Amazon to Brands: Work With Us Or We'll F*ck With You
Part of our series with L2on 23 October, 2015 at 11:10
A winner this week: Beats, the audio brand founded by rapper Dr. Dre. Beats is involved in a flurry of press regarding its sports sponsorships, which have helped the brand generate a YouTube following of almost half a million subscribers — more than sports-centric brands Nike and Under Armour combined.
How do you spell denial? LVMH. The brand boasts a zero-engagement policy with Amazon, but its products are more popular on the retailer than nearly every other Prestige Beauty enterprise. This means the brand is seeing its profit margins erode to third-party merchants — a fate shared by other Beauty brands that refuse to work with Amazon.
Alibaba is frequently compared to Amazon, but it actually bears more similarity to eBay. The brand’s less capital-intensive business model also makes it easier to expand than Amazon, and it performs better in its home market, with 80% market share in China compared to Amazon’s 30% in the U.S.
However, Amazon is a winner compared with Walmart, which it recently surpassed in value. The four Walmart heirs recently saw $11 billion of their net worth evaporate last week as shares plunged on low projected earnings. But don’t cry them a river: the group still controls more wealth than the bottom 40% of American households.