Amazon to foray into private label sportswear

Amazon.com Inc has ventured into private-label fashion, offering office clothing, jackets and dresses under names like Goodthreads and Paris Sunday, is now planning to foray into private label sportswear, tapping some of the biggest athletic apparel supplier. Pushing into active wear would bring fresh competition to some of the world’s biggest athletic brands.

Makalot Industrial Co, a Taiwanese vendor that produces clothing for Gap Inc, Uniqlo and Kohl’s Corp, is making apparel for the Amazon line, a person with knowledge of the arrangement said. Eclat Textile Co, another Taiwanese supplier, is contributing to the effort as well — a relationship first noted by SinoPac Securities Corp, analyst Silvia Chiu.

The project is new and long-term contracts have not been signed yet, but the manufacturers are producing small amounts of products for Amazon as part of a trial, said the people, who asked not to be identified because the effort is not being promoted yet.

Eclat’s involvement is especially noteworthy because it makes clothing for Nike Inc, Lululemon Athletica Inc and Under Armour Inc and has key expertise in making high-performance sportswear.

Amazon, based in Seattle, did not immediately respond to a request for comment.

The move comes as unwelcome news for active wear companies already struggling to stand out in a sea of competition and discounts. Last month, Nike said it expects sales to decline again this quarter in North America. Under Armour, meanwhile, cut its annual sales forecast in August.

Lululemon has fared better this year, but it too is facing steeper competition in the market for yoga pants and other sporty apparel. That cutthroat environment in North America has pushed it to look overseas for growth.

Amazon has developed its own brands in part because they fill gaps in its inventory. If customers are searching for a certain type of shoe or skirt, and do not see much of a selection from established brands, Amazon wants to be able to offer its own options. Oftentimes, shoppers may not realize that the names — such as Scout + Ro and North Eleven — are owned by Amazon.

This also sends a message to brands reluctant to sell their full inventory on Amazon. If shoppers cannot find your products on the site, Amazon will make its own substitutes and become your competitor.

For suppliers like Eclat, forging alliances with e-commerce companies reflects shifting demand from consumers. Eclat expects new clients to contribute as much as 12 percent of sales next year. The shipments to Amazon began in August. The contribution this year will be small, but the potential is high, said Chiu.

According to Chiu, online apparel sales accounted for 19 percent of all apparel sales in 2016, up from 11 percent in 2011. Online sales are primed for strong growth.