Amazon buys online fashion retailer Shopbop

Amazon, the largest internet retailer, on Monday announced the takeover of Shopbop, an online fashion retailer, in its first acquisition of another US online retail site since the end of the internet boom.

Shopbop’s online service was launched in 2000 by Bob Lamey, its chief executive, and Martha Graettinger, who operated Bop, a small fashion retailer based in Madison, Wisconsin, near the city’s university campus.

It has grown into a leading online contemporary fashion retailer, selling a wide range of brands such as Juicy Couture and Diane Von Furstenberg, as well as jeans by Seven for All Mankind, Citizens of Humanity and others.

It has also developed on online guide to buying jeans, and publishes a regularly updated “Look Book”, aimed at keeping its online shoppers up to date with fashion developments.

Sucharita Mulpuru, retail analyst at Forrester Research, said Shopbop was believed to have sales of $20-30m a year, and had established an online fashion business in the US similar to the more upscale UK-based Net-a-Porter.

Online sales of contemporary fashion, she said, were currently “a large slice of online sales in the fashion industry right now”.

Amazon has not released details of the price paid, and said that Shopbop will continue to operate as a separate unit.

Analysts said the deal marked a return by Amazon to the tactic of purchasing a rival online retail site, after a series of unsuccesful ventures at the height of the internet boom, when it invested heavily in a number of sites including Pets.com, living.com and the Back to Basics toy catalogue.

Its recent acquisitions have instead been focused on developing its online services and distribution channels, through deals such as the 2004 acquisition of Joyo.com, the Chinese online retailer, and deals last year for Booksurge, an on-demand printer, and mobipocket, a French e-book software developer.

However, the Shopbop deal is seen as an effort by Amazon to respond to the specific attractions of the rapidly expanding market for online fashion, rather than indicating a broader change of strategic direction.

“Amazon has definitely been trying to get into fashion for long time, and they’ve struggled because they’re perceived by many of the brands as being too much of a mass channel,” said Ms Mulpuru.

In fashion, Amazon has relied on deals with third party retailers to expand its product range, with Nordstrom and Macy’s, the department stores, and Urban Outfitters, the youth-focused clothing chain, currently selling through its site under revenue sharing arrangements.

But both Nordstrom and Macy’s are increasingly focused on building an online presence that is independent from their relatinship with Amazon.

Nordstrom this year started selling Armani and other luxury brands online that it doesn’t make available to Amazon. Macy’s also announced in January that it plans to spend $130m over the next two years developing its online sales and distribution, having formed a relationship with Amazon last year.

Amazon has also focused on developing websites for other retailers such as Target and Marks & Spencer, through its Amazon Web Services division.