amazon private label strategy ,private label strategy,manufacturer branding,most successful private label brands

Private label products are those manufactured by one company for sale under another company's brand. Private-label goods are available in a wide range of industries from food to cosmetics. Private label brands managed solely by a retailer for sale in a specific chain of stores are called store brands

Image of Definition of Private label product with Example
Image of Definition of Private label product with Example

Its Amazon private label strategy is simple: offer the lowest prices on quality products, often knocking smaller merchants that only have one or two offerings, out of the market. Amazon has launched a private label brand for almost all major categories such as electronics, apparel, even furniture

Image of Uses of Private label Product in Industry  with Example
Image of Uses of Private label Product in Industry  with Example

When manufacturer market goods under its own name that brand is known as Manufacturer BrandManufacturers opt this branding to attract existing loyal and satisfied customers by transferring their loyalty to the manufacturer's other products also.An original brand manufacturer, or OBM, is typically a company that sells an entire product made by a second company or including a component from a second company sources as its own branded product. Selling the product of the second company under its own brand just adds a virtual extrinsic value to the product

All brands with “Amazon” in the name are performing well, while other brands, with unrecognizable and disposable names like 28 Palms, Common District, Leather Architect, or Obsidian, are not performing as well. The underlying idea behind these brand names and that most of them don’t mention the affiliation with Amazon is that customers shopping on the platform would ignore the brand name either way. Customers buy these products when they surface in search results with high ratings; customers are not meant to recognize their brand name.

Image of Advantage and Benefit of Private label Products with Example

“Consumers are used to seeing private label brands — or packer’s labels, or store brands, or house brands, or reanimated ghost brands — in stores even if we don’t quite understand what they are or where they come from. Some brands are labeled “for Target,” while others just don’t seem to exist anywhere else, and so we make our assumptions, or don’t think of them at all, and keep shopping. As is often the case with Amazon, what seem like strange or inexplicable new behaviors are often old retail strategies unfolding on the internet, quickly, and in plainer view.”
– John Herrman, The New York Times

Map Image of  Private label product Association and another manufacturer
Map Image of  Private label product Association and another manufacturer 

1.AmazonBasics - household goods, electronics.

2.Amazon Collection - jewelry.

4.Amazon Essentials - men's and women's clothing.

5.Pinzon - bedding and towels.

6.Solimo - household goods.

7.Amazon Elements - vitamins and supplements.etc

Amazon is now focusing on exclusive brands, signaling a shift in strategy

Last year, Merisant North America president Brian Huff left a meeting with Amazon in Seattle feeling inspired.

Amazon was looking for a manufacturing partner to produce a sweetener to complement newly launched coffee brands that were live on Amazon. Merisant, which owns artificial sweetener brands like Equal and Whole Earth, had been selling products on Amazon and was looking to fine-tune its e-commerce business. To create a new product for Amazon would mean finishing a production cycle faster than the team had before — 90 days compared to roughly eight months. But it would be worth it.

“This was something that we saw could take our organization to the next level and act as a challenge,” said Huff. “What Amazon felt like we had was expertise in the field, and they mostly let us move. They trusted the company they partnered with to drive and develop the best product.”

Here is the Image of  Brand of Amazon of private label Product with name and example 

Here is the Image of  Brand of Amazon of private label Product with name and example
Here is the Image of  Brand of Amazon of private label Product with name and example 

Huff said that Amazon had a role in making the final decision on elements like packaging, branding, and pricing. The sweetener is now sold exclusively on Amazon, and Amazon handles the marketing and fulfillment of the product.

Merisant is just one of the companies with who Amazon has repeated this production process with over and over. It’s done it with brands ranging from GNC to Tuft & Needle, in categories from CPG to a home furniture.

The number of exclusive brands on Amazon exploded in 2018, according to TJI Research, a firm specializing in Amazon analysis and insights, there are 434 exclusive brands now active on the site. That’s more than double the number it had at the end of 2017, as well as the number of private-label brands it sells, which TJI Research totals at 138. According to Gartner L2 research, exclusive brand launches outpaced private-label brand launches for the first time in 2018.

Like Amazon’s private-label brands, exclusives sit under Amazon’s “Our Brands” umbrella, which signifies items that can only be found on Amazon’s site. But separate from its private-label brands, which require Amazon to trademark, develop, produce, market and distribute products on its own, exclusive brands let Amazon shoulder some of the work, and resources, required to roll out new products. The burden of R&D and production is shifted to the brand partners Amazon is tapping to participate in its exclusives programs. For Amazon, it’s a way to reap the benefits of exclusive inventory, without needing to put in the work of a manufacturer.

“We knew that Amazon was experimenting with exclusive brand partnerships, but it’s become clear that Amazon has switched gears to focus on exclusives. It makes a lot of sense,” said Owens Khazi, senior principal of Amazon Intelligence at Gartner L2. “It’s a win-win situation for Amazon as well as brands on the platform.”

It’s proven to be a winning format for Amazon. TJI Research notes that Amazon has been launching new exclusive brands on a weekly basis over the past several months. It’s a shift in inventory strategy for Amazon that speaks to a broader marketplace transition for Amazon. By simultaneously building a deep inventory of exclusive brands and products while pulling brand partners closer to the chest, Amazon is further solidifying its ability to scale its retail business beyond competitors.

From private to exclusive
Exclusive brands are a critical piece of Amazon’s inventory strategy, because they help Amazon expand its “Our Brands” selection without the pitfalls of private label. In 2017 and 2018, Amazon launched more than 100 private-label brands, according to Gartner L2 research. But outside of recognizable brands specializing in everyday items, like AmazonBasics and Amazon Essentials, studies indicate that the bulk of its private-label endeavors haven’t made much impact. Right now, private label accounts for 1 percent of sales, according to the company.

“It ends up being sunk cost that’s time and money wasted for Amazon,” said Juozas Kazienkas, founder and CEO of Marketplace Pulse, which found that of the 100 private-label brands that Amazon launched in 2018, none are category leaders in areas like fashion, CPG or personal care.

Amazon isn’t abandoning private-label brand launches, but they’re becoming more considered, and it’s leaning on its exclusive brand launches to pad out product volume.

“Amazon was going hard and fast for two years, releasing more private labels but without seeing much traction across the board. A few have been doing really well, but across the board, private label hasn’t taken off,” said Khazi. “Amazon is reevaluating its retail marketplace, and exclusive brands are taking on more priority.”

A robust private-label business has also brought upon regulatory scrutiny around whether or not Amazon should be able to act as manufacturer and marketplace. Just this week, it removed some of the more aggressive promotions of its private-label brands, like ones that were included on competitors’ product pages. Exclusive brands bring more hands into the pot, making Amazon less liable to be called out for unfair practices.

Amazon’s recent changes to its marketplace have included requiring vendors to sign up for its Brand Registry, which requires a trademark, shifting underperforming vendors to the third-party marketplace, and pulling back on price-matching requirements for sellers.

“Across the board, Amazon is trying to clean up its act, and exclusive brands will help it do this,” said Khazi.

Exclusivity on Amazon’s terms
In typical Amazon fashion, its process around exclusive brands has been scattered and opaque. Some retailers, like Merisant, are recruited by Amazon to participate in the Manufacturer Accelerator Program, in which Amazon provides the prompt — manufacture a certain product on a specific timeline — and incentives, like Vine reviews and marketing dollars in exchange for the production efforts and exclusivity.

Third-party sellers on Amazon can also get in through the Amazon Exclusives program, which accepts applications from sellers wanting to bolster their Amazon businesses with Amazon assistance. Sellers in the Amazon Exclusives program have to meet certain requirements around sales performance, agree to sell products only on Amazon and their own sites. They’re selected based on how they’ve been able to prove that they can drive sales traction on Amazon on their own, and differentiated by more unique branding and positioning than the manufacturers, which create items that more easily blend in with Amazon private-label products. Tuft & Needle, for instance, was tapped by Amazon to produce a lower-priced mattress than the one it was currently selling on the site, based on data Amazon offered up about the amount of money Amazon customers tend to spend on mattresses. With the partnership, Tuft & Needle was able to create and sell a cheaper mattress without watering down its brand.

“Amazon is a retailer, but it achieves scale best when it gets others to do the work for them,” said Juozas Kazienkas, founder and CEO of Marketplace Pulse, which recently ran a study on Amazon’s private-label strategy. “That means the risk is on someone else. It creates an environment where brands who want to work with Amazon get advantages that others don’t.”

Brands that work with Amazon to create exclusive products, through either program, get to have their products marketed by Amazon for free, and get preferential treatment in search results. Amazon has begun promoting an “Our Brands” ad carousel at the top of search results for commonly search terms in categories like CPG, personal care and apparel to prioritize its exclusive and owned products first.

“We realized that we could do two things at once: Perform better on Amazon, as well as learn more about how Amazon works internally,” said one brand founder who worked with the Amazon Exclusives program. “It felt like playing the insider’s game after being on the outside.”

By focusing on exclusive brands, Amazon has to convince brands that it’s an amicable partner, and not a brand killer, similar to how Target and Walmart have attracted exclusive partnerships, particularly with DTC brands. Amazon is positioning its exclusive programs as a win-win: Brands who participate succeed on Amazon and lift sales overall.

But one manager at a brand that created an exclusive product for Amazon said that Amazon hadn’t been as much of a resource as it claimed to be when it agreed to work with them.

“Data and metrics are still as scarce as ever, and it feels more like being a cog in a much greater machine than a real partner,” said the manager. “No matter what, Amazon still holds the cards.”


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