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 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.
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).
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.
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.
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.
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.
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.
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.
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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Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.
If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.
At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.
Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.
DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.
Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.
Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.
So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.
Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.
So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.
As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.
The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).
As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter.
It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.
Set up a call to get your international expansion strategy in motion.