This very afternoon, my wife received a package from Amazon. As she was unpacking her delivery, she informed me, “These workout clothes are supposedly made in the same factory in China as Lululemon, but Amazon sells them for half the price.”
The brand was Core 10, just one of Amazon’s ~100 (and growing) private label brands.
After mastering how to sell everyone else’s stuff, Amazon has sharpened its focus. Now it’s trying to persuade shoppers to buy its own products.
It’s succeeding. Amazon’s private label sales will reach $7.5 billion this year, analysts at SunTrust Robinson estimate. By 2022, they are expected to hit $25 billion.
Retailers have offered private label brands for decades. So that part is not new. However, the biggest hinge pin in this discussion is market share.
According to a study by Jumpshot
, brands with the largest market shares on Amazon are barely edging out their competitors. That means non-Amazon marketshare is not translating onto the Amazon marketplace.
The differentiation (or lack thereof) between brands’ market share on Amazon and off suggests Amazon shoppers have no brand loyalty. In other words, the Amazon platform is commoditizing the products for sale on its site. As we know, commodities compete solely based on price. With its favoritism shown to low prices, its unlimited shelf space, and its limited space to convey value props, Amazon is creating a huge problem for brands, who are increasingly relying on Amazon as a sales channel.
And that is before those brands start competing against Amazon’s own products, expertly designed with competitor data and crafted specifically to compete and win in the Amazon Marketplace.
You can call them white label products, but I call them “house” products because the house always wins.