People who wear the Birkenstock brand of cork-and-leather sandals have a reputation for being laid-back — hardly the type to pick a fight. But for the past several years, executives at the German-based footwear company have been anything but chill when it comes to Amazon. In 2017, after years of partnership, Birkenstock Americas announced it would stop selling on the site because too many counterfeit versions of its shoes were being sold by Amazon’s third-party sellers. In Birkenstock’s view, Amazon wasn’t doing enough to prevent counterfeiting.
“Policing this activity internally and in partnership with Amazon.com has proven impossible,” Birkenstock said in a statement, calling the platform “an environment where we experience unacceptable business practices that hurt our brand.” A few months later, when the company learned that Amazon was reaching out to its authorized resellers to convince them to sell Birkenstock shoes on the site — a direct violation of the reseller agreement — Birkenstock Americas CEO David Kahan fired off an email to all the company’s sales partners. “Any authorized retailer who [sells Amazon] even a single pair will be closed FOREVER,” he wrote. Later, in an interview, Kahan framed the situation this way: “This is modern-day piracy,” he said. “This is a middle finger to all brands, not just Birkenstock.”
Amazon is the most visited e-commerce platform in the United States, with nearly 3 billion visits a month, 200 million global Amazon Prime members, and about $400 billion in annual revenue. Amazon ships products to more than 130 countries, and it is the dominant online retailer in 28 countries. Roughly two-thirds of U.S. consumers start their product search on Amazon. Its fulfillment speed and service quality are trusted and loved by consumers. All these factors make Amazon an essential — and to some brands, a seemingly mandatory — place for companies to, as the saying goes, “meet the customers where they are.” As former Gap CEO Art Peck put it, “To not be considering [selling on] Amazon…would be, in my view, delusional.”
Yet brands face real challenges when selling on the platform — from competing products, third-party sellers, and even from Amazon itself. Additionally, Amazon’s growing advertising business (in which it charges fees for premium positioning in search results, as well as for advertisements on its music and streaming video services and other outlets) has significantly reduced sellers’ margins on the platform. And in an era when companies use customer data to cross-sell, improve existing products, and find ideas for new innovations, Amazon’s walled garden and strict constraints on sharing customer data limit brands’ ability to learn about — and from — their customers.
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