Should Your Company Sell On Amazon?

[Olson]

Idea in detail The Problem 
Selling on Amazon allows brands to reach millions of consumers but that exposure comes with costs. They include lower perimeters, further competition, the threat of commoditization, and lower knowledge about guests. 

The result 
The scorecard in this composition helps brands determine whether the benefits exceed those costs by examining effects like ease of shipping, need for customization, distribution issues, and counterfeiting enterprises. 

The Way Forward 
Companies that choose to vend on Amazon services will need to make smart opinions about multifariousness immolations, runner design, and fulfillment options so that they can take advantage of its scale while guarding the long- term value of their brands. 

People who wear the Birkenstock brand of cork- and- leather sandals have a character for being laid- back — hardly the type to pick a fight. But for the once several times, directors at the German- grounded footwear company have been anything but bite when it comes to Amazon. In 2017, after times of cooperation, Birkenstock Americas blazoned it would stop dealing on the point because too numerous fake performances of its shoes were being vended by Amazon’s third- party merchandisers. In Birkenstock’s view, Amazon was n’t doing enough to help counterfeiting.

 

“ Policing this exertion internally and in cooperation withAmazon has proven insolvable, ” Birkenstock said in a statement, calling the platform “ an terrain where we witness inferior business practices that hurt our brand. ” A many months latterly, when the company learned that Amazon was reaching out to its authorized resellers to move them to vend Birkenstock shoes on the point — a direct violation of the reseller agreement — Birkenstock Americas CEO David Kahan fired off an dispatch to all the company’s deals mates. latterly, in an interview, Kahan framed the situation this way “ This is ultramodern- day pirating, ” he said. “ This is a middle cutlet to all brands, not just Birkenstock. ” 

Amazon is the most visitede-commerce platform in the United States, with nearly 3 billion visits a month, 200 million global Amazon Prime members, and about$ 400 billion in periodic profit. Amazon vessels products to further than 130 countries, and it's the dominant online retailer in 28 countries. Roughly two- thirds ofU.S. Consumers start their product hunt on Amazon.  All these factors make Amazon an essential — and to some brands, a putatively obligatory — place for companies to, as the saying goes, “ meet the guests where they are. ” As former Gap CEO Art Peck put it, “ To not be considering( dealing on) Amazon would be, in my view, delusional. ” 

Yet brands face real challenges when dealing on the platform — from contending products, third- party merchandisers, and indeed from Amazon itself. also, Amazon’s growing advertising business( in which it charges freights for decoration positioning in hunt results, as well as for announcements on its music and streaming videotape services and other outlets) has significantly reduced merchandisers ’ perimeters on the platform. And in an period when companies use client data tocross-sell, ameliorate being products, and find ideas for new inventions, Amazon’s walled theater and strict constraints on participating client data limit brands ’ capability to learn about — and from — their guests. 

numerous brands have grappled with this dilemma. Nike and Ikea, for illustration, experimented with dealing on Amazon but latterly stopped. However, the products are being offered by third- party merchandisers, not the brand itself, If a client finds these brands on Amazon moment. Gap has had long internal debates about whether to vend via Amazon. Randy Antin, a former elderly marketing director at Gap, explains the discussion this way “ Retailers have always been a bit cautious of ‘ frenemy ’ Amazon. Do we play with you when your game plan is to have everyone buy through you? Who owns the client? Are we willing to give up control to use this giant distribution channel? ” Gap eventually decided not to vend on Amazon. Other companies do, but they intimately complain about the costs, trade- offs, and negotiations.