Amazon Product Managers Struggle To Move Upscale

Amazon wants to be the place where people go for luxury
Amazon wants to be the place where people go for luxury
Image Credit: Ron Mader

There is no question that Amazon is a successful company. If you were a product manager who worked at Amazon you would be under a great deal of pressure to find ways for the company to make more money. One way that they would like to bring in more revenue is to start to sell high end products. It turns out that this is harder than it may have originally looked to them…

The Cost Of Luxury

The Amazon product managers are on the hunt. They want to find ways to change their product development definition so that they can attract high end goods manufactures to start to sell their products on Amazon. Oscar de la Renta was willing to do this. The fashion house this fall began selling a $2,000 black lace cocktail dress on Amazon. However, the problem that the Amazon product managers have run into is that few others have followed them. In all honesty, Amazon is off to a slow start in its efforts to woo luxury goods onto its website. Since creating a special section on its mobile app to house high-end fashions, the e-commerce giant has been able to attract just a handful of big brands.

This is not the first time Amazon has tried to add designer wares to its sprawling and fast-growing website. Luxury brands such as Louis Vuitton and Gucci have steered clear of Amazon in the past. The reason that they don’t want to sell their goods on Amazon is because they believe that Amazon does an insufficient job of policing unauthorized sellers and counterfeit goods. Additionally, they believe that Amazon does not give brands control over what is sold and at what price. Amazon’s newest offering, which is called Luxury Stores, addresses some of those seller concerns. It is an invitation-only service for select members of Amazon Prime, a service which has 150 million global subscribers. The designers get to pick which products to sell and can control the pricing. There are no product reviews or links to third-party sellers. Items are displayed with 360-degree views and motion graphics.

The good news for Amazon’s product managers is that both customers and partners have responded positively to Luxury Stores. Luxury brands have started to replenish inventory and expand their selection. Other fashion houses have contacted Amazon to express interest since Luxury Stores launched. If the Amazon product managers can make this work, then they’ll have something to add to their product manager resume. One fashion house that is still not satisfied with how Amazon is running things is LVMH Moët Hennessy Louis Vuitton SE, the French luxury conglomerate behind Dior, Bulgari and Givenchy. The company has rejected Amazon’s proposal to join its Luxury Stores. The reason that they are unwilling is because they have their own e-commerce operations and they don’t want their brands to be associated with Amazon.

Next Steps In Moving Up

So what’s going on in the world of luxury brands right now? Big luxury brands are in the process of moving to take back control of their e-commerce business, cutting back the inventory retailed by third-party sellers rather than their own e-commerce platforms. Oscar de la Renta sold fragrances on Amazon before Luxury Stores launched. Online wholesale and direct-to-consumer sales account for about 5% of their business. This makes them reliant on luxury department stores like Neiman Marcus and boutiques that were temporarily closed by the coronavirus pandemic. Oscar de la Renta’s sales fell 85% when the pandemic struck.

Opening up a shop on Luxury Stores is a way to increase digital sales and introduce the brand to more customers. The ability for customers to discover the Oscar de la Renta brand is one of the most important things about their partnership with Amazon. Although it dominates the U.S. e-commerce market, Amazon has had a mixed record with luxury fashion and apparel brands. It sells Kate Spade handbags and Levi’s jeans, but a two-year partnership that they had with Nike Inc. unraveled in late 2019. The sportswear maker was disappointed that Amazon didn’t eliminate counterfeits and give the brand more control over its listings.

Amazon says it cracks down on counterfeits. It has used its technology to block 2.5 million suspect accounts and has stopped more than 6 billion suspected bad listings before they appeared on its platform. The initial slate of brands in Luxury Stores is small and the service can be accessed only through the main Amazon app, which is a disadvantage. The reason that the luxury brands don’t like this is because they don’t want to be next to a bunch of brands that aren’t relevant. Luxury Stores gives consumers more choice and brands a new way to connect with them. The Amazon product managers understand that it’s very much a test-and-learn relationship between the luxury brands and Amazon.

What All Of This Means For You

Working as a product manager at a successful firm can be a great job to have. However, you need to realize that you will always be under a great deal of pressure. Your company will always be looking to have you use your product manager job description to find new ways to create products that will bring in more revenue for the company. Given this, you can start to imagine the immense pressure that the product managers at Amazon must always be under. The good news is that they think that they may have found a way to generate more income for the company: luxury goods.

The Amazon product managers have been able to convince some luxury goods makers to sell their products on Amazon’s web site. However, the few firms that have agreed to do this have not lead to a surge in luxury firms joining them. The Amazon product managers are making another attempt to attract luxury goods manufactures. They have created a new portion of their website that they are calling Luxury Stores. Only limited customers will be permitted to shop this portion of the site and luxury goods will be the only products offered. This new offering has been a success, but not with luxury brands that already have online stores. More and more luxury brands want to find ways to control their online sales. They are also concerned that other vendors who use Amazon to sell their goods may be selling counterfeit versions of their products. The Amazon product managers understand that they are going to have to take the time to grow their relationship with the luxury brands.

The good news is that the Amazon product managers have already proved that they can sell goods online. Their next challenge is going to be trying to get luxury brands to trust them to sell their goods. In the past the luxury goods never needed Amazon. However, as the world has changed and more and more customers are now buying goods online, Amazon may be just what these vendors need. This is going to be a relationship that will need to be carefully developed by both sides. However, if done well, Amazon may become the place where we go to purchase our high priced goods!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What could Amazon do to reduce the number of counterfeit goods being sold on their site?

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