August 17, 2019
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Birkenstock CEO accuses Amazon of ‘modern day piracy’

Mike Segar | REUTERS
Mike Segar | REUTERS
Amazon boxes are stacked for delivery

The CEO of Birkenstock USA has emerged as an unlikely crusader in a growing battle between smaller retailers and ever-expanding giant

His message to shop owners: Don’t even think about selling our shoes to Amazon.

In a blistering five-page email obtained by The Washington Post, David Kahan last week derided the online behemoth for contacting shop owners and offering to buy their products at full price.

Birkenstock stopped selling its shoes on Amazon earlier this year, citing a rise in counterfeit products and unauthorized sellers.

Amazon, in an attempt to grow even bigger, has recently ramped up its efforts to stock its site with third-party goods. In past weeks the company has contacted tens of thousands of U.S. retailers, asking them to join its Fulfillment by Amazon program, which is already established in Europe. Among the merchants it contacted were shoe stores that sell only Birkenstocks. (Jeffrey Bezos, the founder and chief executive of Amazon, owns The Washington Post.)

Kahan called the entreaty a “desperate act” and a “PERSONAL AFFRONT.”

“Birkenstock does NOT sell [to] Amazon,” he wrote in the email to its retail partners. “And it is clear that they are seeking back-channel means by which to obtain our brand.”

He emphasized that the German shoemaker prohibits shop owners from selling, distributing or shipping its products to resellers.

“I will state clearly, any authorized retailer who may do this for even a single pair will be closed FOREVER,” Kahan wrote. “I repeat, FOREVER.”

Kahan added that he is considering legal action against for “knowingly encouraging a breach of our policy.”

A spokeswoman for Amazon said the company buys products from third-party businesses to offer customers “a wider selection of great brands,” and that those sellers can opt out at any time. She declined to comment on Kahan’s complaint.

“In our mission to be Earth’s most customer-centric company, Amazon strives to provide our customers with the largest selection, at the lowest price, and with the fastest delivery,” the spokeswoman said in an email.

But Kahan says allowing unauthorized retailers – in this case, Amazon – to sell the company’s iconic cork-and-leather sandals could tarnish its brand and reputation. Also at risk, he says, is the ability of companies to control how – and where – their products are sold.

“This is modern day piracy on the high seas,” Kahan said in an interview. “This is a middle finger to all brands, not just Birkenstock.”

For years, Amazon was one of the country’s largest sellers of Birkenstocks. But about a year ago, Kahan announced he would be ending the partnership, after deeming that Amazon wasn’t doing enough to guard against fakes.

He announced his decision in an email, which was obtained by CNBC.

“BUYER BEWARE,” he wrote in the letter. “The Amazon marketplace creates an environment where we experience unacceptable business practices which we believe jeopardize our brand.”

Whether to do business with the online behemoth has become a fraught question for retailers big and small. Last week, Sears announced it would begin selling its Kenmore appliances directly on Amazon, following in the footsteps of others like Nike, Samsung, Microsoft and Bose.

But Amazon’s partnerships haven’t always been successful. In 2009, the company agreed to pay $51 million to settle a five-year battle with Toys R Us after the toy company accused Amazon of breaking their contract by allowing other companies to sell toys, games and baby items on the site. Amazon countersued Toys R Us, alleging “chronic failure” to keep products in stock.

More than half – 55 percent – of Americans now begin their online shopping trips on Amazon, according to a survey commissioned by BloomReach, a marketing research firm. Even if shoppers don’t begin their search on the site, they often end up there, with roughly 90 percent of consumers checking Amazon before they make a purchase, the survey found.

The owner of a North Carolina chain that specializes in Birkenstock shoes said he has been contacted by Amazon multiple times with solicitation offers. He declined to give his name, for fear of retaliation.

“Through the years, they’ve always tried to get our business,” he said. “But I never paid much attention. It’s just not something I’m going to do.”

For his part, Kahan says he has expressed his displeasure to Amazon. (He added that he is not anti-Amazon and that he’s not trying to pick a fight.)

Birkenstock, which was founded in Germany in 1774, didn’t arrive in the United States until nearly two centuries later. The company’s signature two-strap sandals quickly caught on during the counter-culture movement of the 1960s and 1970s, becoming synonymous with hippie fashion.

The brand has enjoyed a resurgance in recent years. Earlier this month, Vogue magazine compared the company’s shoes to kale: “Neither glamorous nor exotic – no asparagus, no quinoa – yet it makes people feel good, almost virtuous.”

At Martin’s Family Shoes in Gettysburg, Pennsylvania, owner John Fidler says sales of Birkenstocks are up about 20 percent this year, which he attributes at least partly to the company’s split with Amazon. He was encouraged, he said, to receive Kahan’s “ticked off” email last week.

“It was great that somebody finally put Amazon in its place,” he said. “I don’t see any reason to sell there.”


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