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What Will It Take For Brands To Trust Amazon Again?

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This week CNBC reported that Amazon is shipping out-of-date perishable food items, a casualty of Amazon’s rambling marketplace of third-party sellers who seem to be mainly governed by machine learning algorithms.

But this is only one recent report of Amazon unwittingly shipping merchandise that could be considered unsafe (including at least 4,000 items discovered by the Wall Street Journal to be unsafe in a recent investigation), counterfeit items, or even products made by factories that violated certain safety standards.  

Consumers might think twice about their purchases on Amazon, but the brands that sell on the platform are also increasingly concerned with the recurring theme of brand safety. 

A large part of the problem is that Amazon’s marketplace model allows multiple sellers to sell a product - not just the company that manufactured the product (the brand). These third-party resellers have no real reason to invest in representing a brand’s products accurately or providing a great customer experience. Instead, they can make a few quick sales and stay cloaked in relative anonymity on the platform.  

This model is a source of much anguish for branded manufacturers like Birkenstock who reported issues like counterfeit items being sold under their brand name. Amazon's Worldwide Consumer CEO Jeff Wilke said this week that Amazon would be prepared to spend hundreds of millions, if not billions of dollars in protecting consumers from issues like counterfeit items. 

Brands argue that Amazon could simply ‘gate’ perishable items and other products prone to counterfeiting and other nefarious behavior. But Amazon only offers gating to a few select brands: Apple is a notable example, and high-end skincare brands enrolled in its Luxury Beauty program. Ultimately, it is in Amazon’s best interest to allow multiple sellers on each product listing: an abundance of sellers creates pricing competition and guarantees a wide assortment of products. 

But as more brands choose to ‘bite the bullet’ and set up shop directly on Amazon, many feel the relationship to be one-sided - a sense that the brand needs Amazon more than Amazon needs them. 

Sarah LaVallee, the VP of eCommerce at Wandering Bear Coffee says that its like any other relationship: trust is lost when there is a lack of partnership and transparency. She says that Wandering Bear has a collaborative relationship with their Vendor Manager, since they came to the party prepared and knowing what to expect. However, she says it can be much harder for smaller, emerging brands to be successful because of Amazon’s “hands off the wheel” approach.  

“In the beginning things can go wrong sometimes more than they go right and it can be difficult to get someone within Amazon to help course-correct,” LaVallee says. She cites issues like counterfeit concerns and ownership of the ‘buy box’ - the algorithm that determines who wins the sale when there are multiple sellers offering the same product.  “How collaborative Amazon is when these serious issues arise is truly what defines the relationship,” she says. 

Other brands are far more critical of Amazon’s intentions. Beardbrand is a company which left the Amazon platform because its issues with unauthorized sellers were unaddressed.   

Eric Bandholz, the founder and CEO of Beardbrand believes that one of Amazon’s goals is to commoditize all products and essentially render brands valueless. “They value grey market products, which many times are stolen goods or counterfeit products, at the same level as listings directly from the brand,” says Bandholtz. “I have heard many sellers who talk about their listings being hijacked by counterfeit sellers and then bad reviews started coming in.” 

Beyond the negative impact on a brand’s reputation and sales on the platform, this activity also impacts consumers who can fall victim to purchasing counterfeit, unsafe, or expired product. Bandholtz says that if suspect products continue to proliferate on Amazon, there will be greater distrust from consumers, and more brands will leave the platform as Beadbrand did.      

Trumans is a company in the household cleaning product category that has always avoided Amazon, although its co founder and CMO Alex Reed is familiar with both the opportunity and challenges of the platform from managing the Amazon channel at a former employer, fan and light manufacturer Big Ass Fans

Reed says that some of the caution brands feel probably stems from Amazon promoting its own private label brands. “Whether you believe the intent is sinister or merely customer-centric, brands have reason to be careful about entering a relationship with Amazon,” Reed says. But he admits that similar practices have existed in brick-and-mortar retailing for decades. “The big difference being none of them had the market dominance Amazon possesses with ecommerce,” Reed adds. “As with any partnership, there will be trade-offs. Brands just need to enter them with their eyes wide open.”

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