Amazon.com Inc. might look like it’s taking over the world. But it hasn’t conquered Europe.
Two decades after the internet behemoth’s first international foray into the region, it’s still working to gain traction selling apparel and footwear. That weakness in a major, growing market illustrates Amazon’s challenge as it expands abroad and tries to replicate its U.S. dominance of e-commerce.
To explain Amazon’s struggles in conquering apparel in Europe, retail executives and analysts point to an absence of top fashion brands, a website they say isn’t conducive to browsing for clothes and a fragmented market full of plucky competitors.
In the U.S., Amazon accounts for nearly half of online sales, according to Euromonitor International, and is also No. 1 in apparel and footwear, with 35% of that market. In Western Europe, it is the biggest e-commerce site by a wide margin, with 22% of the market, but it has just 8% of apparel and footwear.
To woo more shoppers, Amazon is broadening its selection. It is also encouraging U.S. merchants to ship abroad and in recent months has launched three of its own clothing brands in Europe.
“That really is our goal: Earth’s largest selection for our customers,” said Eric Broussard, a vice president who oversees the company’s international marketplaces. Those marketplaces allow independent merchants to sell via Amazon’s site. An Amazon spokeswoman declined to comment further.
Amazon doesn’t provide financial details on Europe, but for 2017 its overall international business saw sales rise 23% to $54.3 billion, and it reported an operating loss of $3.06 billion.
European rivals have so far kept Amazon at bay in clothes and shoes by focusing on adding an increasing number of fashion brands, something they achieve in part by providing those brands with more data on shoppers, industry executives say.
“Major fashion players in Europe of course don’t want to underestimate the threat of Amazon, because Amazon seems to be able to do anything,” said Marguerite Le Rolland, a Euromonitor analyst. “However, our clients still feel relatively safe. They feel [Amazon] hasn’t convinced consumers yet on its fashion credentials.”
Hasna Siddika, a 34-year-old social worker in London, says she hasn’t bought clothes on Amazon. “I just never consider it,” Ms. Siddika said. “I tend to think of Amazon and eBay not as clothes specialists, but more for gadgets and practicalities.” She said she buys clothes online from Inditex SA-owned Zara as well as Britain’s ASOS PLC and Boohoo.com PLC.
Berlin-based Zalando SE is Western Europe’s top online apparel-and-footwear company, with a 9.6% market share, according to Euromonitor.
Zalando launched in 2008, a decade later than Amazon, and analysts partly attribute its growth to a partnership program that allows brands such as Adidas and Tommy Hilfiger to access data on what shoppers are buying. Brands can also compare sales to their sector broadly, valuable insights Amazon generally doesn’t hand over.
Sharing such data has helped Zalando attract top brands, which in turn pulls in fashion-conscious shoppers, said Carsten Keller, Zalando’s vice president of partner solutions.
Analysts say a focus on apparel is also an advantage.
“Amazon is certainly a serious competitor, but it is a generalist with a focus on basics and lots of discounted products,” said Macquarie Group analyst Andreas Inderst, adding that fashion brands tend to allocate edgier products to ASOS and Zalando, while selling more mainstream merchandise on Amazon.
There is also abundant local competition. In the U.K., Amazon ranks No. 7 in online apparel-and-footwear sales, with a 4.8% market share, behind local chains Next PLC, John Lewis and ASOS, Euromonitor data show. In France, it’s No. 3, and in Germany, No. 2 behind Otto Group, a domestic conglomerate that runs several apparel sites, including Bonprix and About You. It also owns U.S.-based Crate & Barrel.
Amazon’s overall product offering is top-notch with highly competitive prices and delivery times, said Otto’s strategy director, Max von der Planitz. But for him, it is too transactional and not conducive to browsing online for clothes and shoes.
“It’s just not fun shopping for apparel on Amazon. I mean, try it,” Mr. von der Planitz said, adding the site works for consumers who know the brand and fit of jeans they want but falls short for those seeking to browse and find something that catches their eye.
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“The strategy to own this space is specialization, inspiration and also proprietary products,” he said.
For apparel companies trying to position themselves as “affordable luxury,” the aesthetics of a website is an integral part of their branding—and another area where Amazon falls short, according to some European retail executives.
They say Amazon is like a chaotic, online department store where there is little control over brand presentation. By contrast, Zalando, ASOS and other specialty apparel sites are like an upscale online mall where brands are given more control and presentation is sleek, retail executives say.
Amazon’s presentation has also been a drawback for U.S. brands, according to analysts and brand executives. But its dominance has led brands such as Nike Inc. to agree to sell products directly on the site in exchange for stricter policing of counterfeits and restrictions on unsanctioned sales.
Amazon’s philosophy is that a large customer base attracts brands, while executives at Zalando and other competitors try to attract brands that will bring customers, said Barbara E. Kahn, professor at the University of Pennsylvania’s Wharton School of Business.
Many brands in the U.S. remain Amazon holdouts and choose to sell their apparel on fashion specialists such as Yoox Net-a-Porter SpA, Farfetch and Lyst.
But that hasn’t prevented Amazon from being the market leader.
In the U.S., Amazon also benefited from the 2009 purchase of online shoe seller Zappos.com, which helped pioneer the practice of letting consumers order multiple styles and return those they didn’t want, free of charge.
Given Amazon’s challenges in Europe’s apparel market, some think it could try to repeat its success of buying scale and a site with a fashion focus through a deal in Europe. Amazon declined to comment on potential deals.
Euromonitor’s Ms. Le Rolland said she thought a purchase was a possibility. Amazon is cash-rich, and an acquisition would be “quite a big shortcut as opposed to building something out,” she said.
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