Back to top
Read MoreHide Full Article

Most of us are generally familiar with the concept of just-in-time inventory, but ecommerce giant Amazon (AMZN - Free Report) is now set to take that concept to a whole new level. At least as far as apparel/fashion is concerned.

This Zacks Rank #3 (Hold) company has won a patent for on-demand clothing that it applied for back in 2015.

Patent Details

Two of the inventors, Aaron Barnet and Nancy Liang are co-founders of the 3-D printing startup Mixee Labs that the company bought back in Feb 2015. So 3D printing will likely play a role.

The patent is essentially for an entire system of manufacturing apparel from the point of collecting orders by a “computing device”; deciding on the most efficient method of production based on geography, fabric type, assembly process or other criteria; printing the fabric, cutting and so forth.

The patent reads: “Once various textile products are printed, cut and assembled according to the orders, they can be processed through a quality check, photographed for placement in an electronic commerce system, shipped to customers and/or stored in a materials handling facility for order fulfillment. By aggregating orders from various geographic locations and coordinating apparel assembly processes on a large scale, the embodiments provide new ways to increase efficiency in apparel manufacturing.”

It’s also careful to mention that the technology won’t be limited to clothing alone but can be applied to fabric products, accessories (e.g., scarves, gloves, hats, bags, belts, etc.), footwear, bedding, curtains, towels, etc., in a wide variety of materials including, but not limited to paper, plastic, leather, rubber and other materials.

What Could Amazon Be Up To?

It’s exciting to think that we could choose our print, cut and make of clothing and then have somebody deliver our choice to our doorstep. But that is likely not Amazon’s intention because it won’t help drive efficiency or lower cost, and would most definitely be a very cumbersome project.

On the other hand, consider that Amazon already deals with a large number of third-party sellers that use its Fulfilled by Amazon (FBA) service. Amazon also said that active sellers in FBA grew 70% year-over-year in 2016 and fulfilled units (both FBA and otherwise) grew 40%. That means Amazon is stocking a steadily increasing amount of inventory at its warehouses to help it quickly handle both deliveries and returns. If it can collaborate with sellers to make the process more efficient, it could save costs while also increasing customer satisfaction.

The other possibility (a strong one) is that Amazon would like to further expand its own fabric categories from the eight it currently has and take its in-house brands to new fast-growing geographies.

Conclusion

What exactly Amazon intends to do with this technology is of course an open question right now. But a couple of years back, John Blackledge of Cowen & Co expected the company to become the largest clothing retailer by 2017-end, overtaking Macy’s (M - Free Report) and also leaving other retailers like JC Penney’s (JCP - Free Report) , Kohl’s (KSS - Free Report) , Dillard’s (DDS - Free Report) and Epic Stores in the dust. Amazon doesn’t break out these sales but patents like this one indicate that its plans are deep. So after books and electronics, apparel could really be the next big thing for the ecommerce giant.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>



More from Zacks Analyst Blog

You May Like