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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Sept 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 13, 2022

Global Ecommerce Weekly News: 13th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon scales back on US warehouse facilities Amazon is shutting down two facilities with 300 employees, discarding plans for 42 facilities, and delaying plans to open a further 21 buildings across the US. The ecommerce giant is scaling back on hiring as well as the expansion of its vast delivery network, as it was left with an excess of space following its rapid expansion during the pandemic. [Read more on Business Insider](https://www.businessinsider.com/amazon-closes-2-facilities-scraps-plans-42-new-buildings-report-2022-9?r=US&IR=T) --- Other Marketplace News --- JD.com is ‘betting’ on ecommerce grocery market Amidst a slowing economy and a decline in ecommerce, Chinese ecommerce giant JD.com has increased its urgency to seek new growth engines. The company is looking to boost its online grocery business through offline partnerships and expansion into lower-tier cities, where it may be able to unleash more consumption power. [Read more on The Star](https://www.thestar.com.my/tech/tech-news/2022/09/08/chinese-ecommerce-giant-jdcom-bets-big-on-online-grocery-lower-tier-markets-amid-slowing-economy) Shopee shuts operations in Argentina, Chile, Colombia, and Mexico Sea’s ecommerce arm, Shopee, has shut local operations in some LATAM countries but will continue to maintain cross-border operations in a few markets. Latin America is Sea’s most important region following South-east Asia, accounting for close to 19% of its revenue in 2021. The move away from these countries is largely due to increased levels of macro uncertainty and rising interest and inflation rates, and rather putting a focus on its core operations. [Read more on Straits Times](https://www.straitstimes.com/business/companies-markets/seas-shopee-shuts-operations-in-argentina-chile-colombia-mexico-sources) --- Other Ecommerce News --- Instagram scales back in-stream shopping elements Instagram is re-examining its approach as it hasn’t been able to make ‘fetch’ happen. ‘Fetch’ in this context being the online shopping trends which have become all-consuming in China, and what Western social platforms have been hoping to add into their apps to make them more addictive and revenue-generating. Consumers have not been swayed by the latest shopping tools on TikTok and Instagram, leading to Instagram scaling back its in-stream shopping program. [Read more on SocialMediaToday](https://www.socialmediatoday.com/news/instagram-scales-back-in-stream-shopping-elements-as-it-re-examines-its-app/631276/) FedEx Express supporting the growth of cross border ecommerce FedEx express has expanded its international commerce shipping service to four more markets across the Asia Pacific, Middle East and Africa (AMEA) region in an effort to support the strong development of ecommerce in this region. Three of the fastest growing markets, the Philippines, Indonesia and Vietnam are leading Southeast Asia’s ecommerce sales, which is set to reach $100 billion by 2023. [Read more on Post & Parcel](https://postandparcel.info/149889/news/e-commerce/fedex-express-supports-the-growth-of-cross-border-e-commerce-within-the-amea-region/) India ramps up hiring as companies prepare for shoppers Ecommerce companies are getting ready for the festive season by rapidly expanding their temporary workforce. As ecommerce in India grows, the country is predicted to have 372 million online shoppers by the end of 2022. The festive season this year, running from October to December, is expected to see a two-fold increase in logistics and delivery alone. During this period, companies are predicted to add 20% more to their existing workforce base, with a 8-10% higher pay scale compared to last year. [Read more on Business Insider India](https://www.businessinsider.in/business/ecommerce/news/the-great-indian-festival-of-hiring-e-commerce-companies-gear-up-for-indias-shoppers/articleshow/94000346.cms)
Sept 6, 2022

Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)