Yes, Gap’s Amazon Deal Can Be Desperate And Smart At The Same Time

GapGPS
is for sale on Amazon.com.

Gap made “thousands” of its items available last week at Amazon.com/Gap with the promise of “fast, free Prime delivery.”

“Collaborating with Amazon Fashion provides us a new channel to deliver Gap’s modern American essentials to even more customers in the U.S. and Canada,” said Mark Breitbard, president and CEO, Gap brand, in a statement.

Though Gap merchandise has been available through third-party sellers on the platform, gaining direct access to customers across the world’s largest online selling platform could provide a much needed boost for the struggling Gap brand that has closed a third of its stores over the last decade.

On the other hand, the move could also be interpreted as a Hail Mary for a flagging brand.

“Given all the calamity at Gap over the last year, this feels more like a desperation move than a smart one,” wrote Mark Ryski, CEO of HeadCount Corporation, on RetailWire last week. “It’s clear that Gap needs to drive sales, and so broadening distribution to Amazon is one way to get it. But I’d argue that selling on Amazon also carries with it the down side of loss of control of their brand. I can’t blame Gap management for looking for new sales, but I do question whether this is the best way to do it.”

With the deal, Amazon gains another key fashion resource. Birkenstock in 2016 and NikeNKE
in 2019 stopped selling direct through Amazon, but the retail giant now has dedicated storefronts for most brands that sell in traditional department stores, including Polo Ralph LaurenRL
, Calvin Klein, Michael Kors, Kate Spade, Levi’s, Adidas and The North Face.

“Good move for Amazon, meh for Gap,” wrote Rick Watson, CEO of RMW Conference Consulting. “Gap’s primary problem is no one cares about its clothes anymore, and the brand doesn’t stand for anything. A new distribution channel doesn’t solve that core problem. Why do I walk into the door of a Gap store these days? That is the fundamental question they need to answer.”

“Sure Amazon has reach, but I wouldn’t have said Gap had a reach problem,” wrote Jeff Sward, CEO of Merchandising Metrics. “They have a brand promise, product and marketing problem. None of which are 1 percent solved with this move.”

A number of luxury labels, such as Gucci, Burberry and Coach, do not sell directly on Amazon, nor do most vertically-integrated chains – e.g., Lululemon, H&M, American Eagle OutfittersAEO
and L.L. Bean. Gap’s sister chains, Old Navy, Banana Republic and Athleta, do not yet list product on Amazon.

“Gap’s move is desperate and will drive the brand even further away from understanding who their customer is and what they actually want,” wrote Liza Amlani, principal at Retail Strategy Group. “Reinventing itself is one thing. Diluting the brand across multiple channels, categories they don’t know (home products), and partnerships that don’t make sense is not a smart move. I continue to be dumbfounded over Gap’s merchandising strategy and I’m not the only one.”

The stock market, however, was not displeased with the move. Gap’s shares rose nearly nine percent on news of the partnership, given the potential to tap Amazon’s customer reach.

Some RetailWire BrainTrust members were more bullish on the initiative.

“If you think of Amazon as a virtual shopping mall, with a wide variety of ‘storefronts,’ then Gap’s presence at the mall makes sense,” wrote Dick Seesel, principal at Retailing in Focus. “The location strategy that built the Gap business is obsolete, and Amazon will bring millions of potential customers to Gap’s e-commerce business. Two things can be true at once: This may smack of desperation (Gap needs the sales) but it is also a smart move.”

“Amazon as a channel has its place in a broader strategy for all brands/retailers,” wrote Shikha Jain, partner at Simon-Kucher & Partners. “The questions usually are whether the brand is strong enough to survive on its own, and what is its goal with Amazon?”

“Gap must find a way to reduce quarterly losses and survive the post-holiday demand uncertainties,” wrote Mohamed Amer, independent startup advisor. “The move to Amazon is unlikely to harm the brand image while providing needed sales upside now with Prime exposure and free delivery. But don’t call it a bold strategic move; this is born out of desperation and survival and is the right move despite all the naysayers.”