A Wren Says

As I continued looking into Amazon’s luxury stores, I found an interview with an expert detailing what Amazon could do to lure luxury brands. When interviewed by Business of Home in early 2020 (before the site launch and announcement), Laura Meyer had some thoughts on Amazon’s ability to corner a share in the market. The CEO and founder of Envision Horizons had made a name for herself helping businesses find success selling on the site. She pulls on her background as a former Amazon employee to give businesses targeted feedback they need to increase sales and improve their storefronts, recognizing that Amazon is a completely different environment and will need different practices.

In the interview, which was published before the Luxury Stores launched, she suggested that luxury brands should keep to selling items that are $500 or less. She also pointed out that much of the success of items comes down to the site algorithm. That equation is based on the number of reviews a product gets, the level of traffic on the product page, and conversion rates. That means that older items, which have more data, are more likely to be recommended to site visitors. It makes it hard for brand new items to be seen and thus purchased. While in normal fashion retail, it makes sense to turnover product quickly to keep customer interest up, such a strategy means that brands would constantly have to start from scratch to get the algorithm on their side.

Brands would/should put this effort in because, as she noted, younger shoppers, millennials specifically, are loyal to Amazon and want to get more of their needs met on the site. That connects to what Amazon said led to this initiative in the first place: People want access to designer products on the site. As Meyer mentions, convenience is the real luxury. Having everything you need in one place plus fast shipping could be what shoppers are looking for. The problem, however, taking these steps may not get the brands what they are looking for.

 While there are truly luxurious brands, such as the major deal with Oscar de la Renta, many of the brands on the site are smaller and lack recognition. This opportunity is a way for them to increase their distribution and reach. On the flipside, the everyday shopper doesn’t recognize them. Case in point, I watched a YouTuber (who I won’t name) devise a conspiracy theory that brands such as Aquazzura and Elie Saab were created by Amazon as fake brands to give the illusion of luxury. That only reinforces the idea that A) there isn’t enough of a presence of better-known brands and B) Amazon needs work on its image of carrying scam products. Although Amazon is working very hard to combat this issue, it still remains an issue and in the front of shoppers’ minds as they consider the site overall.

As a way around this, Amazon has offered “brand-gating” as an option. Brand-gating is practice where they allow the brand to have their own store on the site and be the only distributor of their products, and third party seller listings would be swiftly removed. Essentially, it offers protection from competitions from brands who may be selling counterfeit, stolen, or improperly stored items. They previously offered this through The Premium Beauty program and Apple. However, they did not offer this to Birkenstock and Nike, which led them to promptly leave the platform. 

Amazon could become the online shopping destination for higher end goods. But despite the work brands could do to be successful, they have to make sure participating in this venture doesn’t ultimately damage their success. The major, inescapable issue with the site lies with its connection to savings. On the one hand, brands see it as potentially cheapening their image. On the other consumers recognize those deals come at a cost, often with it being way too good to be true. And everyone is harmed by fake goods, unless of course you’re the one selling them.

Ultimately, I wonder if it would make more sense for Amazon to back a completely different retail platform, with distance from these issues and a more targeted strategy for luxury buyers. But those are just my thoughts. I am curious what you think.

These are the resources I used in drafting this article:

Benveniste, A. (September 15, 2020). At Amazon’s new ‘Luxury Stores,’ you can’t buy anything unless you’re invited. CNN Business. https://www.cnn.com/2020/09/15/business/amazon-luxury-stores/index.html

Choudhary, V. (June 16, 2022). Amazon Briefing: Amazon seeks to revive interest in Luxury Stores with expansion to Europe. Modern Retail. https://www.modernretail.co/retailers/amazon-briefing-amazon-seeks-to-revive-interest-in-luxury-stores-with-expansion-to-europe/

Masters, K. (July 28, 2020). Biting the bullet: Luxury beauty brands on Amazon. Forbes. https://www.forbes.com/sites/kirimasters/2020/07/28/biting-the-bullet-luxury-beauty-brands-on-amazon/?sh=86f395876776

Nicolaus, F. (January 29, 2020). Can luxury work on Amazon. Business of Home. https://businessofhome.com/articles/can-luxury-work-on-amazon