Is this the end of “Amazon first”?
Amazon as a partner for brands - an empty promise?
More and more renowned brands and producers have been - and still are - following the trend of offering their goods exclusively via Amazon.com. This was pioneered by Nike. Many brands hoped to improve their customer’s satisfaction and increase their loyalty by focussing their sales on one website. Furthermore, many hoped to reduce the price battle amongst the countless marketplaces and sellers.
However: more and more partnerships with Amazon are being questioned, or even canceled. Quite recently, Nike ended their collaboration with Amazon - after less than three years of working together.
So, what went wrong?
Reasons for big brands to sell on amazon.com
Do brands like Nike even need Amazon? Customers searching for a certain pair of trainers will find and buy them wherever they are being offered. Renowned, popular brands are explicitly asked for and thus do not need Amazon to enhance their sales. Even though a collaboration with Amazon seems unnecessary for big brands, there are very good reasons for it:
1. Having control over sales
Of course, Nike products could be purchased on Amazon before 2017. These were offered by a large number of sellers using Amazon’s ‘marketplace’ feature. Of course, this led to a price battle - the sellers used to undercut each other’s prices. The result: customers would find one article with huge price differences. This led to confusion and lessened the customers’ trust in the brand itself.
Through a partnership with Amazon.com, many producers and brand owners hoped to improve their customers’ loyalty and to reduce or even stop the offers of countless marketplace sellers.
2. Non-authorised sellers and counterfeits
Trademark infringements and counterfeit products on Amazon have been heavily criticised. Through the direct and exclusive sale to customers, counterfeit products and non-authorised sellers are to be embanked and blocked.
3. Reaching more customers
Big brands benefit from Amazon's huge reach. Customers using prime are especially interesting: a lot of them exclusively buy on Amazon. Fast deliveries and easy returns play a big role in this.
Does Amazon hold its promises to brands and producers?
Spoiler alert: Sadly, rather not! What is going wrong?
In their explanatory statement considering their drawback from Amazon, Nike is rather restrained: Focussing on direct contact to customers, they hope to increase their customers’ satisfaction and loyalty. This is why they decided to put more work into their own online store.
Thus, Nike recognised the importance of direct contact to customers online. On Amazon, this is nearly impossible. Customer information are widely withheld from the marketplace. It even seems like this data is being used to further evolve Amazon’s own range of products. By doing this, Amazon becomes a direct competitor to sellers on their platform.
From our perspective, Amazon still does not fight counterfeits and trademark infringements consequently enough. This already led to Birkenstock stopping their sales through Amazon.
What about the intention of using Amazon as an exclusive way of selling one’s products, and by this embank the price dumping caused by countless marketplace sellers? Here, not only Nike were disappointed severely.The number of sellers of branded products was hardly reduced, and blocked sellers simply reappeared using a new name.
What is even more grave is that brand owners often get a worse listing than other sellers. This is caused by the high importance of ratings on Amazon: positive reviews hugely influence the buying decision. The number of positive reviews is decisive when it comes to ranking on Amazon. The problem with this: sellers who have been present on Amazon already collected thousands of ratings, while producers - in this case, Nike - start from the bottom.
There are many arguments for and against Amazon. Whether the big reach and customer trust are valid reasons for a partnership is a decision that needs to be made by the producer themself.
We can support you with our Marketplace Monitoring and Marketplace Sales Tracking in keeping an overview over different marketplaces. With this, you always know where and how your brand is being sold alongside to your own sales.
- On which marketplaces are your goods being offered?
- Which sellers sell where and how much of your brand?
- How much is being sold and how high is the turnout?
- At which prices are your goods being offered?