“If Nike is absent from the Amazon channel, it risks its customers losing interest and its prospects just not ‘seeing’ the brand. And resellers and ‘gray’ product distort the brand image and customer experience.”
Oddly, it really started with WalMart but now continues with Amazon leading the way.
Once upon a time, product manufacturers (‘Brands’) were king of the hill. Selection was limited, prices fixed and retail was small and widely dispersed. Manufacturer profits were large and retailers much less so. The rise of WalMart (and some similar companies) changed this. Massive purchasing power, equally massive distribution and massive retail presence changed the balance. Manufacturers/Brands ‘suddenly’ needed specific retailers like WalMart (and Target and Macy’s, etc.) because they had locked up the consumer (or most of them).
It became a virtuous circle for WalMart. Low margin brought lower prices which brought consumers to the store. Consumers drove sales and volume, profits followed. Negotiations with manufacturers (or new knock off manufacturers) gained even lower costs for WalMart which brought lower prices which brought even more consumers… and on and on.
Manufacturers had only poor choices, continue to sell to declining traditional retailers, get into retail directly, or get with the WalMart program. And if you didn’t get with the WalMart program, another manufacturer would replace you. And likely permanently replace you in the WalMart channel…[read the full article at www.forbes.com]