The Complete Guide to Amazon’s Private Label Brands

Kevin Lamb

July 2, 2021

It’s a scenario every retail shopper is familiar with: you find the name-brand product that you’ve been looking for when, to your delight, you find an almost identical store-brand product on the same aisle for a fraction of the price. If you aren’t particularly attached to the name-brand item, or if the product’s price is the most important consideration in your purchasing decision, you may choose to buy the store-brand product.

Store brand products, or private label products, are those manufactured by a third party and sold under a retailer’s name. Typically, these products are sold alongside their name-brand counterparts for a lower price. Some of the most familiar private label brands include Walmart’s Great Value brand, Target’s Mainstays brand, and Costco’s Kirkland Signature brand. Grocery store brands are among the most recognizable private labels, but department stores also make a significant number of sales on their own private brand clothing.

While private label brands aren’t new by any means—retailers have created private label products since the mid-19th century—they’re uncharted territory on online retailers and marketplaces like Amazon. This unfamiliarity makes it difficult for consumers to recognize private labels online and even more difficult for brands to compete with the low prices.

Amazon owns over 100 private label brands that operate in dozens of markets on its site, including food and beverage, automotive, clothing, and electronics. Similarly to private label brands we see in brick-and-mortar stores, Amazon brands often create products similar to name-brand best-sellers on the site and sell them for a low price.

Amazon bills its products as high-quality and lists them at some of the lowest prices online. While that may be great news for consumers looking to save a dime, it’s made Amazon the subject of intense scrutiny and concerns of both government entities and third-party sellers. If you’re a third party seller on Amazon’s site, we’re here to tell you everything you need to know about Amazon’s private label brands and how to compete with them.

 

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 brands—AmazonBasics and Pinzon, which both sell everyday household goods—in 2009. Only in the past few 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 compared to more than 100 today.

Some of Amazon’s brands are widely recognizable, like Echo or Kindle, but most aren’t as easy to spot. Amazon has listed about two dozen of their brands on its “Our Brands” page, and many of its 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 in recent years. 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 29 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 “tilt[ing] the online marketplace in its own favor” by selling private label brands.

A few months after Sen. Warren’s remarks, 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.

Amazon claimed in an October 2020 letter that an internal investigation into third-party sales data found no violations of the policy Bezos testified about a few months prior. This investigation—which only looked at two products—wasn’t enough to please the U.S. House Judiciary antitrust subcommittee, which released a report acknowledging the letter but maintaining that Amazon uses competing sellers’ third-party data to unfairly bolster its private-label business.

Despite the ongoing controversy and concern from brands, there seems to be limited legal basis for complaints against Amazon’s private labels, besides cases of copyright infringement.

It’s not unusual for retailers to use third party sales data to develop and market competing products. And while brands may be upset to see low-priced Amazon versions of their products suggested on their listing pages, this practice is similar to what we see in brick-and-mortar stores—Great Value breakfast cereals, for example, are usually placed next to their brand-name counterparts on Walmart’s shelves.

Just like is the case with other major retailers and their private labels, it’s unlikely that Amazon private label products will go away. Competing with these inexpensive products, and potentially even dealing with Amazon’s copycat versions of your products, is one of many costs of selling on Amazon. Instead of trying to make these products go away, brands should focus on their marketing and product quality so their product is still worth buying for consumers despite a slightly higher price.

How your brand can compete with private label brands

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

Since low prices are the main draw of Amazon private label products, most of Amazon’s brands have had limited exposure on their site and elsewhere on the web. The priority of private labels isn’t to win their consumers over with high-quality marketing and a strong brand story—it’s to sell the cheapest products possible to consumers who value low prices.

Because of this, Amazon products don’t have the same level of brand recognition as other companies, 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 private labels.

Marketing

In your marketing content and listing optimization, be sure to highlight the features that make your product unique from similar, cheaper private-label products. Maybe your product is made from higher-quality materials or more ethically made than its private label counterparts. Focus on the features that both set you apart from private label products and that are important to your audience. Knowing and researching your consumer base is key when creating marketing that will convince shoppers to pick your product over a more basic, cheaper version.

Gear and bag company Peak Design is a great example of such marketing. In March 2021, Peak Designs released a video that humorously outlined the differences between one of its products, the Everyday Sling, and a similar one sold by Amazon Basics of the same name.

The video—which has been viewed almost 5 million times—acknowledges the similarities between the two bags while also emphasizing its own design’s desirable features like fairly paid factory workers, carbon neutrality, a lifetime warranty, and high-quality, recycled materials.

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

Customer Service

Beyond product development and marketing, customer service can also play a role in convincing consumers to choose your brand over an Amazon brand. 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.

Product Variation

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.

Shipping and Fulfillment

It may also be helpful to research dropshipping vs. FBA when it comes to your shipping model. It’s becoming increasingly difficult to compete with Amazon’s fast shipping times, and for many sellers, FBA may be the best choice. Your brand will be more equipped to compete with Amazon’s private label products if you can ship products just as quickly and reliably as products sold by Amazon.

In addition to the fast shipping benefits, fulfilling your product orders with FBA can help give your brand more credibility and exposure than it would receive otherwise, especially since using FBA qualifies your products for Amazon Prime.

Ready to take on the competition? Pattern’s ecommerce experts can help you create a strategy to compete against Amazon’s private label brands. Get in touch today to learn more.

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6 Executive Trading Problems on Amazon and How to Avoid Them - blog header
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6 Executive Trading Problems on Amazon and How to Avoid Them

At Pattern, we are constantly trying to better understand brands' performance and experience on Amazon through our research and marketplace data. Our latest Amazon Seller report uncovered common pain points executives faced throughout 2022 on Amazon in Europe and the Middle East. 

Not too surprisingly, there was more than one trading challenge for CEOs selling on Amazon in Europe and the Middle East. There were several top responses such as supply chain issues, advertising, and stock outs–all challenges we hear frequently from 1P Sellers on Amazon no matter the region.  

Here is what we learned about 1P seller trading problems on Amazon:

1. Getting Product into Amazon Warehouses 

Of the brand CEOs who took the survey, 52% mentioned this challenge–making it the most common issue for the second year in a row.  Basically, executives struggle with getting their product into Amazon warehouses, which typically happens because Amazon FBA can be difficult to navigate and comply with. Illegible barcodes, not labeling your products correctly, and a failure to include certain details on barcodes are all reasons your product could be rejected by Amazon FBA works. 

2. Increasing Chargebacks

51% mentioned increasing chargebacks on their products on Amazon, which occurs when brands fail to maintain stock levels or fulfill orders on time. As a 1P seller, if there are any issues with the products you send to Amazon, they will charge you for the time and effort it took for them to resolve those issues. 

Various types of chargebacks could include unauthorized use of credit cards, operational malfunctions (late arrivals, technical issues, etc.), and packaging non-compliance. In a 1P Seller relationship, Amazon will charge vendors with these chargebacks, and disputing them is typically a long, time-intensive, and costly endeavor for any brand.

3. Increasing CPC Costs for Amazon Advertising 

Increasing CPC costs for Amazon Advertising was mentioned by 45% of respondents as a top trading problem. Getting traffic to a product listing helps brands keep their inventory levels stable, so that they never have too much or too little of the product. Increasing CPC costs leads to a possible loss in traffic to a brand’s product, leading to fewer conversions and sales in the long run. 

4. Your Own Supply Chain Being Disrupted 

Sometimes it is not an Amazon issue, but an internal resource and capabilities scenario. 43% of respondents mentioned their own supply chain being disrupted as a common trading problem. Supply chains can be disrupted by a variety of factors, such as inventory order delays, supplier issues, shipping expenses, and problems with existing inventory. 

5. Inadequate Forecasting Methods to Keep Enough Stock in Hand

Many brands lack the resources and expertise to accurately forecast stock levels, according to 38% of the survey respondents. Inadequate forecasting methods can lead to high costs, non-competitive prices, and dissatisfied customers.

6. High Out of Stock Levels Due to Amazon’s Algorithm-driven Price Reductions

High out of stock levels due to Amazon’s algorithm-driven price reductions frustrated 37% of respondents in 2022. Amazon’s dynamic pricing strategy makes sure that the most competitive prices are being offered to shoppers. Low prices are great for shoppers, but sometimes stressful for brand executives. Amazon’s sudden algorithm-driven price reductions can catch a brand off-guard, leading to stockouts. 

Why Most Brand Executives Face the Same Challenges

Being in a 1P relationship with Amazon has its ups and downs—just like any relationship. One of those downsides includes the trading problems mentioned above. In a 1P relationship, Amazon buys your product wholesale and handles most of the selling details, which can be very beneficial in some ways, but may lead to less brand control on your end. Brand executives selling their products through Amazon in Europe and the Middle East face the same challenges that brands are facing world-wide–a lack of brand control and resources to succeed.

Trading problems are just one aspect of the challenges brands face as 1P sellers on Amazon. Learn more about these issues in the full Amazon Vendor Survey from 2022.

How to Avoid These Issues on Amazon

The good news about the trading challenges brand executives are facing as a 1P seller on Amazon is that they are all avoidable. In a 1P relationship, you’re constantly being forced to work around their erratic forecasts, limited communication, and changing priorities. But in a 3P partnership, you dictate inventory management, allowing you to stay in-stock, maintain control of forecasting, and plan for promotions or holidays.

With Pattern as your 3P accelerator, you can simplify forecasting and get inventory to the right place. You ship inventory to one of our warehouses, and we handle the rest—distribution across Amazon’s warehouse network for FBA, repackaging products into bundles, and delivering your orders on time.

Avoid the trading problems on Amazon by partnering with Pattern. Contact us. 

Discover more insights by downloading our annual Amazon Vendor Survey EMEA.

MAP Pricing vs MSRP: What's the Difference? (blog header)
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MAP Pricing vs. MSRP: What's the Difference?

“MAP” and “MSRP” are two of hundreds of acronyms floating around in the world of ecommerce, and they’re two of the easiest to confuse and misunderstand. While MAP and MSRP do play similar roles, they also have key differences that can work in tandem to support and protect your brand on marketplaces.

So what are MAP and MSRP and why do they matter? Here’s what you should know: 

What is MAP?

MAP (or minimum advertised price) is the minimum amount that a manufacturer or wholesaler recommends resellers advertise their products for. MAP pricing policy is essentially a one-way boundary you set to protect your brand, protect the margins of your resellers, and maintain fair competition across all of your distribution channels.

When setting a MAP policy strategy, remember the important things you’ll want your MAP policy to do are:

  1. Protect the interests of your brick-and-mortar resellers, giving them the margins they need to display and carry your product as well as sell it.

  2. Stay small enough that it discourages resellers from heavily discounting your products and keeps competition fair.

  3. Accurately reflects on the brand image and value you want to reflect.

“Advertising” and “recommends” are the key terms here. MAP policies should only recommend the price that is advertised online or in-store for a product, not attempt to fix the actual selling price of the product—that’s illegal—or recommend the actual selling price. That’s MSRP’s job.

Benefits of MAP

MAP not only keeps competition fair, but allows you to control your brand identity and promote consumer trust of your product and brand. Here are some of the benefits of having MAP policies:

  • Better brand protection and control

  • Creates a level playing field for retailers

  • Reduces bad customer experiences

  • Provides an accurate performance analysis

How Can Brands Effectively Enforce MAP?

It’s critical that MAP policies are structured in such a way that a brand avoids violating anti-trust laws. One way brands can effectively enforce MAP is by simply monitoring online product prices across digital channels to identify fluctuations in the market. 

At Pattern, we help brands not only develop a MAP policy, but also enforce it. Enforcing MAP policies and gaining marketplace control includes finding unauthorized sellers, which Pattern’s data finds. Once Pattern finds the unauthorized sellers, Vorys eControls (Pattern’s legal partner) steps in and handles the takedowns of unauthorized sellers, continuous enforcement of brand management, and reseller policy enforcements.

What is MSRP?

MSRP (or manufacturer’s suggested retail price) is how manufacturers standardize pricing across their resale channel and determine what price is fair for their product. The key difference between MSRP and MAP is that MSRP is the actual price manufacturers set and recommend retailers charge for their goods while MAP is the advertised price. 

MSRP doesn’t necessarily have to be the final price of a product—it’s most often a starting price—but it is determined by taking into account all of the costs associated with the distribution and manufacturing process for a product and the margin amount resellers need in order to make a profit. MSRP also establishes value. For example, if a brand wants to build a premium brand, the MSRP can reflect the actual or perceived value of their product.

Benefits of MSRP

Setting up an MSRP for your product includes the following benefits:

  • Maintains brand equity

  • Establishes brand and product value

  • Standardizes costs across marketplaces

How Can Brands Effectively Enforce MSRP?

Like MAP pricing, MSRP has to be set up as a one-way policy and not an agreement between a manufacturer and a reseller to avoid landing a manufacturer on the wrong side of the law. It’s a recommendation, not a contractual bind. As mentioned for MAP policy, Pattern helps brands effectively enforce MSRP with our proprietary data and expertise to protect their brand. 

How Do MAP and MSRP Work Together?

MAP and MSRP have different applications that may prove useful in different scenarios. For example, MAP policies are typically more useful in marketplaces where competition is fierce and price erosion happens easily if sellers are left unchecked. Ideally, however, MAP and MSRP are a dynamic duo that work together to serve the interests of your brand, support your resale channels, and protect your resellers.

Setting an MSRP establishes value for your product and lets your resellers know you’re serious about controlling channel conflict, maintaining pricing equity, and protecting their margins so they’re more confident setting pricing at the MSRP level.

MAP is the second half of setting a pricing policy. Setting a MAP price for your product, in addition to an MSRP, further standardizes pricing across your resale channel and gives legitimate resellers a fair environment to compete in while setting boundaries against unauthorized sellers harming your brand.

MAP combined with MSRP creates a stronger level of brand protection, giving your brand more sustainable, profitable growth.

Maintain Brand Control With Pattern

MAP policies can be tricky to draft, because there are so many legal lines to tiptoe around and so much nuance that goes into pricing. They can also be tricky to enforce without the right tools. At Pattern, partnered with Vorys, we have the tools and resources to help you maintain brand control on all marketplaces. 

As an ecommerce accelerator, Pattern can help you identify MAP violators and regain control of your brand online so that your image and your resellers are protected. To learn more, contact us today.

Athlon Optics Walmart.com Launch Has Record Setting Sales within 3 Days
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Athlon Optics Walmart.com Launch Has Record Setting Sales within 3 Days

Athlon Optics sells scopes and other optical accessories like binoculars for anyone who may be hunting, shooting recreationally, or competing.  After achieving significant success on Amazon, the brand wanted to launch on Walmart. As a growing marketplace with huge growth forecasts, Athlon saw their competitors already staking claim on walmart.com and saw opportunities for increasing their sales.

As a prestigious brand in its category, with loyal consumers, Athlon does so much with very few resources. With less than twenty employees in the entire company, managing everything from customer service to product development, their ecommerce team needed support to scale to a new marketplace.  And, they needed a partner who had a relationship with and deep understanding of walmart.com to accelerate their growth. Pattern is a one-stop shop for Athlon, providing the resources and expertise, so Athlon could also save budget and stop outsourcing so many different aspects of their marketplace business.

Athlon Optics Prepares for a Seamless Launch

Sometimes brands who transition from 1P to 3P with Pattern have no proprietary sales, marketplace data or content such as product images, video, or optimized copy. These circumstances create a more hands on transition for Pattern and may interfere with launch expectations. 

But Athlon was the consummate partner and overly prepared to transition to 3P– buttoned up, organized, and ready to take on walmart.com’s list of launch needs. Athlon provided all the required assets on time and was very organized.  The images were shot, formatted, and categorized as A+ content that Pattern ported over.  This process dramatically reduced wait times and lag times within the platform.  Plus, since the content was optimized for marketplaces, all images, copy, and listing information uploaded in the first pass. 

Pattern’s Walmart Expertise Leads to Success

But the content worked because of Pattern’s resources and marketplace expertise.  Pattern provided Athlon with a very clear outline of needs and expectations for seamless launch and this process has become a playbook for other brands on walmart.com.  The team’s mutual partnership and Pattern’s diligent follow up with and detailed attention to Walmart processes and logistics prevented Athlon from getting lost in the weeds. 

Three Days is All it Takes

The successful, thorough, and quick transition to 3P with Pattern secured Athlon most likely the fastest ramp-up periods for any brand on Walmart.com.  

Together we achieved success such as:

  • 'Best in class' turnaround–98% faster onboarding than average brand on Walmart.

  • First sale within the first week of landing at Walmart. 

    • Unprecedented turnaround considering the ramp up usually needed to gain momentum and traction with reviews on Walmart. 

  • Exceeded initial first month growth projection by 34%.

Athlon was so impressed by the ease and simplicity of its launch and execution on Walmart that the brand wants to grow our 3P relationship with other marketplaces such as Amazon Canada and Target+.

And, in the meantime, look out for Athlon Optics in Walmart Deal Days in 2022.  A huge win for any brand tied to organic advertising and new traffic opportunities across all media.

Pattern Helps Brands Expand Marketplaces 

Pattern has the 3P partner experience and deep expertise on Walmart and other global marketplaces to help a brand expand their footprint to maintain sales momentum and a competitive edge. Pattern, an ecommerce accelerator, takes on the responsibility of your stock and provides the expert resources needed to successfully launch and continue to grow your revenue on global marketplaces. 

Learn more about Pattern’s expertise and partnership on Walmart.  Contact us today.