The success of Amazon’s Prime Day has always come from the many discounts and promotions it offers on a wide range of products. But the same thing that made Prime Day a $ 12 billion per day of sales because the company exacerbates everything that made luxury brands hesitate to sell on the platform.
Brands like Lutz Morris and Louis Vuitton have told Glossy or other publications that selling on Amazon would devalue their brand and associate it too strongly with the mundane and cheap products that Amazon is known for. Amazon’s solution launched in September 2020 Luxury Stores, a separate storefront intended to isolate luxury brands from others on Amazon and provide their buyers with a higher experience.
Now, luxury store brands are also getting discounts on Prime Day, which ran from June 21 to June 22. Products from brands such as Mark Cross, Aquazzura and Rodarte have received significant discounts on the platform, with some selling for 40% of their total price. A selection of products from eight of the 35 brands of the Luxury Stores platform benefited from discounts. Brands that are on promotion declined to comment for this story.
Amazon never promised that there wouldn’t be any promotions in luxury stores, and certainly brands were involved in determining which product would go on sale. But according to Elaine Kwon, a former Amazon employee and current director of e-commerce company Kwontified, it goes against the spirit of what luxury stores were meant to be.
âThey didn’t promise that they wouldn’t make sales, but there was some kind of understanding that they would protect the brand,â Kwon said. “But it’s clear that this priority clashed with the other priority of wanting to increase sales for Prime Day, and the latter won.”
According to Amazon, the luxury store sale, which was labeled as a summer sale, was separate from Prime Day, and participating brands were responsible for what was on sale and at what price. Amazon declined to say whether luxury stores would see more sales in the future or whether the summer sales would be repeated next year.
Kwon said, in his opinion, that luxury stores probably haven’t taken off as quickly as Amazon had hoped. It was launched with a single brand, Oscar de la Renta. An Amazon spokesperson told Glossy in March 2021 that each brand had increased the size of its inventory since joining the platform. But the platform has yet to win over a big luxury brand – neither Kering or LVMH is on board.
“There hasn’t been a ton of customer traction [on Luxury Stores]”Kwon said.” There is supply, though. Brands keep coming up with new products. But it hasn’t taken off.
Kwon also said the discounts on luxury stores will likely impact other luxury retailers. Several brands offering discounted products on Amazon, such as Rodarte, offered the same items at discounted prices on their own direct channels. These products, however, are not on sale at other retailers, including Net-a-Porter and Farfetch, Kwon said.
For example, a floral sweatshirt from Rodarte costs $ 520 on Amazon and the Rodarte online store, but over $ 700 on Shopbop. While luxury stores don’t have as much of a luxury penetration as many other retailers, Amazon’s pricing structure could put pressure on competitors and steal market share.
Ultimately, Kwon said, the future success of luxury stores depends on how much Amazon is willing to invest in them. It also depends on how tolerant brands will remain part of the Amazon ecosystem and all that that entails.