Written by mjobrr in Technology News Blog
Jan 4 th, 2018
Amazon has discreetly developed more than forty own brands. 29 of them belong to the textile world, an area where Amazon excels. According to industry experts, Amazon is expected to accentuate this private label strategy in 2018. A way for the e-commerce giant to offer exclusive products while optimizing its costs.
Buying Whole Foods, tricolor covetousness, attraction for the pharmaceutical industry, but also perseverance in the delivery by drone, opening of new XXL warehouses, research in robotics, launch of features in augmented reality, foray into social commerce… Throughout the year 2017, Amazon continued to make a name for itself. However, the year 2018 should be marked by a strategy on which the e-commerce giant has remained much more discreet: that of private labels.
At the end of December, a study by economic intelligence firm L2 indicated that there were more than 40 brands associated with Amazon. 29 of them belong to the textile world. A universe that Jeff Bezos’ company knows particularly well, since this year Amazon is expected to achieve a turnover of $28 billion thanks to sales of clothing and accessories in its online marketplace. These revenues would make e-merchanting the first textile vendor in the U. S. market, ahead of Macy’s department stores.
Amazon’s development of “private label brands” is not new. As early as June 2013, the Seattle-based firm launched the AmazonBasics brand in June 2013, which offers a host of basic products for the home, from phone chargers and batteries to sheets and kitchen utensils. At its launch, the brand had only 252 items, compared to more than 1500 today. Also worth mentioning is the Amazon Element brand, known for its baby wipes and vitamins.
What is new, however, is the development of own brands whose names do not directly indicate that they belong to Amazon. Last August, after reviewing U. S. intellectual property registries, the U. S. Quartz site revealed 19 trademarks owned by Amazon whose products were listed only on Amazon. com. Among them: Arabelle for lingerie, Beauty Bar for cosmetics, Mae for underwear, Franklin & Freeman for men’s shoes and Strathwood for furniture. More recently, the Bloomberg agency has revealed that Amazon is also investing in sportswear with the development of three new private label brands: Goodsport, Rebel Canyon and Peak Velocity (technical textiles).
Among all these brands, only one clearly shows that Amazon products are concerned by displaying the mention “by Amazon”. This is the Pinzon brand, which offers high-quality bed linen and towels. The other brands owned by Amazon are presented without any special distinction, like all other third party brands on the marketplace. Only a few of them discreetly mention in the product sheet that it is an Amazon brand.
Why this discretion? Several hypotheses can be put forward. Amazon may prefer to wait until its brands are strong enough before publicly displaying that they belong to Amazon. It may also be a way to avoid creating tensions with other brands on the marketplace, Amazon having used the data generated by their activities to refine its knowledge of the market and customer expectations in order to build its own offer.
Nevertheless, industry experts expect Amazon’s brands to gain momentum in 2018. Indeed, exclusivity is a key factor in the world of distribution. To differentiate itself, a retailer must have its own brands that cannot be found elsewhere in order to create loyalty. Amazon seems to want to take this logic a step further by reserving its new products for members of its Prime program. Of course, this vertical integration strategy is also economically interesting. If Amazon controls the entire value chain, it can eliminate intermediaries and therefore offer competitive prices. However, the success of a private label brand does not only depend on the price factor, it must also be differentiating and bring a real plus. In France, Decathlon, for example, understood this very well.
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