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In 2017, the European Court of Justice (ECJ) announced that Coty, the US beauty group, did not violate competition laws by banning a German retailer from selling Coty products on Amazon.de, the German Amazon website. In Europe, luxury products can only sell their products to those “stores that maintain their luxury image,” reported the Financial Times. The ECJ calls this “selective distribution”.

Regarding the Coty case, the Financial Times noted that the main problem was: does easier access to luxury goods change a brand’s image of luxury? In other words, does selling on Amazon diminish a brand’s luxury? The ECJ said “yes”.

The French branding expert Jean-Noël Kapferer writes extensively about luxury. He defines the traditional concept of luxury as something exclusive and rare. For Professeur Kapferer, a luxury brand in the classic sense is “an insignificant, desirable item that is expensive or difficult to get”.

At the same time, Professeur Kapferer describes an alternative luxury concept that brand owners could consider: Luxury can be both exclusive and widespread. This means that a luxury brand can still be perceived as a luxury brand even if it is no longer exclusively distributed. Brands can successfully keep the promise of wide availability and exclusivity.

Amazon: Covered

Amazon now has a trading center for comfortable couture. Amazon launches a solution that takes advantage of the decline in in-store luxury items while maximizing the increase in online luxury spending. Amazon brings available luxury to life.

Coronavirus has turned many luxury brands upside down as their unique, essential in-store experiences were negated by store closings. The contraction is so severe that the Boston Consulting Group (BCG) predicts it will be 2023 or 2024 before the luxury goods industry recovers.

On the other hand, online luxury sales are skyrocketing. Bloomberg and Financial Times both reported on research by consulting firm Bain & Co. showing how the pandemic is accelerating online luxury sales. In 2019, 12% of luxury sales were online. By 2025, Bain & Co. will record almost a third of luxury sales online.

With this extraordinary online shopping opportunity, it is not surprising that Amazon is entering the online luxury market with its luxury stores.

Luxury stores made their debut on September 15, 2020. It is an invitation-only website for select Amazon Prime customers. There is currently a limited range of brands to choose from – Oscar De La Renta, Roland Mouret, La Perla, Clé de Peau, and Altuzarra – but the benefits of Amazon’s luxury stores are seen as vital to revitalizing an industry that is tremendously financial and emotional Load has hit. Analysts believe the way Amazon is handling the new luxury mall will attract more high-quality, exclusive brands.

Amazon’s press releases state that the Luxury Stores app will create “a new shopping experience”. There’s the convenience of Amazon, of course, and the large audience of buyers (there are just over 142 million US Prime members: even if the invitations go to 1% of Prime US members, luxury buyers will increase by 1,420,000 people ), but there is also Amazon’s innovative technology. According to WWD, there is View 360 °, “… an interactive feature that allows customers to explore styles in 360-degree detail to better visualize the fit – making shopping for luxury easier and more appealing.”

To address luxury brands’ concerns about counterfeit products on Amazon, Luxury Stores, WWD explained, “… is a shiny, sealed-off environment – away from auto accessories and fridges and freezers – where Amazon can celebrate the fabulousness of fashion, where It can create brand stories and seduce Prime customers who may not have thought of buying luxury in the past. “WWD added,” Amazon offers the look and feel of a direct-to-consumer website backed by its delivery muscle – the US warehouses, air freight fleet and same day service. Logistics is a major draw for high-end brands, all of whom know how impatient their customers can be. “Amazon is building its own luxury warehouse in Arizona.

Amazon: more friend than foe?

With the luxury groups Kering and LVMH rejecting Amazon’s luxury foray, the Luxury Stores app from Amazon luxury brands offers some very special and much-needed benefits.

FirstThere’s Amazon’s relentless customer focus and Amazon’s continued emphasis on continuously improving the customer experience, backed by groundbreaking technology and customer feedback.

SecondAmazon will provide “clean data” to its luxury brands – shopping behavior, conversion rates, and how many “non-fashion” prime members buy luxury items. This data can be used for cross-selling within the app.

thirdAmazon intends to leave inventory, selection, and pricing decisions to luxury brands. In contrast to the requirements of department stores, brands can design their “shop” exactly as they want without having to adapt to a specific appearance. Luxury brands are in control of what goods they sell.

FourthAccording to Amazon PR, Amazon will provide merchandising tools to “… create and personalize content for each brand’s unique voice”.

Roland Mouret, one of the luxury brand designers at Amazon, told WWD that he believed Amazon was “… the next frontier” for luxury fashion. “It feels so right. It’s part of the fashion industry’s reset. “The CEO of Roland Mouret said:” Amazon offers a unique partnership and business model that is supported by state-of-the-art technology and breathtaking logistics. They are uniquely positioned to connect the dots between e-commerce and entertainment in the luxury industry. “

Professeur Kapferer believes that in order for some luxury brands to survive in an expanding, ever-connected world, they need to figure out how to maintain their high quality aura while being available to many around the world. Amazon makes this idea feasible. Luxury brands will have their own exclusive interactive experiences while Amazon is available.

The luxury brands avoiding Amazon’s luxury stores need to recognize that optimizing Amazon and Luxury takes into account the desires of consumers who do not want to trade off luxury and lightness. Customers who want luxury without waiting.

As the debate continues over a luxury brand’s ability to remain exclusive and available everywhere – with stalwarts believing that luxury cannot be both exclusive and available because too much notoriety gets luxury out of a product or service – Amazon is driving this solution for luxury shopping. Those who view the future of luxury as a “rare rarity” see Amazon as the answer to a previously impossible puzzle.

If a brand can change the nature of a shopping experience, it is Amazon. A luxury industry manager said, “Never underestimate Amazon. We keep a watchful eye. “

Contribution to Branding Strategy Insider by: Larry Light, CEO of Arcature

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