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Brands Waking Up to the Amazon Effect

Category : Blog

In a bold move, Nike has decided to pull the plug on direct retail with Amazon. Decrying that “Amazon is just a traffic aggregator that reduces friction in consumption… It doesn’t build communities,” Jefferies analyst Randy Konik hits the nail on the head.

The ‘community’ Amazon would probably express in rebuttal (if ever they answer the article) would be all the buyers attached to its service as well as its massive network of resellers who’ve long made a living conducting business on their platforms. But even looking at these groups, as an Amazon customer, I rarely interact with other buyers outside of reading some reviews which have been widely known to be plagued with fake booster testimonies for years. And it only takes one visit to the Amazon seller forums to see how disgruntled many of the sellers are with the lack of affect support and every changing anomalies putting to risk many seller’s way of life.

Two communities that are notably missing are the brand owners and manufacturers. Until recently, there really hadn’t been any true enforcement of Minimum Advertised Price to protect an IP’s value integrity, or counterfeit/copycat regulation, which are the two communities that don’t make as much vocal noise, but affect the platform drastically from on a day to day basis. As a matter of fact, in many cases, Amazon themselves are part of the ‘copycat’ community feeding off of sales metrics of items from other sellers and brands that can be easily white labeled and sold under any number of Amazon owned brand names. You can see a rather exhaustive list here , and this is from 2018. Probably many more have been added since.

As a long time reseller on Amazon, this has been a long time coming. Although Amazon has always been the golden marketplace for small entrepreneurs, in all honesty, its really just a platform that simplifies the process of facilitating a sale for a quick buck. Stay there too long, and you’ll get the community of listing leeches undercutting you on your own product offering in no time. Trying to promote a small business on this platform has become practically non-existent as Amazon has made it impossible to enable sellers to manage customer information, and put restrictions on what you can communicate to customer through messaging, packaging, and item listing. You can’t even put a return email address in your Amazon messages without the Amazon authority knocking on your virtual door. Speaking about Amazon authority, they are ruthless in their suspensions that are well known in many cases to withhold funds for months on end. With slow response time and criteria held at a highly ambiguous standard, filing an appeal for re-reinstatement is no simple task.

The articles above are absolutely correct in that Amazon is really only about furthering their own brand impression with little regard to any brand unless a hefty investment is made, but sellers don’t need to be subject to this type of treatment.

In Amazon’s defense, I do understand that their mission is to protect the consumer at all costs, but what they don’t seem to realize is that Brands, manufacturers, and sellers are also their consumers… of their services. They are treated so differently than the consumer side that in the long run, its a losing game.

Giving away the sales metrics of your products, no price control, no appearance advantage over competition, mixed within counterfeit and low quality products. Game Over.

Nike gets it. The one thing Amazon can’t sell other than for itself is a product’s brand. With that brand comes a real community completely dedicated to not the shopping platform, but the product makers, the rabid enthusiasts, and the influential fans free of copycats, counterfeits, and ‘fake’ fans. The brand isn’t in it for the quick buck, and those who invest a little more time to experience the brand, whether it be from attending a major release event or downloading an app, deserve a product that retains its value. That’s where your long term sales potential is: in the impression of not necessarily just the product, but the brand experience. When a company has customers live streaming and Instagram posting not their newly bought shoes, but the confirmation of purchase for shoes on a branded app, that’s momentum Amazon simply hasn’t figured out yet.

There will always be a space for business for Amazon, but I do feel other brands will follow suit behind Nike in the pursuit to preserve meaning in a company community and its long term loyalty of its clients. It won’t be long until many premium brands utilize Amazon like I was told by an old friend in the anime retail biz, ‘I only use Amazon to blow items out at deep discounts. The market is cutthroat with amateur sellers trying to make a quick buck. No money to be made by racing to the bottom.’

https://www.cnbc.com/2019/11/13/brands-dont-need-amazon-nikes-departure-could-prompt-others-to-go.html

https://www.inc.com/cameron-albert-deitch/nike-amazon-breakup-brand-loyalty.html

https://www.bloomberg.com/news/articles/2019-11-13/nike-will-end-its-pilot-project-selling-products-on-amazon-site




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