Gap Uses Streamlined Branding and Expanded Discounts to Raise eCommerce Profits

Apparel retail company Gap Inc. made a huge turnaround this quarter in sales and profits even as global commerce faces continued challenges amid high inflation rates.

The company, which also manages clothing brands like Banana Republic and Old Navy, revealed in its third-quarter earnings report that profits are on an upswing.

Online sales company wide increased 5% from a year ago, representing 39% of Gap’s total Q3 sales.

In Gap’s Thursday (Nov. 17) third-quarter earnings call, Interim CEO Bobby Martin attributed these increased profits to the company’s continued efforts to offer customers discounts on their inventory, stating, “We continue to rely heavily on markdowns and discounting to sell-through reliable styles this quarter and have reduced receipts in Q4. These actions will allow us to enter fiscal 2023 in an improved inventory position.”

Gap also made positive strides in online sales this quarter thanks to its recent collaborative efforts to set its brands apart in eCommerce around the world.

Also read: Gap Sells China Retail Business to eCommerce Platform Baozun

First, Gap revealed its plans to sell its Chinese eCommerce business to local digital platform Baozun on Nov. 8, which Gap has worked with in the past to distribute its apparel in the region.

At the time, Mark Breitbard, president and CEO of Gap, explained the reason behind this sell-off was to “not only connect with new and existing customers, but to provide them with personalized, service-oriented experiences.”

See also: Gap to Use Amazon for Sales and Delivery

Then, in the U.S. and Canada, Gap announced on Nov. 10 that it would be partnering with Amazon to expand its clothing sales on the eCommerce company’s website.

This move indicates the company’s desire to stay connected to its customers even as a shift from brick-and-mortar retail continues in favor of online shopping, and by making its clothing accessible to a larger customer base through Amazon.

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