Amazon slashes private label due to poor sales
Amazon is reducing the number of products sold under its house brands, including AmazonBasics, Amazon Essentials and Solimo. This is a major change in the company's strategy, and according to the Wall Street newspaperit is due to poor sales.
As of this writing, Amazon offers over 250 products through at least 000 private label brands. But inside sources say WSJ that a lot of those products are on the chopping block. Additionally, Amazon executives considered dissolving about 50% of its brands.
Poor sales seem to be driving this change. But external factors, like the economy, are not to blame. It seems that Amazon has simply overstretched itself and lost its sense of direction in this area. After a review of Amazon's private label in 2021, former consumer chief Dave Clark reportedly told the private label team that they should focus on easy-to-sell products, citing the "Great Value" brand. from Walmart as an example.
It's sort of a return to form. Amazon originally launched the AmazonBasics brand in 2009, focusing entirely on basic products like rechargeable batteries. The race to come up with countless private labels didn't begin until the mid-2010s, likely spurred on by the success of AmazonBasics.
But poor sales may not be the only factor here. Amazon's private label brands are constantly the subject of regulatory discussion, as many critics believe that manipulation of these brands constitutes anti-competitive behavior.
Because Amazon is the largest digital storefront in the world, it is in a unique position to collect product and customer data. It can then use this data to dominate a product category, such as rechargeable batteries, with low prices and highly targeted advertising. Reviewers also claim that Amazon showcases its brands over competing products.
Still, regulatory pressure probably isn't driving Amazon's decision. Almost all retailers carry house brands, and sales data is often the deciding factor in what those brands sell. Additionally, if Amazon's private label brands sell poorly, regulators would have a hard time bringing an anti-competitive case against the company.
If there's anything to take away from this story, it's that Amazon failed to take the world by storm with its house brands. It seems that Amazon always does better as a retailer, not as a manufacturer.
Source: The Wall Street Journal
