By Ruth Simon
As Amazon.com Inc. tightens its grip on retail sales, a growing
number of brands are pushing back by championing local
retailers.
Some manufacturers are enforcing minimum advertised prices to
make it harder for online sellers to undercut local merchants,
while others give local stores first dibs on new products or funnel
customers from their own websites to local outlets.
"The pendulum has swung," said Rich Tauer, president of Quality
Bicycle Products, a Bloomington, Minn., bicycle wholesaler that
won't sell to Amazon. The company's sales representatives push
brands that support local retailers by restricting advertised
prices and enforcing restrictions on where products are being
sold.
Nearly 90% of U.S. consumers selected Amazon as the online
retail site they use most, according to RBC Capital Markets, which
estimates the Seattle giant controls roughly 20% of U.S. online
retail sales.
Amazon says more than half of the items sold on its site come
from small businesses and entrepreneurs. "Amazon helps small
businesses increase sales and reach new customers by providing
access to more than 300 million customers world-wide," a spokesman
said.
While many brands sell directly to Amazon or through third
parties, some worry about tying their fortunes too closely to one
customer and fear that online price wars will damage their
image.
Here are some of the strategies brands are using to help local
merchants strengthen their hand:
Luxottica: Restricting advertised prices
Luxottica Group SpA last year launched a minimum advertised
pricing program that restricts the price at which its Ray-Ban and
Oakley sunglasses can be advertised. Like other MAP programs,
Luxottica's policy doesn't set the actual sales price.
"It was a race to the bottom that was not sustainable
long-term," said Fabrizio Uguzzoni, president of Luxottica's North
American wholesale division.
The average discount on Ray-Ban sunglasses on Amazon has shrunk
to about 3% as of this month from 37% in April 2016, according to
Luxottica. The sunglass maker has shut down several thousand
accounts that didn't agree with or refused to follow the new
policy, Mr. Uguzzoni said.
Luxottica employs about 30 staffers who focus on MAP enforcement
and crack down on the gray market. An outside company monitors
thousands of websites and several thousand product listings
daily.
Online sales to third parties in North America fell by 60% after
the MAP program took effect, but a company survey conducted in
October found that the opticians and optometrists who account for
most sales welcomed the new plan. "Our independents tend to
discount as little as they can," Mr. Uguzzoni said.
UPPAbaby: Sending out the tuneup team
Free stroller tuneups are one way UPPAbaby, a Hingham,
Mass.-based maker of baby strollers and car seats, draws customers
back to local retailers carrying its products after they buy one of
its strollers, which cost up to $900.
Tadpole, a children's store in Boston, has hosted two tuneup
clinics this year, with more than 90 UPPAbaby customers receiving
an appointment.
The events are not only a selling point -- they also bring in
customers who bought their strollers elsewhere, including some "who
may not even have known about us," said Tadpole co-owner David
Hauck.
The events also provide the manufacturer with feedback market
researchers might miss. When customers complained they didn't know
how to change the harness strap, engineers redesigned a piece.
UPPAbaby also gives first dibs to local retailers when it rolls
out a new stroller model -- sometimes a six-month head start. "We
never launch a new product with Amazon," said UPPAbaby vice
president of sales Joanne Apothéloz.
Brooks: Using computers to fight back
Running gear maker Brooks is testing a new app that uses an iPad
connected to a treadmill to help local retailers determine which
Brooks shoe best suits a runner's biomechanics.
Brooks will help key retailers cover the $960 cost, said Rick
Wilhelm, a vice president of sales for Brooks, a unit of Berkshire
Hathaway Inc. The setup "allows stores to be the center of
communication," he said.
In April, Brooks launched a website that lets stores order
products they don't have in stock -- and then drop-ship them
directly to customers' homes. The system reduces the likelihood
that a retailer will take the time to fit a customer with the
perfect shoe, but then lose the sale to an online competitor.
"There's no way local stores can carry all five colors of our
best-selling shoes," said Mr. Wilhelm. The new site gives them "the
long tail of the web."
Brooks is one of roughly 120 brands that have also teamed up
with Locally, a startup that lets shoppers check a brand's website
for an item and then find out which stores in their neighborhood
have it in stock and reserve for in-store pick up and, in some
cases, local delivery.
Thule: Putting an online catalog in retailers' hands
Local retailers typically don't have enough shelf space to carry
all the bulky cargo containers, bicycle racks and luggage that
Thule Group makes.
So the Sweden-based company has started providing stores with
tablets that act as a digital catalog, said Schuyler Horton, a vice
president of sales. A dozen U.S. stores are now piloting the $500
tablets, paid for by Thule.
Thule doesn't sell its products directly on its website.
Instead, it funnels the orders it gets to about 70 local retailers,
with the help of software provider Kibo.
"It's a total meritocracy," said Mr. Horton. Retailers, he said,
win the online order "not by being aggressive on price. They win
the order by being able to confirm they have exactly what the
consumer is looking for" and being closest to the customer's
location.
Orb: Letting stores donate unsold inventory
When toy maker Orb unveiled PlushCraft, a line of no-sew fabric
craft kits in 2013, the feedback from local retailers was quick and
pointed. Customers wanted cats, not birds, they said. And Orb was
limiting sales by packaging the kits in pink boxes, rather than in
a more gender-neutral color such as purple.
"We get really valuable information from them that you can't get
from focus groups," said Stephanie Carver, marketing manager for
Orb, which is based in Nova Scotia, Canada.
Orb has a program designed to encourage local retailers to try
out new products without worrying they might be saddled with excess
inventory. At the end of each quarter, local stores can donate
slow-selling items to a favorite charity. Orb then replaces the
donated goods with new items selected by the retailer at no extra
charge.
Arc'teryx: Using e-commerce data to help local merchants
When Arc'Teryx, an outdoor sports apparel maker, holds
promotions at one of 17 company-owned stores in North America, it
brings in local retailers. For a November event in New York City,
employees from nearby Paragon Sports Co. waxed skis and directed
customers to Paragon for other services and for products Arc'Teryx,
a unit of Amer Sports Corp., doesn't carry.
Arc'Teryx salespeople also use e-commerce sales data to help
merchants determine which styles of clothing, shoes and backpacks
are best sellers in their local market.
Simms Fishing: Creating a store within a store
If Simms Fishing Products had its way, the company's waders and
other fishing gear would never show up on Amazon's website. The
Bozeman, Mont., company doesn't sell directly to Amazon, and its
dealer policy specifically prohibits sales on third-party
platforms.
Older items like the Windstopper Transit Jacket sometimes pop up
on Amazon, but "we do everything we can to ferret out those leaks,"
said Mike Moore, Simms's vice president of global sales.
Simms employees visit local independent retailers and use
computer-assisted design software to create customized Simms shops
within each store.
The updated floor plans include custom fixtures and racks that
make it easier to display bulky waders by hanging them
accordion-style.
So far, 28 stores have undergone the upgrades, paid for by
Simms.
Write to Ruth Simon at ruth.simon@wsj.com
(END) Dow Jones Newswires
August 07, 2017 07:14 ET (11:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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