Why Amazon and luxury aren’t yet happy bedfellows

Would you purchase a pair of Louboutins from the same place that you buy, let’s say, cleaning products? How about an IWC watch on the same order as a replacement iPhone cable? Or a Burberry scarf to arrive with your groceries?

Most would say no, though Amazon would hope otherwise. That’s not to say that the eCommerce giant has a renewed focus on luxury – it has largely steered clear of the sector. And while its recent partnership with All Saints – adding 'one-step' Amazon Pay functionality – is a country mile from any interpretation of haute couture, it does feel like Amazon is primed to dip its toes in the luxury pool.

But that begs the question: should luxury brands be anywhere near Amazon? Many, including Gucci owner Kering, luggage atelier Tumi, and LVMH have each explicitly said no.

In the world of luxury little is as important as protecting one’s brand – the perception of exclusivity warrants the price tag. Consider how Burberry burnt stock to stop garments falling into undesirable hands. To control brand, these firms need to control, or at least have oversight, of their supply chain from manufacture to distribution to retail.

Likewise for scarcity. The idea that one is purchasing something others cannot – not just due to its price, but also its limited availability – makes luxury items desirable. Amazon’s business has grown to be so successful due to the opposite principle: offering diverse abundance. Amazon ‘Prime Day’ where it allows its algorithm to discount a brand’s range feels a far shout from how things have worked in the past.

Brand is paramount in the world of luxury, but this still misses the point as to why most brands will never hand control to Bezos’ empire. Let’s say that you, an upstart direct-to-consumer brand with a solid product but lacking economies of scale or a distribution network, decide that selling via Amazon’s marketplace is your best option. Seems reasonable?

But part of that deal is Amazon knowing everything about your brand, commerce and customers. Amazon learns from third-party sellers to effectively compete with them by introducing products on the most profitable categories. Plainly, if you make a product that sells well, Amazon will make a knock off. This of course raises the question: does the short-term gain weigh up to the long-term threat of selling through the platform?

When firing the starting gun for basic consumer goods, Amazon is a way to scale, but you could become a victim of your own success. For luxury brands, while it is highly unlikely – though hardly unimaginable – that Amazon would attempt to replicate luxury products, questions beyond brand need to be asked as the further Amazonification of our lives progresses.

Let’s start with two facts. First: at its core Amazon is just a search engine for stuff. Second: same- or next-day prime delivery has irrefutably shifted consumer expectations regarding speed of item receipt.

In virtually all aspects of modern, digital-led life, people have grown used to instant gratification and acute personalisation. Amazon offers both. It sells everything. It reduces steps to purchase so significantly it is often barely worth travelling to a shop. For today’s consumer Amazon is perfect – hence its domination.

For luxury brands, considering these two facts matters. A person requires an outfit for an event that evening but has no time to shop – who can they rely on to ensure it arrives on time? Few but Amazon.

Luxury brands are already rethinking their supply chain processes to keep up with the shorter cycles and faster deliveries people expect while protecting their brand – just think of Farfetch.

But while Amazon may seem a silver bullet – a tempting quick fix to adapt to the twenty first century – I wouldn’t advise it just yet. It’s just my opinion, but a luxury brand moving to Amazon today would be the surest sign that it thinks it’s run out of other options.