Brands like Cartier, Hermes and Ralph Lauren are available on Amazon’s marketplace, despite none of them intending to.
Just about everything is for sale on Amazon.com, from diapers and blenders to cars and tech, food and books. The e-Commerce site is also a fashion giant.
Next year Amazon is expected to become the biggest US apparel retailer in the world, and boasts a sought after customer base. Its Prime members include a high volume of upper-income households, shown to be incredibly loyal and repeat shoppers who like to shop for high-end clothes.
Despite this, you won’t find brands like Louis Vuitton’s merchandise on there, at least not directly from the company. The label just isn’t budging.
Jean-Jacques Guiony, CFO of LVMH (Louis Vuitton Moët Hennessy), which owns several luxury labels), told analysts on an earnings call last week that there is “no way” it would do business with Amazon, even though the internet marketplace was keen to take on more high-end brands.
Amazon currently sells so-called “luxury accessible” brands like Kate Spade, Calvin Klein and Michael Kors, but LVMH says Amazon just isn’t an appropriate place for its luxury brands.
“We believe the business of Amazon does not fit with LVMH full stop, and it does not fit with our brands,” said Guiony, following his announcement of the group’s unexpected robust quarterly sales.
“If they change the business model, I don’t know, but with the existing business model, there is no way we can do business with them for the time being.” The CFO did not however comment on what was so unappealing about Amazon’s business model.
“Time is the new luxury,” according to analysts at Cowen & Company. “LVMH will need to look for omnichannel ways to add luxurious convenience and personalization to the selling and brand experience,” they wrote in a note published Wednesday last week.
But for years, many luxury brands have faced the conundrum of selling online. Chanel’s president Bruno Palovsky recently highlighted the company was far from any kind of e-Commerce launch, explaining that online reach can never replace the feeling of being in a fitting room (a luxury fitting room that is).
“It’s about being able to try the product, to test the product and also for us to be able to have conversations with the customers in the boutique to explain and suggest options. A lot of people (consumers) want to keep this relationship,” says Palovsky.
One of the hallmarks of a luxury brand, aside from its steep price tag, is providing a luxury experience, establishing special relationships with customers, exclusivity, and keeping control of how products are marketed and sold. Amazon however, is posing a threat to that control.
Even though LVMH won’t budge, you can still find their products on the Amazon marketplace. This is because Amazon sells merchandise from third-party retailers as well as selling directly from brands. Despite Cartier saying they have no relationship with the online marketplace, there are nearly 2,000 Cartier products on the website for sale, according to a recent study by research firm L2.
“From a consumer perspective, third-party product listings are nearly indistinguishable from officially-sourced merchandise,” said the report.
Amazon has made it abundantly clear they want more high-end luxury brands on their site due to its high profit margins. The e-Com giant even launched a glossy “Luxury Beauty” section to its site last year, to lure luxe brands in.
Burberry, who have been dappling into e-Commerce, adopted an “if you can’t beat them, join them” mentality, by agreeing to sell a limited range of its beauty products on Amazon, on strict condition the company would restrict third parties from selling on the site.
Chanel have also been successful in being able to regulate third-party merchandise on Amazon, but others like Ralph Lauren have not, despite over 9,000 apparel items available on the site, according to L2’s study.
It’s an interesting debacle for luxury brands isn’t it? How much control can these luxe brands really expect to have over where their products end up, especially on the world wild web!