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The North Face Climbs on Mount Amazon; Others Not Ready to Ascend

By bob mcgee– July 31, 2017

The VF Corp.-owned brand, whose Americas’ revenues increased 7 percent in the first half helped by more than 40 percent second quarter growth in digital, will commence a third-party seller program with Amazon in the U.S. this fall. The North Face already has a relationship with Amazon in Europe.   “…Our digital wholesale partners are a significant part of our growth in the next five years,” Steven Rendle, President and CEO of VF Corp., told analysts last week. “Amazon is an important customer.”

The North Face’s revenue trajectory, which took a hit from last year’s U.S. retail bankruptcies, contributing to a 2 percent global sales drop in FY16, is forecast to regress to a low single-digit decline in the third quarter due to a shift in retail wholesale orders into fourth quarter. That expected scenario suggests September is a good month for the brand to begin its Amazon ascent.  

There are many advantages to VF establishing its North Face-Amazon distribution strategy as third-party (3P) versus first-party (1P) direct utilizing the ecommerce behemoth’s Vendor Central Interface. Most notably, 3P gives the brand owner slightly more command over the label’s presentation, 100-percent control over pricing and the ability to manage sales velocity. Additionally, 3P sellers can create a unified North American account on Amazon that also allows for sales to Canada and Mexico; have better control over when and what products are made available for sale on the site and know exactly how much Amazon’s commission cost (reportedly ranging from 8 to 20 percent of the selling price) will be.

“…Our digital wholesale partners are a significant part of our growth in the next five years,” Steven Rendle, President and CEO of VF Corp.

On the flip side, a large number of Amazon marketing and promotional tools such as vendor-powered coupons and headline ads, are not available to 3P sellers.

All in all, however, says consulting firm BuyBox Experts, “the number of benefits of selling as a 3P through Seller Central outweigh selling directly to Amazon Retail,” adding, “the choice of distribution is a complicated one to make—and will have ramifications across a brand’s whole distribution strategy.”  

Tim Boyle, president and CEO of Columbia Sportswear, says the company and its portfolio of brands have had a good arrangement and long-time relationship with Amazon. “(But) we don’t have a 10 percent customer, so it’s not dominating our business the way it may others. But frankly…I think there are opportunities for continued advancement at Amazon for us and for the brands that we own.”  

Yet, not all brands in the apparel and footwear space are ready for an Amazon relationship. Birkenstock continues its pushback against the giant. Birkenstock USA CEO David Kahan lashed out at Amazon through a letter to retailers obtained by the Washington Post last week, referring to the ecommerce giant’s third-party program of buying inventory from third-party retailers at full-price and reselling them without the consent of the brands that the products represent, as “pathetic.” Later, he told the newspaper that Amazon’s practice is both “modern-day piracy” and “a middle finger to all brands, not just Birkenstock.”

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