The vendors have been delivering their products to their customers for more than a decade, making them good earnings. But recently, private brands of Amazon have started to spread rapidly. This spread brought with it the question: Do sellers compete with other sellers or with Amazon itself?
2018 may be a year when Amazon private brands began to spread in crowds and may make competition more difficult for third-party vendors. But you don’t have to worry right away; there are things you can do to overcome this obstacle.
What is a private brand product?
Private brand products are usually manufactured by a third-party supplier, but the product is sold under the brand of the seller.
For example, if you went to Costco, you probably know the special brand of this store, Kirkland. Target also has several own brands, such as “Up & Up” and “Cat & Jack”. Probably the most popular private label is Walmart’s “Great Value”. In the retail world, such brands are often referred to as “store brands”. But these products are actually produced by other companies that make similar products, other companies print the retailer’s names on the labels instead of their own names.
Facts about Amazon private brands
Many of you are probably familiar with Amazon’s private brand products: AmazonBasics, Amazon Essentials, and Amazon Elements. But Amazon also sells many private brand products under different brand names in certain categories.
L2, a research firm and working on the performance of digital brands, has identified 41 private brand products related to Amazon. 29 of them are in the clothing section including jeans, sportswear, swimwear and shoes. The strong backgrounds of the products show that Amazon has invested heavily in the clothing department and will continue its efforts to dominate this market.
Interestingly, many of the Amazon private brand products began to appear in late 2017. Amazon intended to use the 2017 holiday season for its own benefit and reported that it had signed a record sale during this period.
Private brands on the rise
There are many reasons behind the expectation that Amazon will increase its private brands this year. Even the following factors are sufficient reason for this expectation:
Amazon bought Whole Foods in August 2017: When purchased by Amazon in the summer of 2017, healthy food retailer Whole Foods had a private label called “365”. The acquisition of this company provided an opportunity to specialize in giant-specific brands in online parken.
The growth of the private brands of Amazon in the last two years: According to the October 2017 report of One Click Retail, Amazon made $ 210 million from the AmazonBasics brand only in the first half of 2017. Fire TV brought $ 110 to the company while Amazon Echo followed AmazonBasics with $ 120 million. Lark & Ro, for example, one of Amazon’s new brands in women’s clothing, earned $ 1.9 million. Although this figure seems to be less compared to other private brands of Amazon, it represents a strong Amazon presence in the clothing department.
Amazon recently launched the furniture brand: In the past, furniture would look like a category that Amazon wouldn’t have, but it came to this category. According to Morgan Stanley, Amazon owns 17% of the home market. This shows that Amazon handles industries other than standards.
According to SunTrust Robinson Humphrey, Amazon’s private brand sales are expected to exceed $ 20 billion by 2022.
How does Amazon increase the number of private brands affecting sellers?
Amazon private brands are expected to grow massively this year, and this growth will undoubtedly affect sellers in a number of ways.
How Amazon’s private brands will affect individual sellers largely depends on the seller’s online presence and the type of product they sell. In other words, someone selling in the book section will be affected differently than someone selling in the clothing section. Likewise, the influence of the private brands of Amazon will be more different than those with a small sales volume compared to those with a small sales volume.
For example, large brands such as Nike can be affected by this development in very interesting ways. It works with various clothing production lines that produce products similar to the quality of Amazon Nike products. Even if customers look for a specific Nike sweater, Amazon recommends them the product of another brand.
Smaller brands are less likely to be affected by Amazon’s ongoing private brand invasion, but of course, these brands are also untouchable. A few small brands have already reported that Amazon is working with its own suppliers to produce similar products. This means that small brands may also find themselves in direct competition with Amazon in the sale of a particular product.
It has data that Amazon vendors send every year. “Does Amazon use this data to grow its own private brands?” What happens to small brands? These are the questions that are curious. Of course, we cannot make a definitive decision about what will happen, but it is always good to be prepared for what can happen.
Can small brands compete with the private brands of Amazon?
To give a brief answer to this question: Yes. But it’s important to understand what you need to strengthen to climb the hill:
Increase in search rankings: Almost 55% of product searches are done directly on Amazon. So where does your product appear during the search?
Use consumer data: Amazon may sell more products at a lower price, but it is difficult to add personal touches that individual sellers can add to their products. Personalize their sales experience by sending promotional offers and discounts to your customers and use these methods as a thank you method for shopping from you. Another way to retain customers is to write a personal note in a pleasant package to increase the perceived value of your product.
Brand website: You can use your homepage to leave a positive impression on customers. Make an effort to improve the content of your website and make your site user-friendly. Attracting your customers with a nice shopping experience increases customer loyalty more quickly than other brands.
To conclude, let your product be a creative and competitive product. If your products have a unique touch produced only by you, you will most likely have more happy and loyal customers.