Lush versus Amazon: a big foe can unite teams

February 25, 2014 Leave a comment

February 17, 2014 4:13 pm

Lush versus Amazon: a big foe can unite teams

By Andrew Hill

The possibility that a senior Amazon executive may find his name on a range of “non-medicated toilet preparations” has considerably brightened my week. Not that I have anything against Amazon. But Lush, the British handmade cosmetics company, does.

It has just won a London court case against the US-based internet group’s UK and Luxembourg arms for using the word “lush” to direct search engine users to cosmetics on its site, even though Amazon does not sell Lush products in Britain.

A close reading of the judgment led to the revelation that Lush had trademarked “Christopher North” – the name of Amazon.co.uk’s managing director – for a new shower gel and other products. The judge described the move as “pretty bizarre”, though he deemed it irrelevant to the case. Amazon plans to appeal against the decision. But whether the judgment sticks or not, Mr North’s name will for ever feature in the list of corporate pranks, stunts and rivalries that leaven the general dullness of books about management and motivation.

Such episodes are not always as spontaneous as they appear. It takes time to apply for a trademark, as Lush did, then mock up taglines for a shower gel that aim lame jokes at Amazon, its senior executive, and thecontroversyover the US company’s tax affairs

(“it’s not taxing to take care of your skin with this product” and so on). Similarly, BrewDog’s social media campaign to shame Diageo into an apology for trying to prevent the independent brewer winning an industry award in 2012 was carefully orchestrated. It even included a Lush-style plan for a special commemorative ale.

Both these episodes started as genuine efforts to right a wrong. But it is no coincidence that Lush’s legal team sued Amazon under the name “Cosmetic Warriors Ltd”. By identifying an “enemy”, companies can rally staff and customers.

The “Get a Mac” advertising campaigns that Apple used to run – pitting trendy Mac against doltish PC – were the polished outward expression of a rougher rivalry between Steve Jobs and Microsoft’s Bill Gates that gave staff at both companies a sense of crusading purpose. Over the years, Larry Ellison has galvanised himself and his company Oracle by attacking technology rivals, from SAP to Hewlett-Packard.

Virgin has taken on incumbents including Coca-Cola (Sir Richard Branson rolled a tank down New York’s Fifth Avenue to launch Virgin Cola) and British Airways (hescrambled an airship

emblazoned with “BA can’t get it up”, when the rival airline ran into problems erecting the BA-sponsored London Eye in 1999).

These strategies run into problems, however, when a “bit of fun” – with its obvious benefits in public relations and private motivation – turns to pettiness, or worse.

Stunts have the virtue of taking place out in the open, but research and history both show how intense competition can degenerate into skulduggery. Stealth tactics never look good when they are exposed, as Facebook discovered after word got out that it had secretly hired a PR firm to attack Google in 2011, or BA learnt after its “dirty tricks” campaign against Virgin was revealed in the 1990s.

The other obvious risk is that poking a larger competitor with a sharp stick tends to trigger a reaction.

Amazon has earned a reputation for neutralising companies that occupy niches it would like to own, from Zappos in shoe retailing, to Diapers.com, in nappies. It eventually bought both.

Lush may have won round one, but I would advise it to bank that victory – as BrewDog, which dropped its anti-Diageo beer plan, did – and return to what it does best.

As for the motivational effect of targeting a common foe, Lush may find it is not as far from Amazon as it believes. Jeff Bezos’s internet “everything store” draws its energy from mounting a challenge to the system – at first, it was just book distribution, but increasingly it has attacked the superstructure of traditional retailing. Lush is mainly energised by its founders’ desire to challenge the cosmetic manufacturing establishment.

The UK company says it may yet push its “Christopher North” line into full production. But, having made its point “about how upsetting it is to have something personal to you, used by someone else”, Lush should now leave the newly fragrant Mr North in peace.

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Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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