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Amazon: Private Brand in the Crossfire

Last week the Wall Street Journal published the story \”Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products.\” The investigative piece shockingly revealed Amazon follows standard retail practices when they develop their private brands and products.

The story began last year when Amazon and its private brands faced increased regulatory scrutiny from both the European Union and the United States. In mid-July, the EU began investigating whether the retailer uses data from independent sellers to gain an unfair advantage. Then in late September, 2019 EU Competition Commissioner Margrethe Vestager announced that her department had launched an initial investigation into the matter. \”The question here is about the data,\” she said. \”Do you then also use this data to do your own calculations, as to what is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things?\”

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Concurrently the United States Federal Trade Commission began interviewing small businesses that sell products on Amazon as part of a preliminary antitrust investigation. Former Presidential candidate Elizabeth Warren continues to question Amazons\’ private brand and data strategies.

Amazon\’s private brand annual sales account for $1 billion. According to an Amazon spokesperson, \”Private label products are a common retail practice, and Amazon\’s private label products are only about 1% of our total sales. This is far less than other retailers, many of whom have private label products that represent 25% or more of their sales,\” 

Amazon\’s retail chief Jeff Wilke defended the retailer from charges that it unfairly competes during their re:MARS conference in Las Vegas, \”Most of our competitors have a much larger percentage of their sales in private label.\”

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The Amazon private brand portfolio currently features iconic electronics brands Kindle, Fire and Echo, their traditional private labels AmazonBasics, Amazon Elements, and Amazon Essentials. As well as more than 120 other brands in virtually every category Pinzon, Solimo, Good Threads, Daily Rituals, Lark & Ro, Presto, Wickedly Prime, Happy Belly, Mamma Bear, etc.

My Thoughts

An attack on private brand at Amazon is an attack on private brand everywhere. Amazon is leveraging tried and true retail and private brand practices to create their own brands and products.

For the last 100+years, retailers around the world have created private labels and their corresponding products with one strategy in mind – national brand equivalence. Whether it was Carrefour, Tesco, Kroger, Woolworths, or 7-Eleven retailers have perfected the art of fast following and grown traditional private labels incrementally.

Times have changed, and the internet, new generations of customers, and mobile devices are all changing the way we live work and shop. They are also changing the way retailers approach private brand adding new unique and differentiated brands and products to their portfolios.

Whether you love or hate Amazon, this debate is a battle for private brand itself.