According to CNBC, Amazon’s grip on the US apparel market is staggering. In 2024, its share of the apparel and footwear segment hit nearly 13%, with sales rocketing past $67 billion. That’s more than double Walmart’s haul of about $32 billion. Looking purely online, Amazon is more than 10 times Walmart’s size. The e-commerce giant first overtook Walmart as the top clothing retailer back in 2018, and Wells Fargo expects its category sales to blow past $72 billion in 2025. But here’s the kicker: after scaling back its private-label ambitions in 2022, that in-house business now makes up only about 1% of its total retail sales.
The Basics Bet
Remember all the hype around Amazon‘s own clothing brands? It basically fizzled. By 2022, they were scaling it back hard. Now, most of that effort is focused on Amazon Essentials—your basic tees, underwear, and socks. As Oscar Barbarin from Hawke Media put it, “Amazon would rather sell the same one item a million times than a million unique items.” And that’s the core of it. Apparel is a messy, trend-driven, fit-sensitive business. Amazon’s strength has never been curation or fashion sense. It’s in brute-force logistics and being the ultimate digital shelf. So they pivoted. The private-label dream is now a rounding error, just 2.5% of their apparel sales. They left the fashion risk to everyone else.
The Marketplace Machine
So how did they get to $67 billion? It’s all about the third-party marketplace. Amazon aggregated a universe of brands into a one-stop shop, enforced low prices, and offered free returns. It’s a volume game that’s incredibly hard for anyone else to match. But this engine has created its own massive problems. The FTC sued them in 2023, alleging they illegally maintain monopoly power. One big claim? That Amazon punishes sellers who list products cheaper elsewhere. Amazon’s defense is they’re just being a good storekeeper, not promoting “bad deals.” They also argue their fulfillment is 70% cheaper than other two-day shipping. But the FTC says sellers are often handing over nearly 50% of their revenue in fees. That’s a brutal take rate.
The Returns Reckoning
Here’s the thing about selling clothes online: returns are a nightmare. Shippers buy multiple sizes and send back what doesn’t fit. For apparel, these returns often can’t be resold as new. This massively eats into profitability for sellers—and for Amazon. It’s the dirty, expensive secret of the category. So why do brands put up with the fees and the return chaos? As Sonia Lapinsky from AlixPartners notes, it comes down to customer acquisition. The volume Amazon delivers, especially when finding new customers is so tough elsewhere, makes the margin hits “worth the tradeoffs.” Basically, Amazon owns the traffic. And in today’s market, traffic is everything, even if it’s expensive.
What This Really Means
Amazon winning apparel isn’t a story about fashion. It’s a story about infrastructure. They built the logistics and the customer base, then let everyone else fight for attention on their platform under their rules. The antitrust lawsuit, detailed in the FTC’s complaint, challenges the very mechanics of that rulebook. Can you really be a neutral marketplace if you control the search results, the logistics, and punish price competition? Amazon’s dominance creates a weird paradox: it’s the easiest place to sell a massive volume of units, but it might also be the hardest place to build a healthy, profitable brand. They’re not the top clothing seller because they make the best clothes. They’re the top because they control the mall. And everyone else is just renting a stall.
