As e-commerce sales mature, luxury brands spurn Amazon

Dive Brief:

  • While most luxury brands are delighted to sell their designs in high-end stores, 75% are unwilling to work with Amazon, Mobile Commerce Daily reported last week.
  • E-commerce sales are not completely out of the picture, though. The most recent L2 Digital IQ Index shows luxury sales make up 7% of the market, and online sales are likely to drive 66% of growth in the next five years.
  • Some fashion conglomerates, it seems, are averse to the e-commerce giant rather than the sales channel. The index shows 25% of brands prefer to work with Yoox Net-A-Porter Group, and brands such as Burberry, Gucci and Fendi have established their own in-house e-commerce sites.

Dive Insight:

Luxury brands' turn away from Amazon to other, more specialized e-commerce vendors shows digital providers are prominent actors in the retail supply chain. E-commerce, after all, is just another sales channel to take advantage of, so it makes sense that — like with brick and mortar retailers — luxury brands would pick and choose where to place their items. 

In the case of high fashion, where exclusivity and originality (allegedly) justify high price tags, Amazon's universal appeal just doesn't strike the right chord. Luxury retailers seem to fear product commonization, which in the past has led to reduced sales and waning brand interest.

Another fear is product fakery, engadget reports. Amazon, for example, is currently facing a lawsuit brought by Apple, which alleges that the majority of its lightning cords and other accessories are falsely labeled as having been made by Apple, when in fact, they are not. 

As a result, having full control of the supply chain — from packaging to last-mile delivery — is essential for these brands, according to Harish Abbott, CEO of Symphony Commerce, a commerce-as-a-service startup offering an online platform, order management and fulfillment services.

"These details make a brand," Abbott told Supply Chain Dive. "Marketplaces like Amazon.com with millions of products do little to preserve the brand ethos of products. This is where the match between luxury brands and marketplaces falls apart."

As brands' e-commerce sales grow and mature, commerce-as-a-service companies like Symphony and Amazon are becoming indispensable partners to the retail supply chain, rather than just another platform.

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Filed Under: Logistics Technology
Top image credit: Burberry Facebook page