AMAZON: THE OVERACHIEVER
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.
AMAZON TRYING TO GET A SEAT AT THE COOL KIDS’ TABLE
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?
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
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
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
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.