The sheer size of Amazon’s customer base makes it difficult for any brand to ignore. Amazon now sells more than 40 cents of every dollar spent online in the U.S., according to market research firm Slice Intelligence. The company’s own reported numbers show that more than 70 percent of Americans with incomes of $150,000 and up have Amazon Prime memberships. Clearly, Amazon should be fertile ground for virtually all brands.
But one category is not so certain: luxury brands. Some marketers of high-end products view Amazon as a venue for deals and discounts—an image that doesn’t align with their reputations and the images they are working to establish for their brands. Others in the luxury industry say Amazon’s online marketplace undermines the strict control they believe is key to maintaining a sense of exclusivity. Gucci owner Kering, luggage maker Tumi and Louis Vuitton parent LVMH are among those companies that have declared that their luxury products will not be found on Amazon.
It’s a growing problem for Amazon, which has pushed to become a force in the fashion industry, among other luxury sectors. More luxury goods would no doubt help Amazon boost loyalty among customers of Amazon Prime, its premium service favored by higher-income shoppers. And it’s an increasingly critical issue for brand marketers, particularly given Amazon’s dominance. The challenge for luxury brands is how to effectively leverage the popularity of Amazon while simultaneously protecting and nurturing the perception and integrity of their brands.
Amazon Ambivalence
Marketers of high-end brands tend to be apprehensive about e-commerce, with concerns ranging from cut-rate pricing to counterfeit or damaged merchandise to whether online selling diminishes luxury’s cachet and exclusivity. Many brands believe that a product’s perception truly is shaped by its environment.
“Some feel that it could somehow degrade their brand for someone to buy a $300 pair of shoes at the same time they buy toilet paper or a gift for their nephew,” says Jeff Walcoff, VP of sales and marketing at Marketplace Strategy, a SocialCode subsidiary that maximizes sales and market share for brands on Amazon.
In an effort to court high-end brands, Amazon has stepped up the policing of its third-party marketplace, managing to win over some of the world’s biggest lifestyle companies by pledging action against unauthorized retailers and knockoffs and taking steps to improve its counterfeit detection systems. The company also has tried to address the concern about product segregation by creating a specific luxury category, but marketers’ concern about consumer perception lingers.
Walcoff maintains that consumers are savvy enough to understand the advantages Amazon offers and the tradeoffs they get when they choose to shop online for luxury products versus having a high-touch, in-person shopping experience.
“Brands don’t give shoppers enough credit at times,” he says. “The world has become a lot more transactional. People look at Amazon as a place where they can get anything, regardless of price point. They understand that Amazon is a marketplace and is transactional—it’s not a boutique. If people want outstanding customer service when they’re buying a product, they’re going to go to a store.”
Leveraging Amazon’s Advantages
There are specific efforts marketers of luxury brands can take to leverage the benefits of selling on Amazon without risking damage to their reputation. For starters, they should pursue Amazon’s luxury categorization—an invitation-only program on Amazon—to more efficiently block third parties from reselling or mimicking their products.
Luxury brands also must take full advantage of the prime real estate Amazon offers to showcase their brands, effectively curating the online experience much as they would curate an in-store experience for consumers.
“There is considerable freedom for brands to dress the image library at the top of the product pages with lifestyle images of people wearing or using a product, but most of the time it’s simply pictures of the product from different angles,” Walcoff says. “There are limited places on Amazon to express your brand, so these things become more important when you’re concerned about your image.”
Brands can further customize the content portions of their pages, incorporating video and other tactics that help convey the characteristics they want associated with their products. And of course, carefully developed and specific promotional copy that communicates the right message is always critical. “There are often multiple places brands can control the consumer experience on Amazon that they haven’t leveraged,” Walcoff says.
Adapting to Amazon
Some higher-end brands have taken even more dramatic steps: Jonathan Adler, for example, sells its Now House line of home furnishings exclusively on Amazon, giving the brand the ability to completely customize how its products are presented and positioned for Amazon shoppers specifically. Examples like this demonstrate how a brand’s openness to adapting to the venue not only allows them to leverage opportunities to further enhance their brand images, but also lets them differentiate their higher-end brand from their Amazon line without compromising exclusivity or jeopardizing customer loyalty.
Ultimately, Amazon’s market strength and popularity among consumers is likely to make the online marketplace hard to ignore for any brand, regardless of reputation or luxury level. Smart marketers will adapt in ways that both protect and benefit their brands.
“If you want to be the next Rolex, you certainly don’t want to start on Amazon,” Walcoff says. “But if you’re Rolex, you can’t skip Amazon just because you’re selling $10,000 watches. The fact of the matter is that if someone knows the exact Rolex they want, they know roughly what it costs, there’s a chance they’re going to go to Amazon and buy it.”