In a recent holiday preview hosted by
One big takeaway from the event, not surprisingly, is that the U.S. smart speaker adoption rate will likely hit another record this year; Amazon’s Alexa-enabled Echo line of smart speakers and Alexa-compatible smart home devices were prominently featured throughout. You could even learn to set up your own Alexa Skills Blueprint and have Alexa instruct your holiday house guests, for instance, on where they can find towels in your home.
The real surprise was the other Amazon private-label brands — well over a dozen of them — that were highlighted over national brands in many sections.
In the area featuring grocery and essentials items, for instance, what took up the most kitchen-cupboard or laundry-room shelf space wasn’t the Lyndt chocolate, Tide pods or Huggies diapers. Instead, it was Amazon’s house brands, including Wickedly Prime snacks, AmazonFresh coffee pods, Happy Belly eggs, Presto! paper towels, Solimo hand soap and the new Wag gourmet dry dog food.
Walk to the furniture section, and pretty much all you could find was Amazon brands, with items including a $1,099 Stone & Beam tufted sofa and a $270 Rivet oak dining table.
Amazon’s Buttoned Down and Goodthreads clothing for men and Core 10 and Daily Ritual for women took the spotlight in the apparel category. At the end of the tour, guests could sample holiday dinners that Amazon’s Whole Foods will have on its catering menu and walk away with a small Whole Foods brown paper shopping bag containing items including the grocer’s 365 private-label coconut macaroons and sparkling water.
Amazon’s aggressive private-label expansion is not unique: Traditional brick-and-mortar merchants including Walmart and Target are just as eager to roll out more of their own house brands, which typically generate more profit for retailers, to differentiate their wares and attract customers. For instance, Target has introduced its own JoyLab athletic apparel line as part of more than a dozen house brands it said last year it plans to unveil. Hanesbrands stock recently took a hit on the news that Target, representing 13% of Hanesbrands’ 2017 sales, won’t renew its contract for Hanesbrands’ C9 By Champion athletic apparel line, totaling $380 million in sales last year.
With Amazon repeatedly proving its industrywide disruptive impact, the online giant’s private-label expansion even to categories like furniture that are traditionally considered “Amazon-proof” should be taken seriously and serves as yet another cautionary sign for other brands and retailers. After all, today’s convenience-seeking consumers are fickle, with little brand loyalty, and Amazon’s brands come with Amazon’s industry-leading logistics delivery network. Some of its private-label brands are so far available only to Amazon’s 100 million Prime members.
Amazon has also made many of its own brands hip by making sure their packaging and quality stand neck to neck with the other top-selling labels (just look at Wag dog food). Featuring its private brands in events like the holiday preview, geared toward reporters looking to preview what will be hot come the holiday season, also helps raise the cool quotient even for quotidian items like the Presto! paper towels.
Amazon is in town from Seattle and just hosted a holiday preview at a two-story pop-up space on Fifth Ave. in New York. Stay tuned for my takeaway. #AllOnAmazon pic.twitter.com/P4Al0GGip5
— Andria Cheng (@AndriaCheng) August 2, 2018
“Amazon’s approach to private labels is evolving,” One Click Retail said in a recent study, adding that Amazon has expanded its private-label portfolio to nearly 80 unique brands. “Its growing range of private-label products is both benefiting from the loyalty of these (Prime) consumers and, in turn, driving more loyalty with the success of leading brands such as AmazonBasics. … (Amazon now is) more willing to enter categories with large, well-established brands.”
How so? While AmazonBasics and other early brands were aimed at dominating niche categories like batteries, lightning cables and pet carriers with no “significant incumbent brands,” One Click Retail said Amazon’s recent private-label investments put it in direct competition against category leaders including Bounty paper towels, Charmin toilet paper and Blue Buffalo dog food.
Some of those new private-label rollouts already look to be winning customers.
I’m “very happy with Amazon’s first foray into dog food and my dog is too,” a customer named Justin Y. said in a five-star review on Wag’s 30-pound dry dog food. “The reviews were good, the ingredients list looked good and it was cheaper than Blue Buffalo, so I decided to give it a try. This is the first dry food that my dog has really liked. … I hope you guys start making wet food.”
Not surprisingly, Wag dry dog food is already listed as an Amazon’s Choice.
“Amazon’s private labels pose a real challenge to traditional brands across hundreds of categories,” 1010Data said in a 2017 study.
In another worrying sign for other brands, the study found Amazon’s products have a high conversion rate: 42% of consumers who viewed the Amazon Elements line of multivitamins and other items, for instance, ended up buying it. There was also strong brand recognition for Amazon’s private-label products as most consumers searched for the brand when buying an Amazon private label, according to the study.
In an indicator of the new private-label categories Amazon may have in mind, some 47 jobs recently came up when “private label” was entered in the search bar seeking various experts and product and sourcing managers in categories from intimate apparel to consumer packaged goods.
“Private Label is a fast-growing area within Amazon, is highly visible and has ambitious targets,” according to a recent Amazon jobs post for a private-label senior product manager based in London. “We have a unique business and obsess over quality and building global brands our customers love. We work directly with manufacturers, which allows us to pass savings to the customer. We are one of the priority growth areas of Amazon.”
It looks like Amazon won’t have any trouble filling those open positions soon. On LinkedIn, that London-based position, just listed in July, is no longer accepting applications.
Happy Belly and Echo can expect to welcome even more sibling brands.
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