Birkenstock USA is fed up with Amazon.
In a recent letter to Birkenstock’s retailer partners, chief executive David Kahan wrote that the Amazon marketplace creates an environment where it experiences “unacceptable business practices” that “jeopardize the brand.”
Thus, Kahan said that Birkenstock would no longer authorize the sale of any Birkenstock products on Amazon.com, starting Jan. 1, 2017. This includes not supplying products directly to Amazon, not authorizing any third-party sellers and not selling to Amazon through a third party.
Birkenstock did not immediately respond to a request for comment, but the letter was posted on the Scribd.com platform and was written about earlier by CNBC. In it, the ceo specifically called out “postings by sellers proven to have counterfeit Birkenstock products.” It also named “a constant stream of unidentifiable unauthorized sellers” that show a “blatant disregard” for pricing policies.
Amazon pricing is rather complicated, as it is known to use algorithms to change the price of a single item multiple times a day. Slightly less than half of the products sold on Amazon are from third-party sellers, and Amazon’s wholesale inventory is generally discounted more steeply than the same products sold by third-party sellers.
Kahan said policing this activity internally and in partnership with Amazon.com had proven to be impossible. He also said that when he joined Birkenstock three years ago, Amazon direct was one of the Novato, Calif., company’s largest accounts, and that he had presented proposals and “out-of-the-box” ideas to Amazon to maintain a fair and competitive environment that was mutually beneficial.
“Unfortunately, after extensive discussions and years of deliberations,” he said, “we have concluded that this goal is simply not possible.”
He said Amazon has stated that the only way to achieve a situation in which there were no counterfeit products and no unauthorized sellers was to sell Birkenstock’s entire product offering to Amazon directly — a move, he said, that did not align with the company’s business objectives.
When reached, Amazon declined to comment. It did share a copy of its A-to-Z Customer Guarantee policy: “We want you to buy with confidence anytime you make a purchase on the Amazon.com web site or use Amazon Payments; that’s why we guarantee purchases from third-party sellers when payment is made via the Amazon.com web site or when you use Amazon Payments for qualified purchases on third-party web sites.”
The web giant’s counterfeit policy states that the sale of fakes, including any products that have been illegally replicated, reproduced or manufactured, is strictly prohibited. It threatens that if a seller sells counterfeit goods, Amazon may end selling privileges, destroy inventory, withhold payments and take legal action.
Birkenstock’s Kahan warns that by ending the company’s relationship with Amazon, he is leaving the marketplace to counterfeiters, fake suppliers and unauthorized sellers who might be selling stolen merchandise or products made with “questionable labor and environmental conditions.”
Counterfeit products are also a major sticking point for Amazon’s Chinese competitor, Alibaba, which earlier this month unveiled an online platform to aid in the fight against counterfeits on its sites. Alibaba has been pressured by international partners to address the amount of fake products on its platforms, and the International Anticounterfeiting Coalition suspended Alibaba’s membership in May to explore the issue broadly.
Kahan did acknowledge the potential affect this move would have on retailer partners, conceding that he allowed a long enough lead-time for third-party sellers to plan accordingly. While it’s not clear how many third-party sellers sell Birkenstocks on Amazon, it lists more than 50 as “Top Sellers.”
“We realize the potential implication on your spring 2017 purchases and the timing of this announcement gives you a full season of advance notice,” he wrote. “We appreciate your support and expect absolute compliance to this policy. We will be vigilant in handling any retail partners who choose not to comply after January 1, 2017.”