Warc Blog

Amazon said to be 'muscling' brands

8 August 2014
NEW YORK: Amazon has been accused of attempting to push its suppliers into an unwanted direct relationship with the ecommerce giant, according to a new study.

L2, the digital think tank, looked at 30,000 Amazon listings from more than 315 brands in fashion, beauty, home goods, jewellery and everyday personal-care items and then compared the results from those companies that have direct distribution deals with Amazon to those that do not.

It said that companies striking deals with Amazon were able to restrict sales of their brands via third-party resellers on the site while at the same time benefiting from greater exposure to shoppers.

"Amazon is the most disruptive force in the largest economy in the world," Scott Galloway, founder of L2, told Bloomberg. "It's definitely pay to play and they are definitely muscling brands and retailers around."

The study indicated that Amazon was looking to establish more direct relationships with brands in certain categories, including fashion and cosmetics, where fashion brands Levi's and Burberry, along with cosmetics giant L'Oréal, among those which had already struck deals.

"Burberry has strategically traded the official distribution of a limited number of its SKUs in exchange for Amazon cleaning up third-party distribution of other Burberry products," the study added.

And shoppers wanting to buy Levi products can only do so via Amazon itself as resellers are blocked from posting any Levi items for sale.

FMCG giant Procter & Gamble has a different sort of agreement, according to L2, which ensures that its products are more prominently displayed than those of its rival Unilever.

Another example was an Amazon promotion offering a gift card to those consumers buying a certain level of household items, all of which were P&G products.

While it is the prerogative of Amazon to come to such arrangements with its suppliers, L2 suggested that some brands could feel they had little choice in the matter, even if they might prefer to keep their products off the site.

Bloomberg quoted Italian luxury consultant Armando Branchini, who said Amazon was using companies' exasperation about the activities of third-party resellers to effectively push them into a deal.

"They consider it a very negative experience," he said.


Data sourced from Bloomberg; additional content by Warc staff

 
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