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Amazon, the industry leader in online shopping and retail, just lost a major client.
According to Ari Levy from CNBC.com, Birkenstock will no longer supply its products to Amazon, nor will they authorize and third-party merchants to sell products on the website.
The reason for Birkenstock backing out is the fact that Amazon hasn’t been able to keep counterfeit products and unauthorized sales from being made on the online marketplace. Birkenstock believes that these issues are damaging their brand and could hurt long-term sales.
“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” Birkenstock CEO David Kahan wrote to retail partners across the United States according to CNBC. “Policing this activity internally and in partnership with Amazon.com has proven impossible.”
Birkenstock isn’t the only company that’s dealing with these kinds of issues when selling on Amazon. The open online marketplace has led to growing sales of counterfeit products, making it more and more difficult for the legitimate products to stand out, especially due to likely lower price points with the counterfeit products. These counterfeit products are also supposedly using other unethical products such as paying for positive product reviews to make their products appear more favorable than the original brands.
Although the German-based shoe company will take a hit in sales without Amazon as a distributor, it could also be a long-term problem for the online marketplace. With a major company like Birkenstock backing out, other major brands could follow suit in the near future if Amazon can’t find a way to battle with counterfeits.
Birkenstock is just the first big company to back out, so we’ll keep an eye on any others.
