L2 Founder Scott Galloway spoke on Bloomberg today about the various ways brands can partner with Amazon. Many luxury brands have not reacted well to Amazon carrying their products, because one of the fundamentals of brand equity is where it is sold. However, there are various degrees of Amazon partnership. Brands such as Almay and Olay have an official distribution agreement with the site. Many high-end beauty brands link to Amazon affiliate Beauty Bar. Others such as Kiehl’s advertise on Amazon, but all purchase links are directed back to their site.
Yet, there is sinister side to these partnerships. Galloway described Amazon as a pay-to-play marketplace. LVMH, for example, has a no engagement policy with the e-tailer, yet there are hundreds of results for Dior mascara on the site, some offering discounts as steep as $20.
Galloway compared Amazon to the Tony Soprano of e-commerce. Amazon requires brands to pay in order to protect their brand on its site; it lets the marketplace chaos reign for brands that don’t. Another example of this phenomenon is Burberry. Once it decided to list 24 of its products on Amazon Beauty, the other hundreds of unaffiliated SKUs magically disappeared. See full interview here.
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