What Apple's Partnership With Amazon Means

Amazon is bigger than any brand, even the most valuable marque in the world. And that any enterprise that hopes to maintain or expand its primacy needs Amazon to do that.

Which is a harsh dose of reality. JL


Hilary Milnes reports in Digiday:

Even Apple sometimes needs to concede. (But) it’s not enough to simply establish first-part selling on the site, you have to do more to win Amazon, and Amazon’s customers. Apple will sell its latest product versions on Amazon. In return, Amazon won’t mess with Apple’s pricing. “Apple’s killing two birds with one stone. It struggles to control third-party vendors, so this will help rein that in. And they’re better positioning themselves from a global consumer standpoint.” If Apple needs Amazon, who doesn’t?
Even Apple sometimes needs to concede. Apple will start selling a selection of its products directly on Amazon’s site ahead of the holiday season.
Amazon announced Friday that in the coming weeks, customers in the U.S., U.K., France, Germany, Italy, Spain, Japan and India will start to see the latest versions of the iPad, iPhone and Apple Watch and Beats headphones selling on the site, with Apple as the verified seller. To protect sales of Amazon’s Echo devices, Apple’s HomePod devices won’t be included in the selection.
Already, Amazon is a certified seller of refurbished Apple products, meaning customers can buy used Macs and iPhones on the site. But Amazon shoppers up until now had to wade through a sea of third-party sellers on Amazon in the hopes of finding authentic, new Apple products, and counterfeits and knockoffs are rampant.
Now, Apple will get in front of Amazon’s loyal customer base — including its more than 100 million Prime members — while Amazon gets first-party access to Apple’s high-end, covetable electronics, an area it’s already saturated in more accessible categories like speakers, cables, e-readers and headphones.
“Apple’s killing two birds with one stone. It struggles to control third-party vendors, so this will help rein that in. And they’re better positioning themselves from a global consumer standpoint,” said Oweise Khazi, associate director at Gartner L2. “For Amazon, it helps extend its reach into pricier, more sought-after electronics.” The biggest loser in this deal is probably Best Buy, Khazi added, which can no longer say, ‘We sell the Apple products that Amazon doesn’t.’
Big-name consumer brands caving in and signing a deal with Amazon, which is notorious for not playing nice with brand partners, typically sends a shudder through the industry. If Apple needs Amazon, who doesn’t? Last year, Nike made a similarly eye-popping announcement that it would begin selling directly on Amazon’s site in an effort to quash third-party sellers, which for Nike, the number is in the tens of thousands on Amazon, according to Gartner L2 research.
But that partnership failed to do much in Nike’s favor. Despite Nike’s presence, Amazon’s algorithms staunchly favored well-reviewed and highly trafficked Nike products, which came from long-standing third-party vendors. Now, Nike has switched gears, signing a new e-commerce partnership with the more urban-minded Jet.com, and pulling back on the product assortment it puts up on Amazon.
The Nike partnership sent an industry warning: It’s not enough to simply establish first-part selling on the site — you have to do more to win Amazon, and Amazon’s customers, over. Nike, which has been pushing to drive more sales to its direct channels, didn’t send its newest or best-selling products to Amazon. Apple, instead, will sell its latest product versions on Amazon. In return, Amazon won’t mess with Apple’s pricing, said Khazi. It also is on the hook to do more to limit counterfeit products on the site, which Amazon has promised to crack down on. By the end of the year, all sellers peddling Apple products on Amazon will have to submit their products for approval by Apple in order to continue business, according to the terms of the deal.