J.Crew makes the jump to Amazon’s marketplace

Discussion
Source: amazon.com/jcrew
Sep 07, 2018
George Anderson

J.Crew is the latest retailer to test the proposition that it makes more business sense to work with Amazon.com while competing against it. The two companies announced the creation of a new online storefront on Amazon’s marketplace featuring a curated assortment from J.Crew’s Mercantile line for men and women.

The Mercantile brand is J.Crew’s version of a discount line, with a focus on everyday clothing items featuring updated designs of classic styles. Items in the collection start at prices in the teens.

“J.Crew’s mission to engage our customers wherever they want to shop makes Amazon the right partner for J.Crew Mercantile,” said  Aaron Rose, chief of emerging business for J.Crew, in a statement. “Their broad-reaching shopping destination supported by our shared interest in service and convenience will introduce the initial collection of colorful everyday basics and fashion to a new audience. We look forward to working together to expand the Mercantile Shop on Amazon and help our customers build their wardrobes.”

J.Crew recently reported its first same-store sales increase (+ one percent) in almost four years. The collaboration with Amazon also coincides with a relaunch of the J.Crew brand earlier this week that CEO Jim Brett said includes lower price “gateway products so people can enter the brand.”

“We were starting too high,” Mr. Brett said in an interview with CBS News. “So, it’s not about taking all prices down. It’s just about having those easy pick-me-up items so that anyone who walks in the store can walk out with something.”

Mr. Brett, a retail veteran who joined J.Crew in July 2017 after serving as president of West Elm, has a long history working in fashion. Previous stints including working as chief merchandising officer for Urban Outfitters. His experience also includes merchandising roles at Anthropologie, J.C. Penney and May Department Stores.

DISCUSSION QUESTIONS: Is J.Crew making the right moves by lowering entry prices on its core brand and selling a curated selection of its Mercantile brand on Amazon’s marketplace? Will these moves help turn J.Crew around?

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Braintrust
"If Mercantile in an outlet environment has not diluted the flagship brand, then I don't see why selling on Amazon would result in anything different."

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11 Comments on "J.Crew makes the jump to Amazon’s marketplace"


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Nikki Baird
BrainTrust

First, I think it’s a little misleading to characterize this as “another retailer” selling on Amazon. J.Crew is first and foremost a BRAND, and anywhere they can sell their stuff is going to benefit them. So it’s not the same as if a retailer who is not a brand decided to sell on Amazon — that would be throwing in the towel.

That said, I thought it was interesting that they opted to focus on the Mercantile brand — a brand that was designed for outlet stores, so already aimed at a lower price point and a more aspirational consumer. While Amazon may no longer always be the lowest price, I think it still maintains an edge around that reputation, so I think it makes sense to focus here rather than on the flagship brand name. If Mercantile in an outlet environment has not diluted the flagship brand, then I don’t see why selling on Amazon would result in anything different.

Cathy Hotka
BrainTrust

Nikki is exactly right. And now is the time to reinforce that brand through extraordinary execution in the store.

Art Suriano
BrainTrust

We all know the adage, “If you can’t beat them, join them.” I see this as a wise partnership for both J.Crew and Amazon. Amazon has a vast audience that will introduce customers to J.Crew, many who may have never set foot in a J.Crew store. Using the Mercantile line is also wise because Amazon is all about price and Mercantile is already a factory/discounted brand. I see this as a successful venture, and there is no doubt we are going to continue to see more partnerships with Amazon and other retailers.

Lee Peterson
BrainTrust

I think Nike set the best precedence for a modern DTC strategy and it’s three-fold: 1.) excellent e-commerce, 2.) experiential physical environments and then 3.) selling on a marketplace provider (like Amazon). J.Crew is smart to do the same, although they have a ways to go on 1 and 2.

Naomi K. Shapiro
BrainTrust

Based on the pitfalls and disadvantages of a retailer of working with Amazon (as discussed in our post: Pros, Cons & Considerations of Working With Third Party Marketplaces), such a move would be ill-advised. On second thought, the potential exposure to new customers for J.Crew and beginning/developing a following would be an excellent decision. Attractive, lower-priced items getting wide exposure will lead the customers to look at, and buy, the other items in J.Crew’s cache. J.Crew did its homework in determining that their pricing was “too high” — and unprofitable. We see the importance of applying business and pricing intelligence technology to get to that decision.

David Katz
BrainTrust

Previously Mickey Drexler, J.Crew’s former CEO, had said the company would not sell on Amazon because, “Amazon takes every bestseller and puts it into their private label collection.” Whether this new strategy will acquire new customers for J.Crew, or cannibalize their existing base, is yet to be determined.

Notably, Nike recently made some of their products available on Amazon, Kohl’s has Amazon shops inside some of their stores and Sears, Roebuck and Co. will install tires purchased from Amazon.

In an interview with The Wall Street Journal, Mr. Brett shared plans to make the brand more accessible. He said the company will sell clothes at retailers such as U.K. department store John Lewis & Partners and Canadian Hudson’s Bay Company.

Neil Saunders
BrainTrust

J.Crew Mercantile is a volume business and is mostly traded via stores at factory outlet centers where customer traffic is strong and the drive to buy on impulse is high. As such, don’t see much harm to the existing business from this move. If anything it will help to drive volumes further and expose J.Crew’s entry brand to a wider audience.

The bigger issue remains fixing core the J.Crew brand. The recognition that entry prices were too high is a good first step. A reset of the brand and a much clearer style profile are important next steps.

Cynthia Holcomb
BrainTrust

J.Crew, a great brand, needs traction via sales. Walk a mall, while even on slow days other retailers have traffic, and the local J. Crew store always looks a bit sad and empty. As far as Amazon, using the Mercantile brand is a solid move. And if Amazon knocks off Mercantile basics, so what, dozens of other brands sell polo shirts, so to speak.

I believe the biggest opportunity for a turn around is Jim Brett’s idea to introduce “gateway” pricing so many can shop J. Crew. Today’s Millennial consumer has grown up with cheap, fast fashion manufacturing techniques and fabrications resulting in a low apparel quality IQ. Why pay J.Crew prices when I can buy the same shirt at Target?

Liz Adamson
BrainTrust

As Amazon’s reach continues to grow, selling on its platform is a logical step for a brand trying to reach new markets and consumers. Using their entry level Mercantile line, historically an outlet or discount line, will also attract new shoppers who may shy away from the higher prices in their main line.

I think the key here is that it is a “curated assortment” of their Mercantile line. Not all products and brands are a good fit for the Amazon marketplace, if they are carefully selecting what to present on their Amazon store, aligning the selection with Amazon shopper preferences, this could be a big win for J.Crew.

Patricia Vekich Waldron
Staff

Offering the Mercantile on Amazon is a great way for J.Crew to get entry-level and new customers addicted to their brand.

Min-Jee Hwang
Guest

This is a smart move by J.Crew, which has the name recognition to attract shoppers on the Amazon marketplace. The trick will be to provide a strong multi-channel experience, so shoppers can visit physical locations and try products, speak with associates and more, while finding competitive prices online with the Mercantile brand.

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Braintrust
"If Mercantile in an outlet environment has not diluted the flagship brand, then I don't see why selling on Amazon would result in anything different."

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