Earlier this year, news that Amazon had acquired Souq.com threw the Middle East retail scene into turmoil, for the e-commerce giant’s hunger for growth is legendary. Yet over the ensuing months, business has more or less returned to normal. As we consider how Amazon changed the face of India’s e-commerce landscape forever – despite a late entry onto the local scene – and given the many similarities seen between India and Middle East market conditions, we could well be witnessing the calm before the storm.
Late 2013, Amazon decided to step out of the mass market and launched The Luxury Beauty Store, a beauty products sales site to attract prestige brands. This site competes directly with luxury cosmetics brands and leverages the marketplace’s muscle power (e.g. free shipping for orders above 35$ and free 48h-delivery for Prime customers).
Many premium brands initially refused to join Amazon’s new site, which they perceived as a grey market and low-price channel. They hoped to continue controlling their distribution and pricing, but had to rapidly review their strategy upon realizing their products were actually widely sold on the marketplace by third-party sellers. By officially listing on the Luxury Beauty Store, many of these brands managed to better control the distribution of their products on the platform.