Birkenstock Brand Walks Away from Amazon due to Surge in Counterfeits — Will Other Brands Follow?

Footwear brand Birkenstock announced that starting January 1, it would no longer directly sell products on Amazon due to growing numbers of counterfeit items found on the online marketplace. In addition, Birkenstock USA will bar authorized resellers from selling items on Amazon’s marketplace.

In a letter to Amazon, Birkenstock USA’s CEO David Kahan wrote the following:

“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand. Policing this activity internally and in partnership with Amazon.com has proven impossible,”

“So, buyer beware.”

Birkenstock is not the only brand to struggle with maintaining brand equity/identity on Amazon. Part of the problem is that Amazon often mixes inventory from different marketplace sellers at distribution centers. With this system, counterfeit products and genuine products sit side by side. This helps to optimize fulfillment, but opens the door for vendors selling fraudulent products to “back door” them to customer’s hands. According to CNBC, this is a problem that’s exploded since Chinese merchants started flooding the site over the past few years.

It appears from Kahan’s letter, that Birkenstock USA’s attempts to work with Amazon to alleviate counterfeiting issues have fallen on deaf ears. Amazon has a solution for retailers to provide an isolated environment for its products, but it requires brands like Birkenstock to provide Amazon with their entire catalog of items. For Amazon it plays into their desire to be a one-stop shop for everything, but it’s a turn off for brands like Birkenstock.

For Birkenstock it means relinquishing control, and it’s a move that many brands do not want to make. It seems that if Amazon doesn’t make changes to current policies, Birkenstock could be the first in a line of brands to pull their products from Amazon.

More so, specialty brands that do not currently sell on Amazon are likely to be turned away from the marketplace, unwilling to relinquish the level of control Amazon demands to protect their products from counterfeiters and uninterested in competing against an onslaught of fake products.

Realistically, specialty and luxury brands will always want to maintain a level of control over their brand identity that just can’t exist on Amazon. This is the reason why I believe that a future where Amazon is a monolithic market place where “everyone” buys “everything” just isn’t realistic.

-Sandeep

@sbhanote

Follow Radius8 on LinkedIn and Twitter @Radius8

www.radius8.com

Originally published at www.linkedin.com.

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