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Amazon Suits Up

Coming soon to an Amazon website near you…. J. Crew khakis, Ralph Lauren polo shirts, Lord & Taylor suits, Abercrombie & Fitch Co., Neiman Marcus Group Inc. and more! Amazon is in talks with these well-known retailers (and several others) to start offering their products on Amazon. For retailers, selling with Amazon has always been a bit of dealing with the devil… even when Amazon carries their product.

Amazon has a proven willingness to lose money on new initiatives and with data on over 240 million customers, retailers (including the ones mentioned above) have been hesitant to actively “give” Amazon access to their customers. With Amazon controlling the look and feel of all products placed on their site including photos, it leaves little room for a brand name retailer to enable shoppers to identify with their branding as opposed to Amazon.

On the other hand, it can be hard to say “no” to the level of exposure that Amazon can provide, even for established retailers. While many of the retailers Amazon is in talks with are mainstream, the brick-and-mortar stores that sell them have a very small online footprint accounting for less than 10% of total retail sales. Being put on Amazon’s shelves may help move that number upward, but it can come at a cost. Exposure, visibility and online traffic are all great, but retailers have expressed concerns about Amazon’s use of customer data as well as the use of its vast marketplace as a laboratory to test pricing strategies and spot products to sell on its own.  It’s doubtful there is much concern that Amazon will start its own line of suits to compete with Lord & Taylor, but offering Lord & Taylor products will give them access to customer data which they can measure and analyze.

For those retailers that are not household names, there is also a real concern about getting lost in the sea of merchandise that Amazon offers. Third party sellers make up over 35% of all units sold on Amazon, but the largest seller on Amazon is Amazon itself – leading to some concern about Amazon using its fulfillment centers to spot new products and trends and sell them on its own. Once Amazon decides to sell a product, it becomes difficult if not impossible for third party sellers to compete with them.

As a retailer that is not Lord & Taylor or Abercrombie & Fitch Co, will Amazon carrying these products make any difference to you and your online store? Not directly; however there are a few valuable takeaways that can be learned.

  • Customer data is valuable. Amazon does not NEED these product lines to help boost its bottom line. While they may fill gaps in their product line and will generate some revenue, the real value here is access to new customer demographics and their data. What tools do you use to collect and analyze your customer data?
  • Add well-known household names to your product line. If you are not a household name in your own right, feel free to borrow a page from the Amazon playbook.  Collaborate with some more well known names (with their permission) to offer their products on your site, linking to their sites for customers to make their actual purchase. Your revenue would come as an affiliate directing traffic – if this setup is good enough for Amazon, it’s probably good enough for you.
  • People will pay for value. Amazon’s current focus on adding these product lines highlights how important it is to demonstrate value for a service or product. In their case, they will be raising the price of their Amazon Prime service, and by adding these recognized names and brands to their current Prime offerings for free shipping, they are reinforcing the value of the service. What are you working on to reinforce the value of your offerings?

Arie Shpanya

Arie is the former COO, Executive Chairman, and Co-Founder of Wiser, a dynamic pricing and merchandising engine for online retailers and brands. He has extensive experience in business development with a focus on eCommerce (eBay and Amazon), and is a guest blogger on Econsultancy, VentureBeat, and more.

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