New Categories

Fashion
In 2002 Amazon launched an Apparel & Accessories Store with merchandise from 400 labels (see Exhibit 3e). Amazon did not own the inventory. Two years later, it began to manage inventory for itself and began offering fine jewelry. In 2006, Amazon acquired online fashion retailer Shopbop. This was followed in 2007 with the launch of Endless, a shoe and handbag website. In 2009, it purchased Zappos, an online footwear retailer, for $1.1 billion.
In 2011, the company launched MyHabit, selling heavily discounted designer fashions in competition with several other sites and added its own private-label lines. Meanwhile, it tried to woo a number of leading brands who were reluctant to sell on Amazon. Eventually, in 2016, Amazon closed MyHabit. In 2017, marking a major turning point, leading brand Nike finally agreed to sell apparel on Amazon. Subsequently, a number of other major brands, including Calvin Klein, Kate Spade, and Levi Strauss, began selling on Amazon.
In April 2017, to support its fashion ambitions, Amazon began testing the Echo Look, a device with a full-length camera that allowed customers to access expert advice on their fashion choices. Two months later, Amazon introduced a beta service called Prime Wardrobe, which let users try on clothes and return the ones they didn’t want, paying only for those they wanted to keep. Amazon offered discounts for customers who kept more items. Meanwhile, Amazon continued to expand its private- label offerings, with a particular focus on apparel. In June 2018, 66 of Amazon’s 74 private labels included at least one apparel or fashion accessory item. According to Morgan Stanley, Amazon would end 2018 as the biggest retailer of apparel in the US.
Groceries
In 2006, Amazon opened the Grocery Store, marking its entry into the dry grocery business, competing with the likes of Kroger and Walmart (see Exhibit 3f). The following year, it launched AmazonFresh in Seattle, offering perishable as well as nonperishable food deliveries. AmazonFresh expanded to Los Angeles and San Francisco in 2013.
Meanwhile, in 2010, Amazon acquired Diapers.com (Quidsi), an online baby supplies company, for
$540 million, after a brutal price war in which Amazon cut its diaper prices by 30% and launched Amazon Mom, which offered free shipping on diapers and other baby supplies.
In June 2017, Amazon acquired natural-foods retailer Whole Foods Market for $13.7 billion. Walmart’s and Kroger’s stock prices fell sharply on the news. Whole Foods operated 460 upmarket natural-food stores, many in wealthy neighborhoods. At the time of the purchase, Whole Foods worked with Instacart on home delivery. In February 2018, Amazon began offering free two-hour delivery of groceries from Whole Foods on orders over $35 for its Prime customers in select cities. Prime members could also pay $7.99 to receive their groceries within one hour.
As of 2018, AmazonFresh was available only to Prime members in certain markets who paid $14.99 per month for same-day and early-morning delivery of fresh grocery items and over 500,000 other items (from toys through household goods). Amazon fulfilled part of the offering itself and partnered with local merchants to provide the rest. In 2018, competitors included Instacart (a national grocery delivery service targeting 150 US markets) and Peapod, a Stop & Shop-centered delivery service.
Healthcare and Beauty
Amazon expanded into the healthcare space in January 2018, announcing that it was joint-venturing with JPMorgan Chase & Co. and Berkshire Hathaway to reduce healthcare costs (see Exhibit 3g). The announcement sent shockwaves through the industry. Then, in June 2018, Amazon announced that it was acquiring the online pharmacy PillPack, which provided pre-sorted and dose packaging for customers with multiple daily prescriptions. The company also coordinated prescription renewals and ordering and shipping. The acquisition was completed in September for $753 million.
In September 2019, Amazon launched a “virtual medical clinic” for its employees called Amazon Care. The program promised faster access to healthcare, giving employees the option of meeting with doctors over video or in-person. They could also pick up medicines prescribed through the service.
Amazon had also become a major player in retailing beauty products online. It offered a wide range of third-party cosmetics and personal care items across three differentiated categories: luxury beauty, professional beauty, and indie beauty. In March 2019, Amazon introduced Belei, a private label focused on skin-care products. Meanwhile, beauty and personal care products had become the second most shopped category on Amazon.