Amazon is primed to change the fashion industry with ‘Making the Cut’

Supermodel Heidi Klum hosted fashion reality show “Project Runway” for 16 seasons, but one element was missing: many of the beautiful clothing designs that went down the catwalk could not be immediately bought by the audiences that cheered for them.

So as Klum launches a new fashion-based reality show, “Making the Cut,” next month with Tim Gunn, she’s aligning with a global streaming service that is also one of the world’s largest online retail platforms: Amazon.

“For the first time, finally, our audience can shop,” Klum said last month at a Television Critics Assn. panel in Pasadena. “You see something, you want it, but you can’t have it. So here, you have a winning look every week and people can buy it around the world.”

The partnership between Amazon and Klum illustrates how the Seattle global giant can intertwine its two most notable divisions — retail and entertainment — and potentially produce new lucrative revenue streams.

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The official trailer for Amazon Prime’s “Making the Cut”

When Amazon launched its foray into video streaming more than a decade ago and later released original shows starting in 2013, the goal was to offer programs that would drive traffic and sales to its site. Until now, however, the company has not used an original, global series to directly promote its products. “Making the Cut” would be the first, and it could pave the way for other tie-ins between the company’s expanding studio and its juggernaut e-commerce business.

Amazon already pushes customers to buy a $119 annual Prime membership that offers free and fast shipping on items from its retail store as well as access to original programs like “Fleabag” and “The Marvelous Mrs. Maisel.” Amazon Prime Video’s cachet not only rises if Klum’s and Gunn’s star power transfers over to their new show but also if it’s seen as a place where people go to buy high-end fashion and not just stock up on diapers and paper towels.

The strategy could also resolve a dilemma marketers face with the popularity of streaming services like Netflix, which do not have any commercials. Shows that integrate shopping and watching as part of a series’ story line could fix that problem.

Some analysts think “Making the Cut” could even change the way people buy fashionable clothes.

“Amazon is going to completely rewrite the rules with its brilliant show,” said Burt Flickinger III, managing director of New York consulting firm Strategic Resource Group.

“Making the Cut,” which premieres March 27 on Amazon Prime Video, will feature 12 designers competing for a chance to launch a global brand and a $1-million prize. Contestants are given assignments, with the winning outfits sold on Amazon immediately after the episodes air. Customers will pay about $100 or less for the winning looks on the “Making the Cut” store featured on Amazon, Klum said. Sizes will range from XXS to XXL, Amazon said.

Sales for the items will help boost the company’s retail business. Apparel and accessories represented 29% of Amazon’s retail e-commerce sales in the U.S. last year, generating $35.79 billion, according to research firm eMarketer. But many of the apparel items sold are considered basic clothing, such as underwear and yoga pants, and Amazon has struggled to gain a large enough foothold in high-end fashion, which often has higher profit margins, analysts said.

Amazon has tried to court luxury brands with mixed results. While Kate Spade sells items on Amazon, other companies like the parent firm of Louis Vuitton, LVMH, do not.

LVMH Chief Executive Bernard Arnault expressed concern about Amazon selling counterfeit goods on its site in a January earnings call with investors.

Some luxury companies may be reluctant to sell on Amazon because they don’t like how high-end products are positioned against other items the tech giant sells.

“They don’t want to dilute or devalue the luxury element of their brand, so it doesn’t make sense to have them sold alongside light bulbs and batteries,” said Andrew Lipsman, a retail analyst with eMarketer.

“Making the Cut” could help Amazon find the next up-and-coming designer, similar to how “Project Runway” propelled the career of Christian Siriano, who has designed a dress for former First Lady Michelle Obama. It could also change customer perceptions about what’s available on Amazon and attract high-end fashion buyers to subscribe to Prime to tune into the show.

“If you have a show that has an interesting wrinkle on it, that can bring them there,” Lipsman said. “If you have the right shoppers there, that tends to attract the right brands.”

A major priority for Amazon Studios executives is to launch shows and movies that will increase or enhance Prime memberships. Amazon has more than 150 million Prime members globally.

“We’re in a very different business model, unlike the pure play video players,” Albert Cheng, Amazon Studios chief operating officer and co-head of television, said at the TCA session last month. “For us, it’s about our Amazon Prime customers, making sure that we’re delivering value, that we’re looking at our content to drive subscriptions.”

Unlike Netflix, which focuses on just video, Amazon markets its Prime memberships as catering to all aspects of a customer’s life — whether it’s watching TV shows, listening to music or ordering paper towels and groceries. Amazon touted its lifestyle appeal in a recent San Francisco subway ad that read: “Tea kettle ... flu meds ... ‘The Marvelous Mrs. Maisel’,” along with the words, “Sick day. Delivered.”

Amazon Studios executives tout the breadth of services available to potential partners. For example, the studio has worked with Amazon’s live game streaming service Twitch and audio division Audible, along with its retail division.

Jennifer Salke, head of Amazon Studios, said that her division worked closely with Amazon Fashion on “Making the Cut” and that there could be similar commercial collaborations on other shows.

“Making the Cut” isn’t the first time Amazon has dabbled in combining streaming video with shopping, but it is the first global series to do so. Last year, Amazon Prime Video aired singer Rihanna’s Savage X Fenty fashion show, and customers could buy items from the collection on Amazon’s retail site. The company also has Amazon Live, where influencers and celebrities advocate for certain products with links to the items mentioned on the screen.

Other shows have also attempted to sell clothes featured in their programs, but often through outside retailers. For example, Netflix partnered with retailer Net-a-Porter to sell clothes by the winner of its reality show “Next in Fashion.” The show premiered Jan. 29, and clothes designed by the winner became available on Net-a-Porter on Feb. 10.

On “Project Runway’s” newest season airing on Bravo on March 14, viewers will be able to buy some of the clothes featured on the show.

Some collaborations haven’t worked. An attempt by “Project Runway All Stars” to sell clothes immediately after the show failed after its partnership with J.C. Penney ended.

“The big difference here is a show that has a global e-commerce platform that is geared toward giving these contestants a really good shot at making a business,” Cheng said at an industry panel last summer.

“Making the Cut” will also allow Amazon to explore other forms of advertising on its platform, some analysts say. Already, viewers can use a feature called X-Ray to pause an Amazon Prime program to get more detailed information on what they are seeing on the screen, whether it’s an actor’s biography or a song title (with a link to listen to it on Amazon Music).

Amazon said on Wednesday that Prime subscribers watching “Making the Cut” on Fire TV devices can use their remotes to shop the winning look on their Fire TVs through the X-Ray feature.

Some analysts speculate that Amazon will eventually make it possible for viewers to order other items that appear on a show with the appropriate Amazon retail links.

“If anybody can pull it off, it’s Amazon,” said Ross Benes, a video analyst with eMarketer. “They don’t really have to go and make a new ad product if it’s part of the show. I wouldn’t be surprised if at some point Prime Video does more of this.”

Other companies including Walmart’s Vudu and NBCUniversal have rolled out features that could inspire more shopping. NBCUniversal on some programs has showed QR codes that viewers could scan on their smartphones to purchase items they see on TV.

But people involved with “Making the Cut” downplayed any connection between clothing retail sales and the show’s success at Amazon Studios. Cheng at TCA said apparel sales will not be used to evaluate the program.

Gunn, one of the show’s hosts, emphasized that the partnership with Amazon hasn’t compromised the designers’ work.

“There’s a big difference between a dumb T-shirt and a float in a parade, and there’s a lot of fashion territory between those two polarities that’s profound,” Gunn said at last month’s TCA session.