To Amazon, or Not to Amazon? That is the Question

Published on: October 11, 2017
By: Ryne Misso

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They’ve been called “The Everything Store.” They’ve been described as “being all things to all consumers.” Over 80% of Americans plan to shop their site this Holiday Shopping Season*. They are leading the eCommerce push in the grocery industry. Shoot…I’d bet you have even heard strangers on the street singing Amazon’s praises, “it’s just so easy…I ordered paper towels in literally 10 seconds yesterday, and they were at my doorstep today.”

It’s true. Amazon has emerged as an unprecedented retail giant, with so many points of differentiation, it is hard to keep count. But, as David showed, even Goliath has his weaknesses.

In the headlines this week you’ll find yet another story about a luxury brand nearing a deal to allow their products to be sold on Amazon’s marketplace, only to see the deal fall through over concerns about brand protection. High-end watchmaker Swatch Group left Amazon at the negotiation table after Amazon refused to “proactively police its site for counterfeits and unauthorized resellers”.

This has been a recurring story for Amazon in recent years. From Birkenstock, who stopped selling on Amazon in 2016 due to counterfeit concerns (and recently lambasted Amazon for illicitly acquiring their products from third party sellers and reselling them directly), to brands like Nike, who refused to sell on Amazon before the launch of the brand gating program, Amazon has consistently experienced friction with select high end brands.

For these brands, selling on Amazon has very distinct advantages AND disadvantages. The most obvious advantage is getting their products in front of Amazon’s massive audience. For some, however, this benefit does not outweigh the key disadvantage of compromising the key ingredients that helped them establish a pristine brand reputation among consumers in the first place: quality, exclusivity, and trust. Once a brand sells on Amazon, exclusivity goes out the door and forgets to close it on the way out, leaving it open for threats to the perception of quality and trust.

This is one of the top questions facing many high-end, luxury, or otherwise exclusive brands today—to Amazon, or not to Amazon? In today’s environment, the spectrum of consumer trust has narrowed significantly. They trust a select small group of major national retailers, including Amazon and Walmart, and they trust the small, boutique, exclusive direct to consumer brands or specialty retailers that have emerged in great numbers in recent years. Think brands like Chubbies, Cotopaxi, or Warby Parker and the success they’ve had establishing a loyal following by delivering unique brand experiences.

Going forward, it is easy to envision a retail environment consisting of Amazon, Walmart, and thousands of direct to consumer brands offering exclusive experiences and assortment options. Which path makes the most sense for your brand?

*Market Track 2017 Shopper Insight Series Survey

 

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