When a person buys a piece of clothing in a store, he or she has the option of trying it on. That's a major advantage for brick-and-mortar retailers because online customers not only have to wait for their order to be delivered, it may not fit once it arrives. Even if the size proves correct, it's also possible that an item bought from a website simply won't be what you expected, necessitating a return.
That's a hassle even on websites that make every effort to make the process easy. It's perhaps less difficult when ordering online from a chain like Wal-Mart (NYSE: WMT) or Target (NYSE: TGT), which allow in-store returns of online orders, but even then it's not as easy as simply walking back to the rack and grabbing another size.
Amazon (NASDAQ:AMZN) wants to solve that problem by creating technology that helps customers find the right fit in an online shopping environment. That's not an easy challenge, but it's one that could put another nail in the coffin of the many struggling apparel retailers while removing an edge Wal-Mart and Target currently enjoy.
What is Amazon doing?
Part of Amazon Grand Challenges, the company's internal innovation incubator, the new effort became public when the employee in charge of the project wrote about it in his LinkedIn profile. That employee, Sam Dwarakanath, formerly worked on the Amazon Go convenience store concept, and he laid out his new job as follows:
As of September 2016 I am building and leading a technical team that is focused on making it easy for customers to discover apparel and shoes that appeal to them, including finding the perfect fit. ... Our problems span hardware/robotics, applied research (statistical learning/machine learning, information retrieval, optimization, and image processing), usability (UI design and UX research), software engineering (broad array of design, implementation, and algorithm problems), and quality assurance.
Those, of course, are not easy problems to solve, but Amazon certainly has the resources to make it happen. It's hard to know what direction the company will take to create virtual fitting rooms or other methods to minimize how often a customer places an order that eventually has to be returned, but that's clearly the goal.
What could this mean for retail?
Mall-based apparel retailers have been struggling and chains including Sears Holdings and J.C. Penney have seen their apparel business shrink dramatically. The internet has certainly contributed to that and with Amazon making a full-on charge into the clothing space by launching multiple private-label brands, solving the problem of ill-fitting items would remove one of the few edges physical stores have.
And it's not as if trying on clothes in stores is a pleasant experience; many people would likely be happy to do it in the privacy of their own home.
Amazon already has a strong selection, good pricing, and quick delivery. If it solves this issue, the only edge brick-and-mortar retailers will have is immediacy, and that's not a major advantage in most cases.
It may take significant time for Amazon to go from concept to reality, but it's likely that if the online leader wants to solve this problem it will. That will win it business not just from physical stores, but also from other online retailers who can't offer the same technology.