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Is Amazon Losing The Battle Of Brand Vs. Bland?

April 1st, 2009

The decision to use Amazon didn’t have an immediate impact on Cloud B’s relationships with its other retailers, but Hamda said “people started to be a little bit confused as to where the brand really was in terms of the market.” He said selling through Amazon seemed to send a “mixed message where, all of a sudden, we’re selling into a mass-marketplace.”

He noted Cloud B items can’t be found at many big-box brick-and-mortar stores. “If we were to sell to Wal-Mart, that would be a disconnect for the brand,” Hamda said. “But Amazon and a lot of click-and-mortars are in this gray area of brand positioning, which is kind of nice for a lot of manufacturers that want to leverage that and get revenue without completely compromising the integrity of their brand.”

In other words, Cloud B could have stuck it out with Amazon. Unlike a move to Wal-Mart or Target, its brand would not have been completely diminished. But Hamda said the nail in the Amazon coffin was pricing. “The problem with the Web is it exposes everybody’s price points right there for everybody to see,” said the CEO.

“We ended up spending 10 percent to 15 percent of our salesforce’s time continuing to police all the retailers on Amazon alone to make sure price-matching didn’t get out of hand and all of a sudden our products were being sold just above wholesale,” Hamda said. “It’s just part of the Internet.”

Hamda said withdrawing from Amazon will immediately erase eight- to 10 percent of Cloud B’s revenue, but he believes it will be worthwhile in the long-run. “We needed to better understand how we could better serve all our retail customers where it’s not always about lower price but it’s about dealing with the best companies with best distribution channels and the best customers and the best market reach,” Hamda said.


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Why Did Gonzales Hackers Like European Cards So Much Better?

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