In the wild wild west of online retail, there has been a long-running standoff between two big players in the game: luxury brands and Amazon.
The affluent shopper is already spending a lot of time with Amazon. Nearly half of US households have a Prime account now, including 82% of six figure households. eMarketer reports that most people in the luxury demographic agree shopping online for luxury goods is easier and more convenient, and Amazon has established itself as best-in-class for shipping, fulfillment, and easy returns, raising the bar for all others.
So, what’s the problem?
Well, there are a couple of them. The first is one we covered in a previous blog post: the proliferation of counterfeit goods on the site. Historically the company has done very little to prevent fake luxury products being bought and sold on its marketplace.
In fact, sometimes the products are authentic — imported on the grey market or purchased on sale — being sold by a third party. For example, a quick search for Estee Lauder shows thousands of genuine products on display. When this happens, the brand has no control of the merchandising or customer service for the product. As far as the consumer is concerned, they are indeed buying Estee Lauder from Amazon and will ultimately relate that experience with the brand itself.
All of this can result in bad experiences that damage brand name.
The second, bigger reason that luxury houses avoid Amazon is that it is simply not premium enough of an environment for them. Luxury customers want an elevated shopping experience, and Amazon is perceived by consumers as an “everything store,” full of low-priced items. This is far from the environment of a high-end department store like Bloomingdale’s.
The end-to-end white glove service that luxury brands provide for their customers is part of the appeal of buying expensive designer handbags, shoes, and jewelry. The execs at Louis Vuitton are probably horrified the thought of someone purchasing a Pochette Metis handbag in the same transaction as a bottle of generic dish soap. However, as more of the world moves their shopping online, it will be imperative for brands to reach audiences where they are.
What’s a brand with high standards to do?
Some luxury houses have already decided to experiment with selling on Amazon. Michael Kors, for example, sells a line of smartwatches on Amazon, but keeps the ten-thousand-dollar handbags to their brand site. Kate Spade has a similar line . These allow the brands to test and learn with Amazon while keeping the high-tier items to premium environments. Rich, eye-popping content on their official Amazon store pages clearly distinguishes the brands from counterfeit vendors whose presence is nowhere near as creative or professional.
Selling on Amazon comes with the added benefit of access to the programs that Amazon’s made to combat counterfeits, brand registry and Project Zero. Vendors who sell on Amazon can claim ownership of their brand trademark and access a framework that makes it easy to report third-party sellers pushing fake products. Project Zero takes it even further with a self-service removal tool, which gives registered brands the ability to delete knockoff products from the marketplace right away without waiting for approval from Amazon.
At the bare minimum, luxury houses should take advantage of Amazon’s massive amount of data for media targeting purposes. Amazon’s DSP makes it easy to identify and engage with luxury shoppers on websites outside of Amazon and drive them to preferred sites to discover products. Simply leveraging Amazon’s data for ad targeting allows for the brands to stay far away from Amazon.com itself while still benefiting from the data they own.
Amazon’s data can also be used for ad buys across Amazon’s OTT TV or to purchase off-network display ads. Companies willing to go the extra creative mile can use Amazon’s data to build premium experiences, like L’Oreal did when they used Prime Now to send a stylist to customers’ apartments for a blowout-on-the-go. It will take some thinking outside the box, but Amazon’s data and reach can help brands create very exciting, high-value experiences for their target audience.
Still, it takes time to make a masterpiece. The road will likely be long between now and the day when consumers can order a Louis Vuitton handbag for same-day delivery via Prime Now. Until then, luxury brands can still benefit from partnering, testing, and learning with Amazon to inform their overall ecommerce strategy.