One of the hallmarks of a luxury brand, aside from selling very expensive products, is keeping tight control of how things are marketed and sold.
However, Amazon has been posing a threat to that control. Brands like LVMH, Kering and Hermes won't distribute anything through Amazon -- not even accessories or beauty products -- in the interest of keeping tight rein over how their products are merchandised. But even though these companies may not be distributing directly through Amazon, their products are still showing up there anyways.
That's because Amazon sells merchandise from third-party retailers in addition to selling directly from brands. Even though Cartier claims to have no relationship with the e-tailer, for example, there are nearly 2,000 Cartier products on the site, research firm L2 points out in its recently released study on Amazon. "From a consumer perspective, third-party product listings are nearly indistinguishable from officially-sourced merchandise," L2 notes. The study found that, on average, brands that do not officially distribute through Amazon have a whopping 1,576 products available on the site.
So how does this "unapproved" merchandise get onto Amazon in the first place? A few ways. Much of the product that appears, like eyewear and fragrance, is licensed -- meaning the luxury brands themselves don't actually control how their product is distributed; their licensees, like P&G, do. The product could also come from overstock and, sadly, some of it is counterfeit.
While these brands would probably like Amazon to clean out the third-party merchants selling their goods, L2 points out that Amazon doesn't have a ton of incentive to. Allowing those merchants to sell on Amazon expands the retailer's product selection without having to increase its own inventory of goods. Also, competition among third-party sellers keeps prices down.
However, Amazon also really, really wants luxury brands to have a strong presence on its site, since luxury products have such high profit margins. It even launched a glossy "luxury" beauty site last year to lure them in. Smartly, Burberry adopted an "if you can't beat 'em, join 'em" philosophy, agreeing to sell a limited selection of its beauty products on the condition that Amazon restrict third parties from selling Burberry product on the site.
It seems that other brands, like Chanel, have been able to work with Amazon to regulate third-party merchandise. But many have not. Ralph Lauren, which does not officially distribute through Amazon, had over 9,000 apparel products available on the site at the time of L2's study.
It poses an interesting challenge for luxury brands -- and how much control they can reasonably expect to have over where their products end up, especially on the wild web.