EcommerceBytes-NewsFlash, Number 3085 - June 12, 2013     2 of 4

Amazon to Re-Launch Beauty Category and Offer Luxe Brands

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Amazon will re-launch its beauty category this year and is going after the "prestige" beauty products from high-end designers, according to Forbes.

The magazine points out that department stores don't put upscale beauty and cosmetic products on sale "save for a few event-driven promotions a year," and it is expecting Amazon to have a disruptive effect on the industry.

While Amazon carries drugstore brands, the small amount of designer brands for sale on its marketplace are generally offered by third-party sellers, according to Forbes, and are never sourced directly from the brands.

Prestige brands are facing a dilemma that many manufacturers and brands across most industries have faced. Keeping their products off of Amazon will give them control over pricing, distribution and brand image, and will keep their existing distribution channels happy; but making their products available on Amazon increases their reach by an enormous factor, and most brands (and retailers) ultimately can't resist Amazon's draw.

Brands already see price erosion through online marketplaces such as eBay and Amazon. Chanel, for example, sells a 3.4 oz bottle of its No. 5 perfume on its own website for $130. On Amazon, you can find it selling from third-party sellers from between $104.95 - $129.99.

If Amazon can promise luxe brands price parity with their own sites and retail channels, brands may see it as a win, betting the Amazon shopper would rather source from Amazon directly rather than third-party sellers. And brands may even be able to pressure Amazon to prohibit the sale of their products from third-party sellers.

Interestingly, Amazon considers many beauty items "hazardous" - including perfume - and bans merchants from selling them through its FBA fulfillment service as part of its ban on hazardous materials going to its warehouses. It's likely working on processes in its distribution centers to accommodate the types of products a relaunched beauty category entails.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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