Anxious retailers are watching Amazon penetrate its next big market: high-end, designer clothing. Having already scarred publishers and lowered prices in electronics, Amazon is making a "significant" investment in fashion and wooing designer brands, says Amazon CEO Jeff Bezos. "It's Day 1 in the category," he tells the New York Times. The megasite has long sold clothing, but now shoppers can find brands like Vivienne Westwood and Jack Spade on Amazon's MyHabit website.
With $5.7 billion in the bank, Amazon can attract brands by making big buys, and hire all kinds of fashionistas (they even have three women who do nothing but try on size-8 shoes for Web reviews). Bezos swears he won't undercut retailers, as he has brick-and-mortar booksellers—after all, that would hurt the very designers he's trying to attract. “A manufacturer does not want to kill a business," says one accountant, "and the best way to kill a business is to have the same product selling for less on Amazon."