In case you hadn’t heard, Amazon recently released private-label brands in the categories of consumer packaged goods (CPG) and fast moving consumer goods (FMCG). As reported in the Wall Street Journal, these brands are positioned as “something other than just discount alternatives to mass-market competitors.” According to the WSJ, the brands are only available for Amazon Prime members, and include:
- Mama Bear
- Happy Belly
- Wickedly Prime
As of this week, there were 15 SKUs of Happy Belly coffee available on Amazon’s US site and two varieties of Mama Bear organic baby food. We couldn’t find any products under either of the other two brand names, and none of the brands were available on Amazon in the UK or Germany. It’s unclear at this point whether Amazon intends to make these brands global.
This isn’t Amazon’s first foray into private labels. Amazon also launched the private-label brand “Elements” last year. While there are currently only baby wipes being sold under the Elements brand in the US, there’s speculation that Amazon may move some of its new products to this label over time.
Looking at other household goods outside of the FMCG/CPG categories, Amazon does have a global private-label strategy. Its “Pinzon” brand of linens and towels is available in the US, UK and Germany, albeit with a smaller selection outside of the US.
AmazonBasics, yet another brand used across multiple categories, is available in all three of these regions as well, including 744 products in the US, 585 in the UK and 604 in Germany, based on our research. The most common category for these products across all regions is Electronics, which includes computer and mobile phone accessories.
According to the Private Label Manufacturers Association (PLMA), private label sales were $118.4 billion in the US last year, up approximately $2.2 billion from the previous year. According to PLMA International, private-label market share grew in 13 out of the 20 European countries tracked by Nielsen.
So why is Amazon branching out in this direction? Well, first of all, no direction seems off limits for Amazon. It seems, however, that the creation of private labels likely results from a desire to improve its retail margins while filling in gaps in its product assortment. The strategy may also be a ploy to target the hyper-connected Millennial generation.
With the inherent trust that Amazon has fostered in its loyal customer base, as well as the ease of placing an order and receiving quick delivery from Prime, Amazon is poised to take market share with its private-label brands in the categories in which it chooses to participate.
It’s anybody’s guess how far they’ll go with it.
Blog post by Mike Shapaker, vice president and managing director, EMEA, at ChannelAdvisor