Idea in Brief
The Problem
Selling on Amazon allows brands to reach millions of consumers—but that exposure comes with costs. They include smaller margins, more competition, the risk of commoditization, and less knowledge about customers.
The Solution
The scorecard in this article helps brands determine whether the benefits exceed those costs by examining things like ease of shipping, need for customization, distribution issues, and counterfeiting concerns.
The Way Forward
Companies that choose to sell on Amazon will need to make smart decisions about assortment offerings, page design, and fulfillment options so that they can take advantage of its scale while protecting the long-term value of their brands.
People who wear the Birkenstock brand of cork-and-leather sandals have a reputation for being laid-back—hardly the type to pick a fight. But for the past several years, executives at the German-based footwear company have been anything but chill when it comes to Amazon. In 2017, after years of partnership, Birkenstock Americas announced it would stop selling on the site because too many counterfeit versions of its shoes were being sold by Amazon’s third-party sellers. In Birkenstock’s view, Amazon wasn’t doing enough to prevent counterfeiting. “Policing this activity internally and in partnership with Amazon.com has proven impossible,” Birkenstock said in a statement, calling the platform “an environment where we experience unacceptable business practices that hurt our brand.” A few months later, when the company learned that Amazon was reaching out to its authorized resellers to convince them to sell Birkenstock shoes on the site—a direct violation of the reseller agreement—Birkenstock Americas CEO David Kahan fired off an email to all the company’s sales partners. “Any authorized retailer who [sells Amazon] even a single pair will be closed FOREVER,” he wrote. Later, in an interview, Kahan framed the situation this way: “This is modern-day piracy,” he said. “This is a middle finger to all brands, not just Birkenstock.”
