Private labels might work well for grocery stores, but Amazon is rethinking its position and plans to reduce the number of private label brands it offers to an estimated 20 total, and rebrand several others.
According to the Wall Street Journal, the move comes as a result of a cost vs. profit analysis and fending off antitrust scrutiny.
This is a huge reversal for the company. Just four years ago, Amazon claimed that it had 158,000 private label products spread across 45 brands in the Amazon store, not to mention some private brand products sold by its online grocery store, Amazon Fresh.
However, it's not a great financial loss as private labels only accounted for about 1% of its sales volume. And its recent move to add its private label Whole Foods products to its marketplace won't be affected, either.
As an example of what segments are taking a hit, the Journal said that in the last year, Amazon has taken an ax to its private label clothing and furniture brands. The once 30-item rich clothing segment was chopped to all but three, and both Rivet and Stone & Beam furniture brands will also be sunsetted once the inventory on those brands is completely sold off.
“We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands – like Amazon Basics and Amazon Essentials – for great value with high-quality products at great price points,” Matt Taddy, vice president of Amazon Private Brands, told Retail Dive.
“We’re thoughtful about our private brand selection, and if there are products that aren’t resonating with customers we deprecate those items and look for other opportunities to better meet their needs.”
A good opportunity for budget-conscious consumers?
Is Amazon’s cutback an opportunity for shoppers looking to save a buck here and there? Possibly.
The company hasn’t announced how it plans to move out all the private label items it’s shuttering, but when ConsumerAffairs looked for Amazon’s “private brands” on its website, there are a number of items already significantly marked down.
We found some men’s socks at 26% off, a 3-piece frying pan set at 32% off, and memory cards at 40% off – and that’s just scratching the surface. For consumers who can buy things in bulk – like for the office or classroom – there might be even greater discounts on things like office supplies or disinfectant wipes.