Watch and jewelry brands are increasingly facing threats from all sides: gray market sellers, private label brands run by e-tailers, and online third-party discount sites. Unauthorized Amazon sellers pose the largest risk to the women’s watches category, according to L2 research, and women’s jewelry brands are more in danger at the hands of Amazon’s private label brands than any other category.

Here are the two areas where watch and jewelry brands should be most alert:

Amazon

Amazon’s gray market is growing. Third-party sellers accounted for 51% of the e-tailer’s US Q2 sales, up from 45% in 2015. While well-known legacy brands dominate Best Seller lists, half of the bestselling brands don’t officially distribute on Amazon. More than 80% of product listings for Michael Kors and Geneva watches were sold by third parties, according to L2’s Amazon Gray Market report.

Another threat is the penetration of Amazon’s private label brands into the women’s jewelry category. Currently, the Amazon Collection jewelry brand dominates traditional jewelry brands when it comes to share of listings on the platform. L2’s study notes that Amazon appears to be limiting third-party seller competition in this category, likely in order to boost its private label products.

Risk by category

The Greater Online Gray Market

The gray market for watches and jewelry dominates paid search visibility. More than half of the top watch brands don’t offer e-commerce capabilities, and brand-operated e-commerce store listings only appear in 19% of paid listing ads for brand-related search terms. By bidding aggressively on keywords relating to specific watch brands and models, gray market e-commerce websites poach shoppers from official brand sites.

Gray market percentage of brands with PLA visibility

These sites also entice consumers with hefty discounts. An L2 report analyzing 36 brands across four major gray market sites (Chrono24, Jomashop, Ashford, and Authentic Watches) finds discounts ranging from 28% to nearly 50%. Watches in the $1,000 to $5,000 and $5,000 to $10,000 price brackets had the highest average discounts.

Discount on gray market sites

Watch and jewelry brands need to take back ownership of their online commerce by investing in the Amazon channel as well as paid and organic search strategies. Amazon is willing to help brands that officially distribute on their platform cull unauthorized listings. Furthermore, emphasizing quality and craftsmanship through Amazon product listing content can help fend off competition from the e-tailer’s private labels.

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