At diginomica, as part of our ongoing retail digital transformation coverage, we’ve highlighted the challenge that retailers face when it comes to their response to Amazon.
Some have panicked and decided their best bet is a desperate bid to shed their stores and ‘become’ Amazon - spoiler: it isn’t!. Others, typically at the luxury end of the market, are in denial about the shift of their business model to online. And some have pragmatically decided that the best policy is one of co-existence and have struck varying levels of distribution relationships with Amazon.
What’s about to happen in a few weeks time will put the co-existence model to a new test as US furnishing and homestyle retailer Williams Sonoma challenges Amazon on a number of fronts relating to trademarks of its goods.
Back in December last year, Williams Sonoma accused Amazon of “trading upon WSI’s goodwill and infringing WSI’s intellectual property” by advertising goods on Amazon.com as “by Williams-Sonoma” and “fulfilled by Amazon.” The firm says that it has had complaints from customers who thought that they were buying from Williams Sonoma rather than Amazon.
The company also accuses Amazon of a “systematic campaign” of copying patented designs from Williams Sonoma’s West Elm furniture arm, citing as an example Amazon’s own brand Rivet Modern Upholstered Orb Office Chair, which it says is a steal from West Elm’s Orb dining chair. The suit alleges:
It is implausible Amazon could have conceived of a product line with nearly identical product designs which feature product names containing the very same non-descriptive terms WSI uses in connection with those products, other than by intentionally undertaking to copy WSI’s West Elm product line and appropriate the trademarks WSI uses in connection with that line.
Why does it matter? For Williams Sonoma, it matters because the firm’s own e-commerce operation now accounts for 54% of total revenues and is set to rise further with current growth rates of 10;8%. In fact, the firm is now one of the top 25 internet retailers in the US and as such isn’t keen on customers buying its own goods via a third party, let along cheaper (alleged) copycat products.
The case is still active and in dispute, so it’s not something that Williams Sonoma CEO Laura Alber is discussing. But with the offline and online aspects of the business now so balance and inter-dependent on one another, to the extent that the firm doesn’t plan to break out offline/online numbers in the future, the direction of travel is clear:
As the brand is predominantly digitally driven, we are focused on improving conversion on site, prioritizing enhancements and content search and check out, all with a mobile first mindset…We will continue to drive a higher penetration of the digital business, our most profitable channel, including the expansion of our e-commerce-only offerings with more product breadth across tabletop and food.
We’ll also be more aggressive in monetizing Williams-Sonoma’s extensive repository of food, cooking and decorating content through subscription-based services. In the next year, we will be operating curated bundles of recipes including those exclusively developed by our test kitchen as a paid service on our website as well as on our soon to be relaunched Williams-Sonoma recipe app.
She adds that there will be an increased emphasis on “content-led digital storytelling at every touch point in the customer journey” to bolster e-commerce growth:
We will continue to strive for e-commerce excellence and market share gains through more relevant and friction free experiences. We will implement machine learning driven merchandising, search and site recommendations and introduce personalized connected customer journeys across digital touch points. To better leverage our multi-channel platform, we are focused on delivering the ultimate omni-channel convenience through improved order predictability and transparency and the continued expansion of our omni-channel fulfilment capabilities.
Underpinning the success of these growth initiatives is of course customer experience. Over the next few years, our technology strategy will be centered upon improving the customer experience across the supply chain, e-commerce and stores. We will leverage emerging technology to transform the supply chain including machine learning, optimization of the logistics network and robotics and automation to reduce our reliance on labor.
In addition to technology innovation, our supply chain is critical to the customer experience. In our industry today, no one is delivering furniture as successfully as they should be. And while we know that we've made substantial progress, we have a lot more opportunities to improve customer experience.
Meanwhile the offline stores will continue to play an important role. With furniture shopping in particular, the ability to look and feel will inevitably remain an important part of the buying cycle. So while there will be consolidation of the real estate, the further pulling together of offline and online - in both directions - will be a priority. Alber says:
In Williams Sonoma Home, we are choosing to consolidate out of some of the stores and remove the footprints so we can make a better impact than others.We tried a lot of things last year. We tried in a lot of markets…we’ve already taken out some and we're going take out some more and then really expand it in others based on where the market is. At the same time, online we can drive a lot of customer acquisition through our digital efforts.
This court case is about the inevitable tension between the biggest online retailer of them all and how other brands deal with a behemoth that is potentially a good partner and equally a ruthless competitor.
It’s not the first time that third parties have accused Amazon of pushing counterfeit products sold on its marketplace by independent sellers - or at the very least, not doing enough to take action to stop such activities.
But the accusation that Amazon’s own private label goods are open to allegations of ‘rip off product’ is going to be an equally troubling one for many retailers, particularly as Amazon moves into more and more sectors with its own offerings.
The best approach for a lot of retailers will be to try and create a complementary relationship with Amazon.That’s not going to be an easy ask if said retailers think they are likely to find knock-off versions of their own designs and products with an Amazon private label on them.
This is going to be an important court case to keep an eye on for more than just Williams Sonoma.