announced its “Prime Wardrobe” service on Tuesday, and share prices immediately jumped on the news.
Lots of pundits, including Business Insider, have hailed the service as a great addition to Amazon’s fashion retailing operation. But what they haven’t said yet is that services like Prime Wardrobe have already been proven to work.
In a note to clients Friday, Credit Suisse wrote that the German service Zalando has been successful using a very similar business model to the one announced for Prime Wardrobe.
“This product release matches from a customer service perspective what Zalando … has had for some time,” Credit Suisse wrote. “One of the key drivers of Zalando’s success in the [German] region has been its ability and willingness to handle from a logistics perspective a relatively higher merchandise return rate (~50%).”
The higher cost of customer service and logistics has proven to be worth the expense for Zalando. The company…