Yes you heard it right! Amazon is on the verge of launching a platform dedicated to luxury brands! 12 top brands have already signed up to be on the platform and we are wondering how this will pan out.
Amazon has attempted to enter the luxury space in the past but failed. How will this time be any different?
Well for starters they plan to provide the brands complete autonomy with respect to the look and feel of their respective page. According to Quartz, the companies will have complete control over the look of their online space, which products they sell (or don’t), and any discounts they offer. At the same time, they’ll have access to Amazon’s vast logistics network for fast delivery, as well as its customer service. Quartz reports that Amazon is building a large warehouse in Arizona for this purpose and is planning to invest USD 100 million on marketing campaigns.
Luxury brands like LVMH are not biting. Jean-Jacques Guiony, CFO LVMH has been quoted saying that there just isn’t a fit between the two brands at the moment and there is “no way” it would do business with Amazon. Image concerns and issues with counterfeit products have historically kept luxury brands away from big online e-tailers. This was until China’s Alibaba launched a brand-to-consumer portal TMall which housed a ‘luxury pavilion’ where luxury brands like Burberry and Versace came on board. A completely separate platform and freedom for the brands to decide how they want to present themselves were the key to success here.
According to Business Insider, Amazon will have to work hard to recruit luxury brands. Issues with counterfeits and third-party sellers on Amazon’s marketplace have caused brands like Nike and Birkenstocks to stop selling directly on the platform. Luxury brands also have their image to protect – selling high end products on the same portal that sells books and diapers, while maintaining prestige is sure to be a struggle.
All luxury brands now sell online via their own websites, while this accounts for only 10% of sales, it is a fast growing segment. Access to Amazon and particularly Amazon Prime’s 100 million subscribers may be too good an opportunity for many brands to pass on.
What are your thoughts? Do you think you could take the plunge if authenticity is assured?
Photo courtesy: Business of Fashion
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