The Top U.S. Apparel Retailer
Think of the fashion industry and name the top five players that come to mind. Did Amazon make your list? Probably not. And yet, Amazon is on track to become the largest seller of apparel – in terms of both online and offline sales – by next year . While traditional retailers such as Macy’s stand in shock watching their revenues decline, Amazon and other online retailers are swooping in to capture market share. Amazon is working to grow their apparel business beyond basic commodities like t-shirts and into trendier pieces like dresses. In order to approach this new segment successfully, they need buy-in from customers like you. How soon will it be until Amazon becomes the powerhouse behind your go-to clothing brands?
Developing Better Product
Amazon continues to enlist many top fashion brands as first party sellers – Nike, Levi’s, Stuart Weitzman. But, it has been a slow and uphill battle. Brands are hesitant to sell directly through Amazon, favoring tight control over their brand experience . In response, Amazon has shifted its focus to developing its own product. They are investing to represent something larger in the fashion space: they want to be the company behind the next generation of brands you love, not just the platform. They have been developing and refining their own portfolio of 60+ private label brands [1, 3]. To do so, they are betting on their ability to harness machine learning to help create beautiful, sell-able products. Two things have made leveraging machine learning possible: 1) the massive amounts of fashion images and 2) the role of social media.
The most immediate result from their work is the ability to determine which images are “stylish” – a difficult endeavor especially given how subjective and hard to quantify “stylish” can be . In a world where data is seemingly endless, Amazon is able to use artificial intelligence to cherry-pick appropriate images to track trends and use them as a source of inspiration for their own product development. What sets their technology apart is that they can apply it to a wide variety of data including unlabeled images – this means that they can utilize social media platforms such as Instagram and Pinterest . This algorithmic approach gives Amazon an edge since they can learn a lot about their customers preferences via social media. Other companies such as Stitch Fix are similarly leveraging social media to better serve and predict customer preferences.
In a longer-term play, their research center, Lab126, is building an algorithm that will be able to design new products from trending images. Essentially, Amazon is creating an artificially intelligent designer in a move which could displace a traditional Creative Director or in-house design team. The algorithm uses generative adversarial network (GAN) to decipher a particular style by analyzing multiple images. It then uses inverse mapping to reconstruct new images that are in the same style. The simplest way to think about GAN is as a game whereby the generator G needs to create fake images to fool the discriminator D whose role is to determine which images are real and which are fake .
Machine Learning as a Reactionary Tool in Fashion
Machine learning can play a crucial role in product development at fashion companies. It can help identify trends which in turn increases the likelihood of a product’s demand and ultimately reduces product waste from overproduction. In a way, this new technology mimics how fast fashion disrupted traditional retail years ago, but takes it one step further. Instead of creating new trends, which is an expensive and unpredictable process, fast fashion adapts existing designs and sells clothing at a fraction of the price in record time (in short, what makes it all possible is shortening the production lead time from 12 months to just a couple of weeks). With machine learning, the process of identifying trends is shortened even further, giving companies like Amazon additional headway to create sell-able products.
One downside, however, is that Amazon’s application of the machine learning process is reactionary. Instead of creating new trends, it helps identify which styles have taken off. It is important to note that AI has never successfully created something completely “new”. As Tim Oates, a Professor from the University of Maryland, posits, “People innovate in areas like music, fashion, and cinema. What we haven’t seen is a genuinely new music or fashion style that was generated by a computer and really resonated with people” . To that end, can Amazon successfully create brand identities by using AI to identify ongoing trends? To what extent do brands need to create newness?
 Cathaleen Chen. Amazon Primed for Gain with Private Label Apparel. Business of Fashion (July 23, 2018).
 Lauren Thomas. Amazon Hopes to Ride Its Sales Momentum to Become the Top Apparel Retailer in the US. MSNBC (July 16, 2018).
 Eugene Kim. Amazon Owns 7 Private Label Fashion Brands. Business Insider (February 22, 2016).
 Will Knight. Amazon Has Developed an AI Fashion Designer. MIT Technology Review (November 12, 2018).
 Will Knight. 35 Innovators Under 35 – Inventor Ian Goodfellow. MIT Technology Review (2017).
 Alexander Lorbert, Nir Ben-Zvi, Arridhana Ciptadi, Eduard Oks, Ambrish Tyagi. Toward Better Reconstruction of Style Images with GANs. KDDW (2017).