Getty Images


Sears donned an Amazon halo Thursday when it announced that it will sell Kenmore products through Amazon.com including ones controlled by Alexa, Amazon’s voice-controlled assistant.

Shares of Sears (ticker: SHLD) jumped over 10% to nearly $9.60. That looks like an overreaction, according to Susquehanna Financial Group analyst and Sears bear Bill Dreher.

He sees shares headed to $4 after the excitement wanes.
 
Dreher cites three reasons: First, a comparison of Amazon (AMZN) and Sears.com suggests Sears is listing relatively few of its Kenmore products for sale on Amazon. Second, there are “horrible customer reviews and write ups of Kenmore products and service” on Amazon, writes Dreher. Third, Thursday’s jump might have been amplified by the fact that more than half of Sears shares available for trading had been sold short. 
 
On point two, Dreher might overstate the case, at least for now. A quick search for Kenmore products on Amazon shows that some are rated poorly, others are rated well, and most, so far, are scarcely rated.

ConsumerSearch.com, which amalgamates reviews from third-party sources, recently had kind things to say about a Kenmore washing machine, vacuum cleaner, portable dishwasher and window-mounted air conditioner. Some of the brand’s products are reportedly made by companies it would seem to compete against, like Whirlpool (WHR) and LG Electronics (066570.Korea).
 
Positive customer perception is important for Sears if it hopes to one day sell the Kenmore brand, the way it sold Craftsman tools this year to Stanley Black & Decker (SWK). Dreher writes that Sears, which hasn’t turned a profit since 2010, will need about $1.2 billion more in liquidity from outside sources this year and $1.4 billion next year to remain a going concern. He views the Amazon announcement as an admission that online investments for Sears aren’t working, and a sign the company is preparing the brand for sale.
 
If Sears is indeed eyeing a future Kenmore sale, more positive reviews on Amazon would surely help. Then again, those reviews could be a double-edged sword. In the near term, they’re excellent for business; one academic study, slated for publication in the Journal of Financial Economics, finds that among companies that sell on Amazon, glowing reviews are linked with handsome subsequent stock returns.
 
But longer term, Amazon “has conspired with about a billion consumers and technology to destroy brands,” as New York University Professor Scott Galloway put it in a recent lecture. In his view, brands serve as a shorthand for product quality, and companies invest richly to build the perception of their brands in order to boost pricing power and profits. But Amazon’s review system is a potentially better shorthand for quality, which has allowed the company to “start sucking the margin away from brands,” according to Galloway.
 
Good news for shoppers, perhaps—but worrisome for the long-term fate of Sears.