Thanks to COVID-19, the personal goods luxury market suffered major losses in 2020, shrinking by up to 23% and sending well-known high-end brands into crisis mode. In the same year, Amazon ushered in a new era of “fast” fashion, bringing these luxury brands into the fold of its 9.7 million worldwide sellers in the “Luxury Store”, which Amazon dubbed “a curated collection of the world’s most sought-after luxury brands.”

With ecommerce sales accelerating at unforeseen speeds and the entire world shopping from the comfort of home, it seemed like a no-brainer to start selling anything and everything on the world’s largest marketplace. But as we’re all now keenly aware, hindsight is everything—especially when it comes to decisions we made in 2020 (I’m looking at you new dog owners, bread makers and those of us who may or may not have put on a few extra pandemic pounds).

Whether it was the allure of simplifying D2C operations via Fulfillment by Amazon (FBA), acquiring new customers with simple search and checkout for their products or increasing profitability outside of brick-and-mortar stores in an economic downturn, Amazon Luxury Store was the shiny object that caught the eye of brands like Mark Cross, Oscar de la Renta and Elie Saab. 

I should note that a recent Slack thread with my team at Cart.com was actually the inspiration for this blog—so rest assured the angles, inputs and opinions herein stem from a diverse group of thought leaders and frequent online shoppers. So, after synthesizing the thread and applying my own industry knowledge to the question, here’s my take and my forecast on Amazon luxury:

Sell out or sellout? What do luxury brands have to gain (and lose) on Amazon?

‍There are some obvious benefits to selling on Amazon: it’s the largest marketplace on the planet, more than two-thirds of shoppers start their product searches there and optimizing your listings to reach the right customers is simpler than ever. But when your brand’s appeal factors happen to be product rarity, high-end experiential shopping destinations and difficulty in finding and purchasing them, how does that translate on Amazon.com – the place where products are almost always available, easy to buy and accompanied by the most impersonal of transactions? 

Think of this as my Faulkneresque SWOT analysis on everything that could happen when luxury brands choose to sell on Amazon.

• Customer acquisition cost (CAC): As CAC continues to rise for brands and ecommerce merchants, in part due to new limits put on Facebook and other social media channel advertising, brands of all kinds - including luxury names - are looking frantically for new ways to find and acquire new customers, but also to beat margin squeeze on their current advertising channels. Brands like Elie Saab seem to be using Amazon as a pure-play customer acquisition channel—being that they list products on Amazon but according to their products’ Buy Boxes, they’re still handling the fulfillment themselves.
  
  Ostensibly this model makes sense, considering that 85% of brands that sell on Amazon do it mainly for customer acquisition. Or as our own Head of Corporate Communications Jay B Sauceda put it: “You can either give 15% to Amazon, or blow 15% on CAC on FB/IG/Google. Might as well be everywhere.”
  
  
• Fulfillment and delivery: It’s well known (and established in the popularity of Prime memberships) that fast, reliable fulfillment is one of the main reasons shoppers look to Amazon. The behemoth’s worldwide infrastructure and lightning-fast delivery time is something every brand aspires to – but likely does not have the footprint or resources to achieve. Outsourcing fulfillment to Amazon is a quick win for luxury brands who want to simplify operations and cut fulfillment spending … but at what cost?
  
  For example, Fulfillment by Amazon (FBA) is a surefire way for brands to “take a load off” when it comes to picking, packing, shipping and delivery—but how might that end-user experience suffer when luxury brands leave their once uber-personalized operations in the hands of a retail behemoth? Can luxury brands really trust that the brand experience from storefront to doorfront will ooze the fabulousness their customers are expecting?
  
  
• Brand experience: This IMO is the most important thing to consider when sending your brand into the jungle. How much of what makes a brand unique is lost when customers purchase directly on Amazon? We talked about how FBA might possibly dilute the brand experience above, but there are other risk factors to be aware of.
  
  There will obviously be a loss of control as product listings and photos are uploaded according to Amazon’s content requirements and restrictions. And while the luxury storefronts within Amazon feel more elevated than your standard product search, they’re still not as customized, personalized or extravagant as a luxury ecommerce site. Plus, when shoppers purchase from Amazon versus a brand’s website, the ensuing communications, follow-ups and tracking will also flow from Amazon – so I wouldn’t necessarily expect any cutesy branded emails or notifications to roll in post-purchase.
  

• Revenue: When a luxury brand (or any brand for that matter) lowers CAC, ensures fast, smooth delivery and simplifies selling operations, it’s a given that sales volume should increase. But the luxury market is not a volume game; if anything, it’s the exact opposite. When luxury products become ubiquitous (real or dupes), they lose value and become less desirable. Think Tommy Hilfiger in the late 90s.
  
  To further illustrate the point: Remember that Burberry burned ​​£90m in excess inventory from 2013-2018 in an effort to protect the brand’s rarity and authenticity. Rather than those goods be sold at a discount price or flood the market with more inventory, the brand chose to destroy millions of dollars in bags, clothes and perfume. Luxury revenue is not, and has never been explicitly tied to volume. This is a clear conflict of interest for Amazon sellers.
  
  
• Imminent threats: Lookit. I’m not saying Amazon is evil or out to get growing brands. In fact, Bezos’s baby has given brands and merchants more opportunity than ever to reach new audiences, simplify operations and sell to more people worldwide. That said, there are ecommerce conspiracy theorists (and a few ex-Amazonians) who believe that marketplaces like Amazon may use their merchants’ listings to create product dupes of their own—undermining their own merchants to steal market share and offer similar products at a lower price.
  
  Even if Amazon is totally innocent on this front, don’t discount the ambition of other copycat merchants to capitalize on your product listings, photos and content to design dupes of their own.

Luxe online: If you build it, will they actually come?

My take: I don’t see Amazon as a long-term selling platform for luxury. The truly brand-obsessed and status-seeking buyers of personal luxury goods aren’t going to be happy when their rare breeds are plastered all over Amazon. 

Plus, it seems to me that the type of person who spends $9,000 on a dress isn’t the type of person who would do so without a glass of champagne in hand and a little ass-kissing to go along with it (or maybe that’s just me). 

And with 82% of shoppers citing price as the number one factor for shopping on Amazon, converting existing customers to buy such extravagant items with no personalized experience is an exercise in futility. Bottom line, when it comes to luxury goods, Amazon shoppers simply are not your people. 

In (2020) hindsight, the luxury market’s rush to Amazon feels more reactionary than strategic; a somewhat desperate overcorrection that may save on costs like CAC and simplify fulfillment, but is more likely to dilute branding, kill the high-end customer experience and threaten everything that makes luxury brands so desirable to begin with.