Will other brands follow Birkenstock in cutting off Amazon?
Birkenstock will no longer sell on Amazon.com, nor with third-party merchants that do business on the site, beginning Jan. 1. The reason given was a rampant increase in counterfeits and overall unauthorized selling on the website.
“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” David Kahan, Birkenstock USA’s CEO, wrote in an e-mail to the shoe manufacturer’s retail accounts. The letter called out “postings by sellers proven to have counterfeit Birkenstock products” as well as “a constant stream of unidentifiable unauthorized sellers” that show a “blatant disregard” for pricing policies.
Mr. Kahan added, “Policing this activity internally and in partnership with Amazon.com has proven impossible.”
Birkenstock has lately seen more counterfeits at a time when the brand’s sandals are undergoing a resurgence.
Amazon has also been facing more counterfeit complaints with much of the problems traced to third-party sellers. More than 40 percent of unit sales on the site are sold through Amazon Marketplace.
An article on CNBC.com in early August said the rise in complaints is the result of Amazon targeting Chinese manufacturers. But part of the problem is also that fake products often find their way into the Fulfillment by Amazon program, thereby legitimizing them. Amazon often bundles inventories at fulfillment centers, sometimes leading to counterfeit items from one merchant being sold by another. Fake reviews also support counterfeit sales.
Birkenstock’s policy is also aimed at legitimate sellers using Amazon’s third-selling marketplace to violate MAP (minimum advertised price) policies.
“We realize that many of our best brick and mortar retail partners play by the rules and have found incremental sales as third party sellers. We are appreciative of the way you ‘play the game’ and of the responsible support you have given to the brand,” wrote Mr. Kagan to retail accounts. “However, Amazon has made it clear that the only way to achieve a ‘clean’ environment (no counterfeits and no unauthorized sellers), is to sell our complete product offering to Amazon directly. We believe this decision does not align with the long-term health of our brand or your business objectives.”
- Birkenstock CEO: No More Amazon – Women’s Wear Daily (sub. required)
- Birkenstock will pull its shoes from Amazon over counterfeit sellers – Mashable
- Chinese counterfeit problem is getting worse – CNBC
- Birkenstock quits Amazon in US after counterfeit surge – CNBC
DISCUSSION QUESTIONS: Is Birkenstock making the right move by cutting its ties with Amazon.com? Do the counterfeits and unauthorized sellers on Amazon point to a fundamental weakness in its third-party marketplace model?