Outdoor Insight

The Amazon Factor Nine things every brand and retailer needs to know. s /UTDOOR )NSIGHT s *ULY OUTDOORINSIGHTMAGCOM W hen it comes to Amazon and its effect on vendors and retailers in the outdoor industry, there is nowhere to hide. The best bet is to learn as much as you can about how the Seattle-based behemoth operates. Amazon, whose U.S. sales grew more than 33 percent in 2017 to nearly $120.5 billion, is the biggest force in the changing retail land- scape. But while some retailers and vendors only see the escalating threats that Amazon founder and CEO Jeff Bezos' beast brings to their more traditional retail businesses and brands, others see Amazon's power and platform as an opportunity to supplement the reach and revenues of their own labels beyond traditional brick-and-mortar, their own doors and e-commerce sites. Until last year when Nike announced a test partnership with Amazon and was projected to generate $300-$500 million in revenue from the alliance, brands largely shied away from talking publicly about their Amazon relation- ships for fear of alienating their longtime, traditional retail partners. But that "damned if you do, damned if you don't" attitude is slowly beginning to erode, driven largely by necessity. The vast U.S. product pipeline to traditional retail has shrunk in recent years due to bankruptcies and door closures. Forced to not only maintain but grow their sales volumes, some brands have re-engineered their growth strategies and begun to embrace Amazon as a legitimate sales avenue. For the most part, they are doing this smartly by only making certain SKUs or collections available and being adamant that Amazon must eradi- cate the sale of any counterfeit or grey market products on its platform. At the same time, traditional retailers have tightened their SKU bases (Dick's eliminated 20 percent of its mix last year), further developed their own private label collections and started exploring new ways to improve the experiential experience for shoppers. Here, we examine and breakdown nine issues related to Amazon that every brand and retailer needs to know. 1. Working With Amazon as a Partner Outdoor brands and retailers, cognizant of the reality of Amazon and the need to satisfy their traditional specialty customers, are developing a conduit between the two. At the Outdoor Gear Exchange, for example, the Burlington, VT, specialist has a dedicated staff focused on facilitating sales through Amazon. OGE purchases and manages inventory from 10 key outdoor brands, among them Mammut, Osprey, Sea to Summit and Darn Tough, and ships items to Amazon warehouses throughout the U.S. for fulfillment via FBA (Fulfilled by Amazon) accounts. More of these specialty retailers to Amazon relationships, particularly among smaller brands, will likely emerge in the months ahead. 2. The Marketplace The Marketplace is where third-party ven- dors use the company's platform to sell their new or used merchandise. Third-party sales accounted for 31 percent of Amazon's total 2016 revenues and the percentage figures to rise in the coming years. Orders are fulfilled by the merchant or Amazon. If the latter option is chosen, Amazon collects a "referral fee" on each sale, plus additional fees for picking and packing the order. In the clothing and accessories area, which includes outerwear and athletic RETAIL

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