May 31, 2019
This month’s HFN magazine shares a letter that I wrote to the editor. In the letter, I encourage the industry to team up and push back against Amazon and big online entities in order to ensure our long-term survival. I welcome your feedback on it.
Fifty-four percent of people looking for a product go directly to Amazon.com, shared a front page story in this week’s Wall St. Journal. This 54 percent is not good for nearly anyone in our industry. Amazon takes a 30 percent cut of the sale and keeps all the customer’s contact information (email, telephone number, address). If you’re a retailer, you can’t operate a successful business giving away 30 percent of your 50 percent cut of a retail sale.
If you’re a brand, over the last few years you were probably relishing in selling direct, cutting out the rep commission, and getting 100 percent of the sale. Well, now Amazon is your new retailer and rep and it’s going to take 30 percent and make you work for it. Amazon puts about nine ads for competing products on your page on Amazon. In this way, you have to constantly keep prices low and manage your page in order to not lose a sale. And you have to buy ads from Amazon. Amazon has you competing in a death match with your competitors. And who wins? The king who watches: Amazon.
I’d highly recommend collaborating with other members of the industry to protect your business and livelihood now before it’s too late.
For those of you out there who still think old retail is alive and doing fine, please keep in mind that Neiman Marcus has $5 billion in debt and may go bankrupt. Traditional retailers have too much debt and showed up to the war with horses. Amazon has tanks and momentum. What happens when the current trend continues and 75 percent of shoppers start on Amazon? It’s time for the Allies to team up.
One hundred percent of our livelihoods depend on what we get that 54 percent to do next.