As I frequently cover in my posts here on Forbes.com, Amazon is viewed as an essential distribution and marketing channel by most consumer brands. Amazon accounts for over 50% of all e-commerce sales. Shoppers are also using Amazon at all stages of their purchasing journey and if a brand is not actively participating on Amazon, it can leave open the door for other third-party sellers to list their products—perhaps not representing the brand correctly.
But a handful of consumer brands have still opted to reject the Amazon channel, relying on differentiators like product customization or a complex buying process. Here are some brands that are successfully navigating online sales without Amazon.
Product personalization as a defense
Some brands are banking on the fact that their products require an element of customization for each customer. Personalization on Amazon is limited to being able to add a photo or custom text to products like cell phone cases or t-shirts.
For example, at-home hair coloring company Madison Reed produces hair coloring kits, which rely on specific information from the customer to select the correct shade. This kind of experience, which promises customers they’ll “find the perfect shade,” can’t be replicated on Amazon because the platform doesn’t support this type of personalization.
Another brand that relies on product personalization as a competitive moat is the new supplement company Care/of. Cofounder Craig Elbert, previously CMO of cult menswear brand Bonobos, says that Care/of didn’t launch on Amazon because offering personalized guidance is core to the company’s value proposition. The company’s personalized daily vitamin packs are customized to each shopper, based on their dietary and lifestyle preferences. For example, a vegetarian with an active outdoor lifestyle will receive a different formulation to someone with a standard meat-eating diet that spends a lot of time indoors.
Elbert says that the product is ultimately a combination of digital and physical product, and that combination is part of the experience that the company is delivering. “If we delivered that directly on Amazon, it would have been a much lesser experience for the consumer, so in our case it was a conscious decision not to be on Amazon,” says Elbert.
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But Elbert also says that this decision has potentially dampened their sales, since Amazon accounts for 50% of all e-commerce sales and 80% to 85% of purchases are still happening in brick-and-mortar stores. “Launching a brand outside both of those channels enforces constraints—you have to prove that you’re good at storytelling, you have to prove you can build an audience, and that you can connect with consumers,” says Elbert. He also admits that Amazon is not necessarily off the cards forever for the brand.
Cult status as a defense
Brands that have achieved cult-like status may also have the luxury of avoiding Amazon. Glossier has generated such a strong audience and cut-through in the beauty category that they do not plan to launch on Amazon.
Glossier founder Emily Weiss has said that “no woman has ever told me that their criteria for the best mascara was ‘fastest’ or ‘cheapest’” (referring to Amazon’s key differentiators). Instead, the brand relies on making an emotional connection with the customer, capturing their values, and reflecting these values back in the brand’s messaging—fresh-faced optimism, a healthy lifestyle and self-acceptance.
This position is something every CMO can aspire to, but cult status is rare, and difficult to sustain. As it stands today, many Glossier products are being sold on Amazon by third-party merchants. As of the time of writing, Glossier Cloud Paint is sold on Amazon for $27.50 as opposed to $18 on the official Glossier website. This is a common issue faced by brands who avoid Amazon: Due to the open nature of the marketplace, while the brand may not be selling their wares directly on the platform, enterprising resellers might decide to fill the gap.
Having a direct customer relationship is worth the cost
Natural home cleaning product brand Truman’s decided to forgo Amazon when they launched in 2018. Cofounder and CMO Alex Reed had experience in selling to Amazon in a previous role and decided that forgoing the potential sales revenue of the channel was worth it, in comparison with the control that they would retain in selling direct to customers.
Reed says that any company considering the sale of products on Amazon should carefully evaluate the potential impact on financials, brand and customer relationships. One specific issue is the inability to continue selling to customers who’ve purchased from a brand in the past—because Amazon owns the customer relationship, not the brand.
“Before selling through any third party, you really should take the time to sell directly to your customers and really learn who they are, what they like and dislike, and why they buy your products to fulfill their needs,” says Reed. “That’s incredibly valuable information to know at any point during the life of your business but particularly at the beginning."
Counterfeiting keeps brands away
Some brands have faced such significant issues with counterfeiting on Amazon that they pulled the plug on the channel completely and cut ties with the company, in spite of it being a primary sales channel.
Two well-known examples of brands who have abandoned Amazon due to issues with counterfeiting are Birkenstock and Popsockets.
David Kahan, CEO of Birkenstock Americas, recently shared the brand’s story oin an interview with Jason Del Rey for the Land Of The Giants podcast. When Kahan joined Birkenstock in 2013, the company’s wholesale business with Amazon accounted for a significant portion of Birkenstock revenue (Kahan said in the “double-digits” percentage). But Kahan soon found the Amazon marketplace flooded with third-party sellers, many of whom were causing issues for the brand.
“We would get an inordinate number of phone calls from people who got shoes that fell apart or had problems, and sure enough, 99.9% of the time when they were asked where they bought [the shoes] it was on Amazon,” Kahan said in the interview. To verify that counterfeit shoes were indeed being sold on Amazon, Kahan would order shoes online that appeared suspect. Sometimes they would arrive in replica boxes, sometimes they would arrive wrapped in elastic bands, smelling strongly of glue and certainly not genuine Birkenstock product. Kahan assumed Amazon would be as outraged as Birkenstock was, but the concern was not handled expediently enough to avoid hundreds more customers from receiving fake products. Kahan wanted Amazon to restrict any third-party from selling the brand’s products, but this doesn’t work with Amazon’s definition of their marketplace.
In response to the Land Of The Giants interview, an Amazon spokesperson said that Amazon worked closely in the summer of 2016 to address their concerns about counterfeits. But the two sides continued to disagree about how to solve the problem.
“We decided: Do the right thing. However hard it is, do the right thing.” Kahan said of the ultimate decision to cut ties with Amazon directly. But today, three years after pulling the plug, you can still find Birkenstocks on the site. Birkenstock still allows some sellers to sell some products on the marketplace, since Kahan recognizes that some presence by authorized third parties is better than the platform being completely overrun with suspect sellers.
The future of the anti-Amazon stance
Some companies can afford to reject Amazon as a channel, but they typically are large enough—either through a long company history (Birkenstocks), venture funding (Glossier and Care/of). But many smaller, younger companies don’t have the luxury of avoiding Amazon. With 50% of all e-commerce sales going to Amazon and Amazon playing a substantial role in the consumer buying journey, it’s a default sales channel for many brands that want to stay relevant. Most merchants find sales volume on Walmart.com to significantly lag Amazon, Target’s new-ish marketplace has added only 55 brands since launching, and eBay’s GMV growth has stalled in the past few years. To go direct-to-consumer online on a platform like Shopify, brands face eye-wateringly high customer acquisition costs through digital channels like Facebook and Google, where the cost-per-click has been pushed up by well-funded brands who don’t need to be profitable on their first sale.
As Birkenstock’s Kahan says, Amazon is the “default search engine for consumerism,”one that’s only possible for some brands to truly ignore.