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Will Fashion Ever Really Embrace Amazon?

Some brands see Amazon as the most-efficient way to find new customers — but selling via the e-commerce giant can be more trouble than it's worth. A careful and cautious strategy could set fashion brands ahead in 2020.
Products from MCM, which recently started selling on Amazon. | Courtesy
By
  • Chavie Lieber

NEW YORK, United States — Two months ago, luxury leather goods company MCM embarked on a journey that would be unthinkable for most upscale fashion brands: it started to sell on Amazon.

MCM's logo-covered bags, which cost anywhere from $295 to $3,700, are typically found at Nordstrom or Saks Fifth Avenue, as well as at its own stores and website. But starting in December, MCM listed about 30 styles on Amazon, a number that will increase, said President Patrick Valeo.

"To us, the question is 'how can you not be on Amazon?'" Valeo said. "In 2020, you go to the shopper. We call ourselves new-school luxury, and the new-school luxury shopper is young, digitally savvy, and shopping on Amazon."

Valeo is a bit of an outlier in luxury fashion, where many brands have been reluctant to work with the e-commerce marketplace. The site accounts for more than one-third of online sales for apparel, shoes and accessories in the US, according to Bloomberg Intelligence. But it also sells "thousands of banned, unsafe or mislabeled products," according to a Wall Street Journal investigation last year (an Amazon spokesperson said it "strictly prohibits the sale of counterfeit products and we invest heavily in both funds and company energy to ensure our policy is followed.")

Brands also fear Amazon will use data collected on their sales and customers to launch lookalike products (in November, Amazon's private label, 206 Collective, was called out for ripping off Allbirds' distinctive wool runners. An Amazon spokesperson said that "like many other stores, we offer private brand products to provide customers with more choices, better products and lower prices," but added "we do not use an individual seller's data to determine which private label products to launch. Amazon uses data about individual sellers only to support them or enhance or protect our customers' experience. "

The new-school luxury shopper is young, digitally savvy, and shopping on Amazon.

But as the department store sector declines and the cost of social media advertising skyrockets, some brands are giving the e-commerce giant a second look, albeit a limited one. Some list commodity items like cheap denim on Amazon, saving more-aspirational merchandise for their own sites, where they can better control how the products are presented and priced.

Valeo said the decision to partner up with Amazon came down to the data. Shoppers were already searching the site for MCM products, demonstrating pre-existing demand. Then there were Amazon’s 150 million Prime members.

“Amazon is a customer acquisition machine — it's what they do,” said Matt Kaness, interim chief executive of Lucky Brand Jeans, which has sold on Amazon since 2009 and aggressively expanded its presence on the site in the last six months. “We've really seen it as an opportunity to reach a certain segment of the market more efficiently than we could through our own dot com or through retail partners like Macys.com or Nordstrom.com.”

Amazon is reportedly courting luxury brands for a new high-end fashion venture; presumably, reining in counterfeits and knockoffs will be part of that effort. The company is also priming its customers to view its site as a fashion destination, including an upcoming Amazon Prime show, "Making the Cut," where audiences will be able to buy the winning looks every week.

Amazon is a customer acquisition machine— it's what they do.

For many brands, Amazon will always be a “frenemy,” as one Nike employee put it to Reuters (a few months later, the footwear brand ended sales on the site). Working with Amazon requires a degree of strategising above and beyond many other wholesale retailers, from how to advertise to which inventory to stock.

“If you think Amazon is a training ground, you will get eaten alive,” said Daniella Berkson, founder of New York-based jewellery brand Humble Chic, who has been an Amazon seller since 2013. “It’s a sink or swim model.”

Leveraging the power of Amazon

For small businesses, Amazon’s logistics offerings are hard to resist.

Brands that sign up for Fulfilled By Amazon ship their inventory to Amazon, which takes care of storage, order fulfilment and customer service. This was a driving factor for Jim Lambert, founder of men's swimwear company Okaicos, which started selling with Amazon in May 2019.

“Our team is small and it’s challenging to complete orders [at] the speed that customers expect today, and fast, easy fulfilment is something Amazon can promise,” he said.

Lambert said Okaicos sales have increased 40 percent since joining the marketplace.

For MCM, inking a deal with Amazon meant the brand could tackle counterfeiting on the platform. The partnership meant MCM could report and freeze the accounts of fraudulent sellers.

Fast, easy fulfillment is something Amazon can promise.

“If you’re on the site, one advantage is that they do attempt to better police the third party sellers, whereas if you're not, they don't,” Valeo said. “Initially, that felt like them strong-arming us, but now we can control the MCM experience within the marketplace.”

Valeo believes brands stand a better chance fending off counterfeiters by selling on Amazon.

“The fact is, your stuff is already all over the internet, whether it’s resale, or vintage, or third-party sites,” he said, “Your product is out there, so you might as well get it to them first on Amazon and be top of mind.”

All businesses give Amazon a cut of sales (commission rates for apparel typically range from 15 to 35 percent). Indré Rockefeller, co-founder of direct-to-consumer luggage brand Paravel, which began selling on Amazon in July 2017, said it's a better alternative to increasing ad spend on social media.

“Driving traffic to your own website requires huge ad buys — and more people are starting their product search on Amazon, not on Google,” Rockefeller said. “The more incumbent DTC players are making shifts because the environment is changing, and they are identifying that the customer is living on Amazon.”

Your product is out there, so you might as well get it to them first on Amazon and be top of mind.

Those perks come with drawbacks. Brands will need to cede control over how they present themselves to potential customers; most Amazon searches are for types of products — swimwear or jeans — rather than specific brands, said James Thomson, an Amazon Marketplace strategist.

The prospect of appearing alongside countless other brands in a grid is one reason Andie Swimwear has stayed off the marketplace, said Melanie Travis, founder and chief executive. So did Amazon’s control over data; sellers receive far less information about customers than they would through their own channels.

Amazon is making great strides towards brand pages but at the end of the day, it's a home for product, and we're a brand.

“We’re aspirational and invest in brand-building which means gathering customer information and Amazon owns the customer relationship,” said Travis. “Amazon is making great strides towards brand pages but at the end of the day, it's a home for product, and we’re a brand.”

Be strategic about inventory

Deciding what to sell on Amazon can be as important a decision as whether to sell on the site at all.

Menswear company Untuckit told BoF it's been using Amazon as a clearance rack since 2018, selling prior season's inventory at a discounted rate.

Lucky Brand is mostly selling lower-priced items on Amazon, keeping more high-end merchandise for its own website and stores like Nordstrom.

“Amazon competes with price and convenience and so our value assortment is more resonant,” Kaness said.

Paravel’s strategy is similar: the brand only posts its packing cubes and lower-end bags to Amazon, saving its fashion items for its own website and Net-a-Porter.

People are searching for travel solutions, not an aspirational purchase.

“People are searching for travel solutions, not an aspirational purchase,” Rockefeller said.

Laura Meyer, chief executive of Amazon strategy firm Envision Horizons, recommends fashion brands stick to posting core items on Amazon, which can be optimised to appear higher in customer searches. With seasonal collections, brands would be starting from scratch each time.

“There's so much work that goes into building out a product detail page that you don't want to have to put in all that work again four months later with a new product launch,” she said. “The best practice is to stick with staples.”

Play hardball

Selling on Amazon means competing with the platform’s 2.5 million-plus sellers, not to mention Amazon’s 135 private labels.

“No matter what size business you are, no one has time to make mistakes when it comes to Amazon,” said Elaine Kwon, who runs e-commerce management firm Kwontified. “It is a full-time commitment.”

Brands should be prepared to spend a hefty amount on Amazon ads.

“You absolutely have to buy your way in,” Thomson said. “There are brands that start on Amazon and don’t make any money for the first six months because they are just investing all their sales money into advertising.”

There are brands that start on Amazon and don't make any money for the first six months.

Companies must also keep up with Amazon's rules for sellers. Some brands report being suspended from the marketplace for seemingly minor infractions, and Berkson noted that a cottage industry of suspension prevention consultants has sprung up.

Amazon sellers are also expected to shoulder the blame when orders go awry.

“If a customer feels there’s something wrong with a product, Amazon will take care of them; full refund, no questions asked,” said Thomson. “They set a high bar, which is a customer’s gain and a brand’s loss.”

Amazon experts say there are some essential strategies to employ early on, like nailing the keyword game. MCM paid to be listed high in sponsored results for keywords like “MCM Belt,” “luxury belt for women and “fashion belts for men” that direct searchers to its Claus Belt. “MCM backpack,” “leather backpack for women,” and “designer backpack,” direct to its Stark backpack.

They set a high bar, which is a customer's gain and a brand's loss.

Meyer said brands need to get creative.

“Glossier doesn’t sell on Amazon but a lot of people search for Glossier, so beauty companies should be buying those keywords” for ads, she said.

Kwon said brands that don’t want to sell on Amazon still need to, at minimum, register on its Brand Registry, which was launched in May 2017 and gives brands protection tools once their trademarks are registered with Amazon.

“Registering your brand will make it difficult for others to sell it on Amazon,” she said. “It’s worth the minimal investment to protect your brand.”

Editor's note: This article was revised on 28 February, 2020 to include statements from an Amazon spokesperson.

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