Amazon (AMZN) is entering the private-label sportswear business and working with the same Taiwanese suppliers, Makalot Industrial Co. (TPE: 1477) and Eclat Textile Co. (TPE: 1476), that some of the world’s biggest athletic brands use. Elcat’s involvement is particularly noteworthy as the company manufactures high-performance sportswear for Nike (NKE), Lululemon Athletica (LULU) and Under Armour (UAA). Both manufacturers have begun to produce limited quantities for AMZN, as the company looks to test the market before entering in to long-term contracts.
Howie Long-Short: AMZN wants to be in the private-label clothing business because it pushes retailers to sell inventory on the e-commerce site. Should a retailer choose not to, AMZN will simply produce the product themselves and compete directly against the brand. That’s not good news for retailers (LULU shares dropped 4.9%, UAA down 2.8% since Friday’s announcement), but it does offer manufacturers a viable new revenue stream. Eclat expects its new e-commerce clients to generate up to 12% of company revenues in 2018, with the potential for that percentage to grow significantly.
Fan Marino: There are no shortage of media stories pointing to the end of the athleisure trend, so hearing that AMZN is first looking to get into the space is big news for those of us who live in joggers. Bezos isn’t known to be late to the party, so I’m betting this concept of dressing comfortably isn’t going out of style anytime soon.