Mean Girls: Digital Edition

AMAZON: THE OVERACHIEVER

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Every high school has one, and Amazon takes the cake for class overachiever of the digital world. Whether it’s AmazonFresh or the fact that I can order just about anything to my doorstep overnight, there is no doubt Amazon has already mastered the art eCommerce. But, as seen through their lack of dividends, re-investment and investment in growth, and overall track record, Amazon wants to be a lot more than just the eComm King. With superb streaming services, AmazonFresh moving into B&M stores, and being the go-to for cloud services, it almost seems like there is nothing Amazon can’t do, right?

Wrong (well for now).

There is one space Amazon just can’t quite conquer: fashion.

Although attempting to grow its fashion and jewelry retail segment in recent years, Amazon has failed to attract any high-end luxury brands (And for these brands there a lot of reasons why). Amazon just can’t seem to get in with the in-crowd. 

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In the past year, Amazons has been expanding its efforts in fashion; mainly the launch of seven in-house brands: Franklin & Freeman, Franklin Tailored, James & Erin, Lark & Ro, Society New York, North Eleven and Scout + Ro. The lines, which are designed to be affordable, already offer close to 2,000 clothing pieces for men, women and children. In creating these labels, Amazon attempts to become less reliant on external brands. Earlier this month, Amazon kicked off a $15 million advertising campaign in an attempt to brand itself as a high-fashion retailer. Unfortunately for Amazon, majority of these luxury players have been around for almost a century and have built brands that have withstood all types of competition throughout the decades.

The problem is that these established luxury brands, the “cool kids,” think Amazon is being like SUCH a try hard. And as Amazon’s plans get more ambitious, like trying to become the online destination for couture, there’s bound to be some pushback from established players in fashion. Amazon can’t just walk up in here with 7 new friends that no one knows and take over the cool clique, you know?

FAKE IT TILL YOU MAKE IT, RIGHT AMAZON?

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Amazon currently sells “accessible luxury” brands from Michael Kors, to Calvin Klein, to Kate Spade, BCBGeneration, Rachel Zoe and Tommy Hilfiger. Though these respectable fashion brands have a presence on the platform, they have certain limits. Majority of these brands don’t sell clothes on Amazon; only jewelry, watches and some accessories. For example, Michael Kors, which is not considered high fashion by most in the industry (what a poser), does not officially sell any category other than jewelry and watches on Amazon. So if you have ever purchased some piece of Michael Kors clothing on Amazon, there’s a chance it could be counterfeit.

THAT KID WHO TRIES TO BE NICE TO AMAZON, BUT THEN NO ONE TALKS TO THEM

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Amazon heard people were wearing army pants and Birkenstocks, so then Amazon sold army pants and counterfeit Birkenstocks. Birkenstock, although not luxury, is rather upscale for the footwear industry chose to partner with Amazon as third-party retailer. But earlier this year, Birkenstock noted an increase of counterfeit goods on the site and “a constant stream of unidentifiable unauthorized resellers.” In an email to retail partners, Birkenstock CEO David Kahan wrote, “Policing this activity internally and in partnership with Amazon.com has proven impossible.” So, Birkenstock decided the said it would stop doing business with Amazon.

Birkenstock’s partnership with Amazon created a brand experience that is off, because Amazon allows third-party resellers on the platform who might sell unauthorized products from a luxury fashion house. “Until the proper marketplace reseller arrangements are in place,” he says, “luxury brands will be cautious.”

WHEN THE QUEEN BEE SAYS YOU’RE UNCOOL – YOU’RE OUT

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The main mean girl and head queen bee, is the largest luxury player in the market: LVMH (Louis Vuitton Moet Hennessy). Where LVMH goes, majority of luxury brands follow (well technically they have to, seeing as they are owned by LVMH). The parent company behind the “crème-de-la-crème” fashion houses such as Louis Vuitton, Fendi, Christian Dior, and dozens of other luxury brands, is telling these brands to totally not talk to Amazon. The leading lady, LVMH, is saying “no way” to Amazon, finding that it is simply not the appropriate platform for its luxury brands.

“We believe the business of Amazon does not fit with LVMH full stop and it does not fit with our brands,” LVMH chief financial officer Jean-Jacques Guiony

LVMH and other luxury brands are cautious of Amazon because they don’t want to devalue their brands. That’s an understandable concern when you consider that a piece of expensive clothing would be sold alongside toilet paper, food and other conventional goods. (Aka the mean girls think Amazon is going to make them look bad, because sometimes she can be totally embarrassing).

Amazon, as the overachiever she is, just wants to be friends with everyone. It wants to be the place where you can have a $12 pack of Hanes underwear and a $1,500 Louis Vuitton bag in the same cart. Although Amazon sees it as inclusivity, LVMH knows its totally not good for their image to be hanging around in a shopping cart with Hanes. Like totally social suicide, am I right?

Companies like LVMH sell at high prices and thrive on the notion of exclusivity, so something as “seemingly insignificant as selling on Amazon could be hugely detrimental,” explains Julie Zerbo, founder and editor-in-chief of The Fashion Law. “For luxury brands, controlling the chains of sellers is extremely important for maintaining brand image and exclusivity,” continues Zerbo. “But they also need to ensure authenticity and quality, both in terms of the products themselves and the customer experience.” Basically, to hang with the means girls, you need to genuinely be one; if you’re not cool, you’re not relevant.

For luxury brands, having full control of the retail experience is of utmost. LVMH and other luxury goods groups such as Chanel and Richemont fought hard to obtain the right from the European Commission in 2010 to refuse partnering with certain websites, citing worries about pricing and counterfeits.

PLAY IT COOL, AMAZON, PLAY IT COOL

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For Amazon, the drama isn’t over. Amazon Fashion is the fact it’s still a work in progress, and, by learning from situations like Birkenstock, it can improve the platform for both labels and buyers. But the retail giant will need more than just a $15 million ad campaign to appeal to the LVMHs of the world and, most important, the people who want to buy that type of merchandise without questioning its authenticity. If Amazon wants to join the clique, it needs to start by cracking down on dubious third-party sellers. Even with all these changes, Amazon may never sit at the cool kids table. But to try to hang with the cool kids Amazon must at least try to solve such counterfeit problems.

MORAL OF THE STORY

Exclusivity doesn’t just happen in high school, just ask Amazon. You may be able to talk the talk, but if you can’t walk the walk, then you can’t get a seat at the cool kids’ table.

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Sources:
https://www.businessoffashion.com/articles/news-analysis/lvmh-says-no-way-will-do-business-with-amazon
http://fortune.com/2016/10/11/lvmh-no-business-amazon/
http://www.marketwatch.com/story/lvmh-is-keeping-its-luxury-goods-away-from-amazon—-and-thats-smart-2016-10-14
https://www.engadget.com/2016/10/25/amazon-fashion/
http://www.retailwire.com/discussion/will-other-brands-following-birkenstock-in-cutting-off-amazon/

10 comments

  1. cattybradley · ·

    Great post. I have never really thought of Amazon as a fashion retailer for high end clothes or not. It just doesn’t cross my mind when I am looking for a dress, shirt, etc. I think it makes sense that these high end lines don’t want to be associated with Amazon. From a consumer perspective I think Amazon represents a huge selection of products and convenience – definitely not the same vibe a person gets in a high fashion store or on their website. I also liked the Birkenstock example – If Amazon can’t make it work with regular brands, why would other brands trust them. The counterfeit issues are becoming greater and Amazon needs to be more proactive than it has been in the past if it wants to succeed in this area.

  2. gabcandelieri · ·

    I loved the theme of this post! Creatively intertwining the ‘Mean Girls’ mentality into your logic was extremely fitting for a fashion topic. I think it would be detrimental for LVMH and other luxury brand products to sell to Amazon. Brands like Louis Vuitton, Dior and Fendi simply do not compare to Franklin & Freeman, Franklin Tailored and Society New York, and especially should not be placed in the same cart as groceries, toiletries, etc. When you purchase a luxury item from Dior, you are not just paying for an overpriced accessory, you are also investing in a status symbol. In reality, you are paying for the brand name/retail experience and not the functionality of the product, which feeds these brands’ overall profitability. Without this status differentiator, the brand is devalued. Even if Amazon solves its counterfeit problem, for this reason, I still do not see luxury brands wanting to be associated with its services (although it would be extremely convenient for consumers). If Amazon can find a way to maintain luxury brands’ status and somehow separate it from other offerings, it may have a chance to be considered ‘cool.’

  3. daniellep2153 · ·

    First, I love the layout of this post. It was super engaging and fun to read :) Second, LVMH nailed the main reason why amazon is having such issues in the new space. Most of these brands focus on individuals that thrive on the exclusivity factor that comes from being able to buy these cloths. If everyone can buy these products, they will switch to other, more exclusive brands. Amazon takes the complete opposite approach. They focus on giving their customers fair prices for products that are overpriced in stores. This way, consumers can buy anything they need at the right price. Because of this difference, I don’t think Amazon will ever be able to truly enter the luxury clothing space. If they do, they will most definitely have further issues with counterfeit items. Great post!

  4. fernaneq4 · ·

    Agreeing with everyone above that I loved the little anecdotes you placed throughout the article relating it back to the title. I’m a big amazon purchaser and I will say with their consumer analytics I’m sure they can create an efficient designer brand that people would really use. However, when I think designer, I don’t think Amazon. If I am going to purchase an expensive item, I am more likely to purchase from an established designer. Not that I don’t buy everything else from Amazon because I do, but the majority of people are going to want the designer brand name for the money they spend. Plus Amazons competitive advantage has always been cheaper prices, how do they do this if the product they aim to sell is supposed to be more expensive? Conflict of brand image if you ask me. Great read!

  5. Great post. Each week your writing gets more and more creative. I feel like my mind is so black and white and analytical (probably why I am working after school in internal audit), but your creativity is something I wish I had …and that my mind worked like this. Awesome job including Amazon in a relatable fashion like Mean Girls, something someone of every background can relate to. “Every high school has one, and Amazon takes the cake for class overachiever of the digital world.” I found this post super insightful!

  6. dabettervetter · ·

    Awesome post! When I think of Amazon I definitely do not think of clothing! I just do not think I could trust their products. Also, their website does not have the feel of a typical online retail experience. I wonder if they reconstructed their retail, specifically clothing website, to appear more like a J Crew or TOBI, would they draw more customers? Especially the luxury items, I wonder if there is a way to verify the items being sold so they are not assumed to be counterfeit, faux, or fake. Who knows!

  7. Tyler O'Neill · ·

    Awesome post! You did an incredible job weaving in the mean girls mentality into your post to simplify the problem that Amazon is facing. It also fit nicely into the overall luxury related theme of your posts! As someone who isn’t extremely into high fashion, I was impressed by how straightforward you made struggles of Amazon entering a new marketplace. Amazon does embody “the overachiever,” always trying to innovate and do more. It’s interested hearing about an area in which they fall short. The dilemma facing companies like LVMH reminds me of issues facing Alibaba, where many small Chinese vendors are producing counterfeit American products and selling them at a tremendous discount. It seems like Amazon will need to take big steps if they want to be part of the “in” crowd.

  8. Great post! Love how you tied in one of the most quotable movies of our generation to a very real and pressing digital commerce struggle that Amazon is facing. I am obviously a huge fan of Amazon! Being a college student, carless, and balling on a budget, Amazon is often my best friend in terms of where I do my shopping. Interestingly enough I have never considered doing any of my luxury brand shopping on Amazon. I guess I haven’t really thought about this a lot becasue to start off with a do not do a lot of luxury brand shopping haha, but additionally Amazon and high luxury brand seems like an oxymoron to me. This is exactly the type of mindset that Amazon is trying to move away from, but it is true. I recently invested in a leather Tory Burch wallet, and it did not cross my mind for a second to look for it on Amazon even though I shop there on the reg. The thing about high fashion I think isi that even if you can talk the talk and walk the walk, you still have to be accepted by the people before you. I think companies like LV see Amazon as “cutting corners” through digital commerce. After all, they have built up their high fashion brand through centuries of work. How are they going to allow Amazon to expedite and in a sense “cheapen” this process through digital commerce? I think that breaking into high fashion will be a very big challenge for Amazon, but I am very interested to see how this plays out.

  9. emilypetroni14 · ·

    I think part of the excitement of buying an LV handbag or any luxury item is the experience: either walking into the store or going on the well maintained website that just seems so fancy. When this luxury experience is taken away, it devalues the amount a customer would be willing to pay for an item. Amazon is known for competitive pricing and many different retailers. Luxury brands are not known for their low price point, there is a whole niche of consumers that love to spend money, and the more expensive and exclusive something is, the more they want it. I agree that luxury brands do not fit in with Amazon. Same when I go into a boutique….if I see a high end luxury brand next to a second class, low quality brand, I tend to question the skills of the buyer and also lowers my opinion of the reputation of the store.

  10. Very interesting post. The fashion world is a tough one. Clothes need to fit people properly, and often times the internet is merely a search tool used to inform brick and mortar purchases. Particularly as the products become more expensive and exclusive in the high fashion world, finding an exact fit is very important. With that in mind, even the exclusive online retailers struggle with this roadblock. Amazon struggles in particular because it’s reputation for carrying everything and selling it to everyone is hardly an exclusive one. For LVHM, simply being listed on the amazon website could devalue the brand. The same way these brands wouldn’t want to be found on a Wallmart shelf, they don’t want to be seen on the amazon page.

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