This Is How Dominant Amazon’s Clothing Business Really Is

E-commerce giant Amazon (AMZN) has seen its control of the clothing and footwear market get stronger. In 2024, it held almost 13% of the U.S. market and generated more than $67 billion in sales, over twice Walmart’s (WMT) $32 billion, according to Wells Fargo (WFC). In addition, the firm expects Amazon to pass $72 billion in 2025. Online, Amazon is even more dominant, with over ten times Walmart’s apparel sales.

Interestingly, Amazon’s push into fashion began around 2012 when it started bringing well-known brands onto its site. Over the next five years, the segment grew at a 40% annual rate, which attracted major brands like Nike (NKE). Amazon also expanded its own private-label clothing lines. However, interest faded by 2022 as sales slowed, so the company reduced the segment to basics like T-shirts and socks under Amazon Essentials. As a result, Wells Fargo estimates that private-label apparel is only 2.5% of Amazon’s clothing business and about 1% of total retail sales.

Nevertheless, Amazon succeeds by gathering many third-party brands in one place, offering low prices, and allowing free returns. This keeps shoppers coming back, but also creates headaches. For example, clothing returns are a major problem because shoppers often buy multiple sizes and return what doesn’t fit, which reduces profits and leaves many items unsellable. Still, industry experts say that brands stay on Amazon because the huge sales volume is worth the lower margins and higher costs.

Is Amazon a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 43 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $295.23 per share implies 26.2% upside potential.

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