September 28, 2020

All You Need to Know About Amazon's Private Label Brands

By Kevin Lamb / Amazon

Amazon isn’t just an ecommerce marketplace: it owns over 100 private label brands that operate in dozens of markets on its site, including food and beverage, automotive, clothing, and electronics.

Amazon’s products are billed as high quality items and listed at some of the lowest prices online, but while that may be great news for consumers looking to save a dime, it’s made Amazon the subject of intense scrutiny and concerns by third-party sellers.

 

Amazon currently has 146 private label brands, selling over 7,200 products that compete with normal 3P merchant products. 

 

A brief history of Amazon’s private label brands

Amazon introduced its first in-house brand AmazonBasics (which sells everyday household goods) ten years ago. Only in the past three years, however, has the company ramped up its focus on private label creation—in 2017, there were just 30 private label brands in operation on the site.

Some of Amazon’s brands are easily recognizable, like Echo or Kindle, but most aren’t as easy to spot. Amazon has listed about two dozen of their brands on their “Our Brands” page, and many of their product listings are labeled with “Amazon Brand” in the name or description so it’s easy to identify them. That said, details about all of Amazon’s private labels are fairly limited.

Why Amazon’s brands concern third-party merchants

While Amazon claims its private label products make up about 1% of its total sales, its sales in specific categories have grown rapidly. According to Numerator, brands selling in Amazon’s core consumer packaged goods (CPG) category—household, grocery, baby, pet, beauty, and health products—saw an 81% growth in the 2017 to 2018 time period. AmazonBasics has seen major growth.

As of April 2020, the label had been growing at a steady 47% year over year for the past 12 months. Indeed, in Jeff Bezos’ July 29th hearing with Congress, he shared the following statistics about Amazon Private Label Brands. While these brands make up less than 1% in the category, MarketplacePulse reported, they make up to 9% of sales (in clothing).

Amazon Private Label Brands Percentage of Total Listings | Pattern Amazon Private Label Brands Percentage of Total Sales | Pattern Screenshots from MarketplacePulse

Of course, this is nothing when compared to big-box retailers like JC Penney or Macy’s, who project that their private label clothing brands make up anything between 70% and 25% of clothing sales, respectively.

However, Amazon’s increase in sales has come with an increase in seller unease. According to our 2019 marketplace survey we conducted among ecommerce executives, Amazon’s private label brands are a top concern—73% of survey respondents say they are concerned with Amazon’s private label products competing with their own, and 57% of those indicated that they are very concerned. Sellers aren’t the only ones concerned—Elizabeth Warren called out Amazon last April for “tilting the online marketplace in its own favor” by selling private label brands.

Last August, The Washington Post found Amazon had featured several of its branded products as “similar items to consider” when customers clicked to add an item of higher cost to their cart (e.g. AmazonBasics batteries were offered to shoppers looking for Energizer batteries).

At the start of 2020, Amazon appeared to be quietly removing similar features that could raise concerns about anti-competitive behavior, but there is still cause for concern. Between April 2018 and April 2020, the number of AmazonBasics best-seller products alone jumped from 660 to over 1,300, with AmazonBasics eating up prime real estate in certain search results pages.

Recent controversy from Amazon's private brands

Amazon has been the subject of several antitrust investigations in the past year. Historically, they’ve denied using sellers’ data to unfairly skew the market in their favor, but in a recent Congressional hearing, chief executive Jeff Bezos testified that he could not confirm Amazon didn’t use data it collects about products sales in its marketplace to launch its own private-label goods.

“What I can tell you is we have a policy against using seller-specific data to aid our private-label business,” Bezos said. “But I can’t guarantee you that policy has never been violated.”

In the hearing, Bezos was questioned about a seller who claimed Amazon created an identical product to their own and sold it at a far lower price, causing their sales to plummet overnight. It isn’t the first time Amazon’s been accused of copycat behavior that causes brands to CRaP out.

In November 2019, Allbirds co-CEO Joey Zwillinger called out Amazon for selling shoes under its 206 Collective label that look exactly like Allbirds’ Wool Runner shoes. The listing price for Amazon’s copycat product was $45, half the price of Allbirds’ shoes.

How your brand can compete with private label brands

If you’re a third-party merchant selling product on Amazon, you may feel intimidated by the prospect of competing with Amazon. The good news is there are several practices that can help.

Unlike national brands, most of Amazon’s brands have had limited exposure on their site. They also don’t have the same brand recognition other companies do, which means customers are generally less likely to trust them over another brand they’ve heard of or had good experiences with. Sharing your brand’s story and nurturing customer trust by providing exceptional customer service and high quality products is how your brand can stand out above other private labels.

“Loyalty to your brand comes from putting out the best product you can for your customers and providing great customer care,” said Pattern Senior Brand Manager Juliana Hacken.

Exceptional customer service creates a chain reaction that can lead customers to leave positive reviews and push your content to areas on Amazon where it has greater visibility.

Another thing you can do is create new variations of the products you’re already selling with their own ASIN. One example is making your product part of a bundle so it’s different from similar products Amazon may sell.

In addition to these tips, utilizing SEO practices that drive outside web traffic to your products and providing product listings that are easy to understand and engaging can help your brand compete.

Pattern’s ecommerce experts can help you create a strategy to compete against Amazon’s private label brands. Contact us through the form below to learn more.

Editor’s note: This article has been updated from an earlier December 2019 version of the same title to include the most recent information.

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