Earlier this week investment analyst Robinson Humphrey of SunTrust made what I am sure he thought was a bold prediction. He projected that that by 2022 Amazon’s private brand business would reach revenues of $25. SunTrust analyst Youssef Squali went on to say that the growth of private brand at Amazon could send shares up more than 21% over the next year. As a result, he increased his stock price target from $1,900 to $2,000.
“As strong an eCommerce platform as Amazon has become over the last 20 years, we believe that the best has yet to come,” Squali wrote in a note on Monday (June 4). “Private label is one of the highly underappreciated trends within Amazon, in our view, which over time should give the company a strong … competitive advantage.”
Regarding clothing and footwear on Amazon, the eCommerce retailer’s private brands are the fourth most purchased brand, “with only Nike, Under Armour and Hanes ranking higher,” Squali wrote in a note. Overall, the bank projected that private brand sales could bring in $7.5 billion in sales on the company’s site this year.
I always find it intriguing to listen to analyst prognostications, over the last few years Amazon has dramatically expanded its private brand portfolio across dozens of categories and now includes everything from Kindles to cheap Amazon Basics phone cables to cute LArk & Ro dresses. Many estimates push the brand count of the portfolio well above 70 brands.
I will be shocked if it takes Amazon 4 to 5 years to reach $25 billion in private brand sales. The goal has to be bigger let’s say $50 billion annual sales in 5 years; it’s a significant number and Amazon has the potential.