Why Birkenstock Is Kissing Amazon Goodbye

Iconic sandal label Birkenstock is fed up with Amazon. The German shoe company, founded over 240 years ago, is sick of fake versions of its shoes being sold on the online retailer’s site.

As of Jan. 1, 2017, Birkenstock USA will no longer sell its products on Amazon. And the company will no longer authorize any third-party sellers to sell its products on Amazon either. The decision to stop selling through the online retailer came after “extensive discussions and years of deliberations,” David Kahn, CEO of Birkenstock Americas, wrote in a memo obtained by CNBC. The company simply concluded the partnership is no longer worth it. Birkenstock is the first major brand to announce it will completely stop selling on the U.S. version of Amazon.

“The Amazon marketplace, which operates as an 'open market,' creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” Kahn wrote. He went on to describe the problems Birkenstock encountered with Amazon, which include:

• Postings by sellers proven to include counterfeited Birkenstock products.


• A constant stream of unauthorized and unidentifiable sellers that display a “blatant disregard” for Birkenstock’s pricing policies.

While Birkenstock is the first company to pull its products from Amazon, it is not the only company to experience problems with the site. “It’s well-documented that Chinese manufacturers have been knocking off popular products and selling them for a fraction of the cost on Amazon,” Vocativ reported. And as CNBC's Ari Levy put it, “It's a problem that's exploded since Chinese merchants started flooding the site in the last couple of years.”

CNBC has published multiple reports on Amazon and counterfeiters. One report, published last month, features the creator of BedBand, a product that keeps fitted bed sheets in place. Jamie Whaley, a licensed nurse, began selling her product on Amazon, and within three years her annual sales reached $700,000. BedBand ended up in the top 200 products in Amazon’s home and kitchen category in 2013. Fast forward to the middle of last year, and revenue fell by half, forcing Whaley to lay off eight of her employees. The reason is that cheaper-priced Chinese knockoffs began to flood the site. Amazon still accounts for 90 percent of Whaley’s profit, but she is making efforts to partner with other retailers and drive traffic to her website. “She's lost all trust in Amazon,” CNBC's Levy wrote.

Amazon's anti-counterfeiting policy claims that customers “can always buy with confidence” on its site. It also states that products sold on Amazon “must be authentic” and the sale of counterfeit products “is strictly prohibited.” However, the responsibility is on the seller to “source and sell only authentic products.” Tell that to the guy in China selling fake versions of BedBand.

Amazon makes a lot of money from its sellers. In a letter to shareholders, Amazon CEO Jeff Bezos said over 70,000 entrepreneurs with sales of over $100,000 a year sell their products on the site. Amazon is “great for sellers,” Bezos continued. But clearly it's not great for all sellers, as Birkenstock’s recent announcement proves.

Image credit: Flickr/Freedom II Andres