Last year Amazon was granted a patent for an on-demand apparel manufacturing system that is designed to produce apparel products after orders are placed and aggregated; in other words machines only start stitching once an order has been placed. This system means that the only inventory that the manufacturer holds is the fabric or raw material rather than higher-end finished products which will lower the value of the inventory.  This frees-up cash and avoids the problem of “unfashionableness” that occurs so frequently in the apparel industry.  It looks like Amazon is looking to disrupt the garment industry by aiming for a new standard- sell it, make it, ship it.

H&M, a leader in fast fashion, had been outperforming their competition for years by selling massive volumes ordered months in advance at low prices using quick agile supply chains.  But now H&M is admitting that their inventory levels have risen 11% in the first half of 2018 which is putting negative pressure on the company.  Their model of ordering massive volumes of unfinished product materials in advance is breaking down as customers’ tastes are changing leaving them with an unbalanced assortment of goods, supply chain interruptions in major markets and fewer customer visiting their stores.

If Amazon is able to implement their on-demand manufacturing system, their  logistics backbone could be a powerful weapon in its bid to become an apparel powerhouse.  They are already building a private label clothing business which is focusing on eight brands.

Jessica Binns in the Sourcing Journal has developed an excellent case for why on-demand manufacturing may dictate how the fashion industry grows in the future in her article, Why Amazon’s Patents are Evidence of the Case for On-Demand Manufacturing

And as Jessica quotes Matthew Mueller, the Founder and President of Knot Standard, in her article, “Wait five years,” he said. “I don’t think Amazon made [the Echo Look] camera for no good reason or filed a bunch of patents to do this for no good reason. It will get there.”