1% of retail sales and about 2.5% of apparel sales.
Amazon succeeds by aggregating a wide range of third-party brands into a one-stop-shop marketplace. The company strives to keep prices low and most returns are free.
While these aspects have attracted shoppers and helped Amazon grow, they have also created problems for the company.
The FTC filed a lawsuit against the company in 2023, citing antitrust concerns. Specifically, the complaint alleges that Amazon punishes sellers if they list their products cheaper elsewhere.
In a statement to CNBC, an Amazon spokesperson said the company provides tools and education to help sellers maintain competitive prices, and other retailers are taking similar steps.
“Just like store owners who don’t want to advertise bad deals to their customers, we don’t highlight or promote products that aren’t priced competitively,” the spokesperson said. “If the FTC were to prevail in this case, the result would be anticompetitive and anticonsumer, because it would have to stop many of the things we do to offer and emphasize low prices. This would be a perverse result that directly contradicts the purpose of antitrust law.”
The lawsuit also says sellers are often forced to pay nearly 50% of their revenue to Amazon in fees.
Amazon says its fulfillment services are on average 70% cheaper than comparable two-day shipping services.
Returns are also particularly common in the apparel sector, where shoppers commonly buy items in multiple sizes and return items that don’t fit. This practice greatly reduces the profitability of a seller’s business, and Amazon apparel returns often cannot be resold.
“These are all part of the equation and brands have to consider when deciding to put a product out there. And I think what they’re saying is that the volume you get, especially given the challenge of acquiring new customers, is worth the trade-off for the expense to Amazon and this kind of small hit at the last minute,” said Sonia Lapinski, head of fashion retail at AlixPartners.
Watch the video to learn more about how Amazon became America’s largest clothing retailer.
