Amazon is ready to hit the market with a barrage of private label grocery-store products for Prime customers, the Wall Street Journalreports, further disrupting not only how consumers get their goods but also what brands they buy.
“The new brands with names like Happy Belly, Wickedly Prime and Mama Bear will include nuts, spices, tea, coffee, baby food and vitamins, as well as household items such as diapers and laundry detergents,” writes Greg Bensinger.
“Amazon’s latest lineup is aimed at winning sales in niches with generally higher profit margins, as well as giving the Seattle retailer a potential edge in crafting new products ahead of its own vendors,” he continues.
“… It’s Going To Be A Really Big Deal,” predicts the hed on Recode’s re-cap, followed by the subhed, “As If Amazon Needs More Power.”
The “move into consumer packaged goods gives it even more opportunity to flex its muscle with suppliers. That means giving its own products better placement on its site, and undercutting competitors on pricing,” points out Recode’s Jason Del Ray. “The move also offers Amazon the chance to pad its bottom line — something Jeff Bezos hasn't traditionally been willing or able to do.”
“Amazon is ‘carpet-bombing’ the market with new products,” Brick Meets Click’s Bill Bishop tells Bensinger. “Private label allows them to test out new prices and distinctive flavors with less risk.”
“It's not certain how competitive the pricing would be, but you'd have to subscribe to Prime to even consider it,” Jon Fingas writes for Engadget. “Amazon historically uses Prime to subsidize the costs of certain services, so it won't be shocking if these foodstuffs offer better-than-usual value.”
Still, there’s competition out there.
“The reported move mirrors the strategy of several major retailers, including Costco, Walmart and Target, which have recognized the lucrative nature of selling groceries. Private-label portfolios tend to have higher profit margins than brand-name goods because the companies save on marketing and brand development,” writes Steven Musil for CNET.
“Store brands sales reached $118.4 billion in the U.S. in 2015, an all-time record and an increase of about $2.2 billion from the prior year,” according to the Private Label Manufacturers Association, Musil reports.
And just because it’s Amazon doesn’t mean success is guaranteed.
“In 2014 Amazon had to recall its Element brand diapers due to a design flaw. With edible goods, the stakes are only higher, and one slip-up could tarnish the reputation of the e-commerce giant’s future private-label offerings,” writes Fitz Tepper for TechCrunch.
“Presumably, it's put more thought into the products this time around,” observes Jacob Kastrenakes for The Verge. “It's already started doing this in other categories, offering gadgets and cables and hundreds of clothing options, as well as less expected items, like a K-Cup storage drawer and a medicine ball.”
“The new report coincides with the release of the company's customizable edition of its popular Dash Button, points out Marcus Gilmer for Mashable. “And if you include Amazon's Echo, Tap, and Dot devices, plus the Amazon Fresh grocery delivery service, the company will have a range of popular convenient shopping products on which to push these new in-house products.”
And last week it announced Amazon Video Direct — “a competitor to the professional side of YouTube that will give those creators and others, and their advertisers, another place to display their material,” as P.J. Bednarski reported for MediaPost’s Online Video Daily.
Meanwhile, as department store sales slump, which Marketing Daily’s Sarah Mahoney has been reporting, Amazon has become second only to Walmart in selling apparel made by third parties, Ángel González and Janet I. Tu tell us in Seattle Times, and it’s doubling down on its own fashion offerings.
“By 2020, the company could come to dominate nearly a fifth of U.S. apparel sales, up from about 7% today,” analysts tell them. “The trend is leading to brands increasingly setting up their own Amazon channels.”
As for a reaction to the WSJ’s story, “we don't comment on rumors or speculations,” an Amazon spokeswoman tells Reuters in an email, echoing its refrain elsewhere. It doesn’t have to, of course, because the speculations are proving as adept as ever at selling themselves.