Industry Paul Sherratt The AmazonEffect


Paul Sherratt of Solutions for Sport looks at the impact of Amazon on the UK sports trade and how brands are trying to manage third party selling


to feature a curved arrow leading from A to Z, representing that they carry every product from A to Z, and a sporting goods category had been added. Today in the UK, approximately 40% of all


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ecommerce traffic is to amazon.co.uk, the number of product lines offered run into the millions and last year’s UK sales alone were £3.3bn. It is no surprise then that this global retailer has become a force to be reckoned with within sports ecommerce and for many sports brands it now features as a major customer. Despite this fact however, many sports brands


are now amending their terms and conditions to prevent retailers selling on the Amazon platform. To understand the reasons why, we need to


first understand the two ways in which products can be sold on Amazon:


1. Wholesale Brands simply sell in the traditional way to


Amazon who take stock and fulfil from their own warehouses.


2. Amazon marketplace Marketplace was launched in the UK in 2002


to allow customers to buy and sell new, used and collectable items on the same page that Amazon sells the item new. This side-by-side placement dramatically


expanded the selections available to customers and gave retailers the chance to compete directly with the products that are sold and fulfilled by Amazon by buying and selling and fulfilling the order themselves.


It is the evolution of Amazon


n 1995 an online bookseller called Amazon.com launched in the USA. By the year 2000 the logo type had been changed


It is the evolution of Amazon Marketplace that


has now driven brands to consider their third party seller terms and conditions as this direct competition has led to an increasing number of problems:


1. Retail Price Point Erosion To attract customers away from buying the


product listed by Amazon, many retailers listing alongside this product have adopted a discount policy. Aſter all, with the consumer faced with a


choice of either buying direct from Amazon with, more oſten than not, free shipping and seller trust or buying from a third party seller on Marketplace, many consumers opt for the Amazon option. However if the product(s) are discounted then


this provides the consumer with an incentive to purchase through Marketplace. Clearly this free market model provides a


supply and demand-based price structure and ensures that the consumer gets the best deal. However, behind Amazon’s general and


Marketplace offers lies sophisticated soſtware that tracks customer purchases and automatically revises Amazon prices to be competitive with those selling products through Marketplace. As the sports retailers selling through


Marketplace reduce their prices so Amazon reduce their prices to match- the result is spiralling retail price points- something that brands, in whatever industry, are not keen on.


2. Poor product/brand representation Whilst the Amazon website is extremely efficient at selling products, it is less impressive regarding brand and product information. The limited page structures do


Marketplace that has now driven brands to consider their third party seller terms and conditions as this direct competition has led to an increasing number of problems


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not allow exhaustive product descriptions, brand imagery or any type of rich media such as embedded product videos. To create the best user


experience, the brands need to agree additional marketing investment with Amazon to


create A+ content and improve these areas. Retailers listing on Marketplace are not able to


create A+ content and thus many brands prefer to remove them from this sales channel and take control directly with Amazon to improve brand and product message.


3. Multiple ASINs Each product that is listed on Amazon is given an ASIN number (Amazon Standard Identification Number). If, for example, a brand sells direct to Amazon,


then the ASIN is created by Amazon for product x and the brand can ensure that all product images, descriptions and A+ content etc is correct. However if a retailer selling through


Marketplace creates an ASIN for product x (something which should not happen but does), then there is no guarantee that any of this information is correct or on brand message. Again- another reason to prevent retailers


selling through this platform. As we enter 2015 and brands launch their new


price lists, more and more retailers will find them being accompanied by new terms & conditions. If you have built an online business selling


through third party sites such as Amazon or eBay then this is a direct threat to your sports retail business and you need to consider these changes within the context of your future business strategy. The brands are fighting hard to take control and Amazon are fighting hard to improve the consumer experience by removing multiple ASINs and/or products that are incorrectly represented. The biggest challenge for any brand


introducing terms and conditions of this nature will be the policing of such a strategy. However this topic is here to stay and as more and more brands introduce these changes, new and improved automated policing methods will soon follow. Who knows how these strategies will evolve,


but who’d have thought that an online bookshop would cause such issues in the UK sports trade!


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