Is Amazon Losing The Battle Of Brand Vs. Bland?

Written by Evan Schuman and Fred J. Aun
April 1st, 2009

Striving to maintain a unique brand in a sea of bland, some manufacturers are foregoing the revenue potential of selling to huge, generic E-Commerce sites such as Amazon, EBay and Overstock and are sticking to more specialized retailers with more perceived ambiance and character.

There has been a trend this year of retailers—scared for their survival in a massive economic mess—questioning their Internet/E-Commerce investments and whether their dollars wouldn’t be spent better elsewhere. The best example is likely Borders, but Canadian Tire, Sears and even Circuit City—in its last days—also provide good evidence of the trend.

But other retailers are re-evaluating their E-Commerce strategy and are not necessarily pulling back. Many are questioning the impact on their brand strategy—let alone their channel strategy—of having a high percentage of their product sold by huge E-Commerce sites that sell hundreds of thousands of other—often unrelated—products. Amazon, EBay and Overstock are probably the three most well-known generic e-tailers, but it’s a very long list.

Cloud B, a maker of fancy sleep products for children, is a good example of a specialty manufacturer who has opted to make such a change and pull its products away from Amazon. That wasn’t an easy decision, given that Amazon’s sales have accounted for about 10 percent of all of Cloud B’s revenue. Nevertheless, for some manufacturers who believe their main competitive strength is their brand, selling to mammoth “vanilla” sites equates to sacrificing long-term success for short-term gain.

In announcing the pull-out, Cloud B said it wanted to “stay true” to its business philosophies by supporting smaller retail partners as they struggle through the recession. However, Cloud B President and CEO Nader Hamda said there are other drawbacks to dealing with Amazon when you are a specialty manufacturer with a brand built on exclusivity.

“We are a higher-end brand and going down the Amazon route wasn’t in synergy with our brand positioning,” Hamda said. “During a company’s evolution, you get to a crossroad where you decide whether you’re going to play with the big angel or opt for slow, steady growth. It’s a very scary decision. Often, you are looking at immediate gains (by selling to Amazon) and you almost can’t walk away.”

Cloud B, in business for six years, sells its products in about 3,000 specialty stores nationwide and 23 countries worldwide, Hamda said. Not all its sellers are small; Cloud B merchandise is sold by Nordstrom, Harrods, Bloomingdales and other big, but “fine,” retailers. It sold through Amazon for about a year.


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