Amazon is coming for your millennials, and it’s bringing inexpensive clothes and free shipping.

In February, the online retailer quietly launched seven new private label brands, with offerings that include men’s, women’s and children’s clothing, men’s dress shoes, and men’s and women’s accessories. Prices are eminently affordable, with the most expensive pieces topping out at just under $90.

At a time when retail stalwarts are suffering losses and announcing store closures—Kohl’s, Wal-Mart, and Macy’s—Amazon is clearly hoping to buck the trend. For industry experts, Amazon’s timing couldn’t be better.

“I’m surprised it took so long for Amazon to do this,” said Adheer Bahulkar, partner in the retail practice of A.T. Kearney, a global strategy and management consulting firm. “Amazon has a massive reach, and it’s the first site that U.S. shoppers visit. Plus, Amazon can look at shoppers’ browsing history, see why they buy and when they buy and how they buy, and then decide what they can build for their customers. It’s a very unique advantage. So if not now, when? They’re only losing market share by waiting.”

Past perspective

Amazon, which did not respond to requests for comment, has been building up to private labels for a while. Since entering the apparel and accessories categories in 2002, Amazon has become progressively more aggressive, acquiring Shopbop in 2006, Zappos in 2009 and discount designer sale site MyHabit in 2011.

Over the next few years, Amazon worked to steadily increase its fashion presence. According to Internet Retailer, investment banking firm R.W. Baird & Co. estimates that total clothing and accessories SKUs, including what’s sold by marketplace sellers, accounted for 6% of all Amazon products as of Q3 2015, growing 87% since Q3 2014. Furthermore, Women’s Wear Daily—citing KeyBanc Capital analyst Ed Yruma—reported approximately 1,800 SKUs for Amazon's new private label brands alone. In 2015, Amazon also became a sponsor for the CFDA’s first Men’s Fashion Week.

Then there’s Amazon’s new fashion show, "Style Code Live," which combines interactive viewing and chat features with random celebrity appearances (singer Meghan Trainor and actress Keri Russell made appearances on the first episode), styling tips, and of course, a shopping push.

For those who have been tracking Amazon's progress, this is all part of the plan. The e-retailer is not actually new to private label product, but Keith Anderson, vice president, strategy and insight at Profitero, an e-commerce analytics consultancy, says that fashion in particular represents an important piece of the puzzle for Amazon, a company that tends to invest with what he calls "great conviction."

“Amazon has been courting fashion shoppers for years,” said Anderson. “It hasn’t perfected the model, but it does have a massive, loyal shopper base and high volume of traffic.” 

Anderson says that the success of Amazon programs such as Prime and Pantry have positioned the retailer as a trusted source of everyday essentials, including fashion. “Fashion is among the handful of massive, high-margin discretionary categories that Amazon has yet to deeply penetrate," he said.

Anderson believes that persuading consumers to cross the digital aisle from everyday consumables to fashion apparel will improve both the lifetime value and profitability of Amazon's most loyal shoppers.

“It may not crack the code on fashion overnight, but given fashion’s strategic importance, Amazon is likely to be persistent and willing to iterate on its approach until it succeeds,” Anderson said.

Positioned for success

The question is how long, exactly, it will take for Amazon to win at what has notoriously been a difficult market to crack. A.T. Kearney's Bahulkar thinks that Amazon already has many of the core components necessary to create a viable fast fashion presence.

“If you break down what fast fashion is and why it succeeds, it’s because it’s cheap, it’s basic, it’s on time, and it’s on trend,” said Bahulkar, who believes that Amazon will easily be able to source affordable fashion using channels similar to H&M and Forever 21. He also thinks that Amazon’s extant supply channel will be a big advantage, calling its shipping prowess “leaps and bounds ahead” of other retailers.

Bahulkar additionally says that brand names are less important for younger customers than they used to be, with apparel brand loyalty dropping 15% from 2008 to 2013. This will help Amazon navigate potential hurdles associated with its unfashionable background, as long as they focus on the product.

“People surveyed say they think about product first, and not brand first," said Bahulkar. “I expect that trend to continue. And even Gap and Abercrombie have dramatically reduced their logo-driven merchandise.”

Other experts agree. “Millennials don’t give a damn about brands anymore,” said Robin Lewis, CEO of The Robin Report, a retail strategy publication, and co-author of 'The New Rules of Retail: Competing in the World’s Toughest Marketplace.' “Brands aren’t a destination for them, and they’re not loyal to brands. They’re looking for new, now, and that comes before the brand name.”

Lewis also said that he doesn’t believe Amazon is concerned about the costs involved in developing its fashion category.

“For them, to get this and up and running, they don’t have to fund malls to lease space or find brick and mortar stores,” he said. “Maybe they tweak their supply chain and hire people and find styles. But there’s not a lot of investment. Though [Amazon founder and CEO Jeff] Bezos has dipped his toe in this fashion water before, and not been successful, I think this time it will succeed.”

But what are the risks?

As with any new venture, Amazon’s fashion foray doesn’t come without potential pitfalls. The company needs to invest not only in product, but also in a team of people who can oversee that product and make it compelling.

“The holy grail for any company is picking the right product and the right style and the right feature,” said Bahulkar. “But at the end of the day, you also need people with vision who can see what the trends are, and what will stay and what will go.”

Bahulkar cautions that Amazon may have problems attracting the right talent. “Apple, for example, is known for being aspirational, and it’s known for its design,” he said. “Amazon is not necessarily known for design sensibilities. At least not yet.”

Making Amazon cool to consumers will be an easier fix, according to experts such as Lewis. He says that Amazon's fashion approach is targeted directly at younger shoppers—millennials in particular—and that the company's massive database will be a big asset when it comes to figuring out what the millennial customer wants to buy.

“Amazon has tracked all the transactions,” Lewis said. “They know what’s hot and what’s not, and they can quickly find and fill the white spaces.”

Anderson thinks the company may still have to tweak its software a bit. In particular, Anderson says that since fashion is about discovery, Amazon will need to optimize its existing search engine to allow for more happy accidents. If the company can do that, he said, it could "inspire and convert shoppers that may not have something precise in mind."

While Anderson also believes that Amazon still has a cool-factor credibility issue to contend with, he also thinks the private label lines may be part of a long-term strategy to lure back former partners and bring in brands that are not currently partners.

“If Amazon can’t source the branded goods it wants, a successful private label range could persuade branded suppliers that demand for fashion is real at Amazon,” Anderson said.

Amazon has already indicated that it plans to look for holes, or "white space," in its fashion product offerings, and then fill those gaps with its own products.

“Amazon will serve the under-served segments,” said Lewis. “And for those segments that are already being served? They’ll just knock off.”

Relationship drama

Even if Amazon isn’t initially concerned with making a profit off this fashion venture, there is another risk at play: This development might affect its already somewhat adversarial relationships with other retailers and brands. 

“One CEO of a major department store told me that dealing with Amazon is like dealing with the devil, but it’s necessary because it’s such an important distribution point,” Lewis said.

Analysts agree that at least in this regard, Amazon has some, though not all, of the advantage. “Amazon’s relationships with brands have either always been great, or have never been great, depending on who you ask,” said Bahulkar. “Amazon has always had more leverage, because brands need Amazon more than Amazon needs brands.”

That said, Bahulkar says not all brands need Amazon... and that’s where things get interesting. He notes that while Amazon is already offering products that dovetail with Wal-Mart’s space as well as certain luxury goods such as watches and jewelry, there is no major fast fashion brand on the site.

“If you look on Amazon, you’ll find Calvin Klein, but you will not find H&M or Forever 21,” he said. “They don’t need Amazon. And that’s why Amazon is getting into this space."

Bahulkar believes that because brands like Uniqlo and H&M currently have no incentives to sell on Amazon, launching private label fashions may also be a tactic to pressure those retailers to reconsider their stance, as well as an opportunity to increase competition.

"It’s putting a lot of pressure on Wal-Mart and J.C. Penney, but there’s already pressure on them,” Bahulkar said. “This private label fashion launch is not cannibalizing what’s already on [Amazon's] website. It’s squarely targeting the fast fashion space, and that’s Amazon’s competition.”

For its part, H&M is choosing not to worry, at least publicly. When reached for comment regarding Amazon’s fashion expansion, an H&M spokesperson acknowledged that Amazon is a competitor, but declined to discuss specifics, saying, “We choose not to comment on individual competitors and instead focus on our own business. H&M sees itself as its own biggest competitor.”

The future of the fashion marketplace

But H&M's perspective may adapt over time depending on several factors, including Amazon’s success, the evolution of the fast fashion business as a whole, and the changing needs of fast fashion consumers.

“Maybe [fast fashion stores] will start emphasizing the importance of brand, in a surprising turn of events. At least H&M today has a brand you want to be associated with,” said Bahulkar. “That might be the tipping point. I would expect H&M to exploit how much their brand matters, which is ironically the very model it broke.” 

Analysts are confident that Amazon has the ingenuity to stay one step ahead. Lewis predicts that the company may even defy convention and open apparel brick-and-mortar outlets to help drive home its fashion concepts.

“If Amazon gets this right, then they would have no peers in basics,” Lewis said. “They opened brick-and-mortar book stores largely because they know better than Barnes and Noble what kind of books people want to read in, say, Keokuk, Iowa. And Amazon can stock exactly what people in Keokuk want to read. So for the same reason they opened bookstores, they’ll be opening apparel entertainment centers. They’ll be social gathering centers, with live chat fashion videos, music, and coffee, and, I dunno, crumpets? And apparel samples, all according to local fashion preferences.”

Bahulkar also said that he “wouldn’t be surprised” if Amazon looked into aggressive marketing campaigns and celebrity designer collaborations, which might result in unexpected changes within the industry. 

And the apparel marketplace is already changing rapidly: In July 2015, Bloomberg reported that financial services company Cowen predicted that Amazon would become the top U.S. apparel retailer by 2017. At this point, with large brick-and-mortar chains struggling and Amazon’s fashion star rising, that prediction seems even more likely to come true.