Amazon’s own branded business product line began in 2009. The early products launched by the AmazonBasics brand were mainly batteries, transmission lines, power cords, etc. Among them, the battery is the most popular product, and the price is lower than that of Energizer, Duracell and other famous brands. %. Perhaps Amazon’s team did not even think that, without the promotion and brand operation of its own-brand products, it quickly occupied the market segments with the support of Amazon’s e-commerce platform. In particular, the battery, AmazonBasics in the United States accounted for more than 30% of battery sales, exceeding the Energizer and Duracell batteries.
Within a few years, Amazon could quietly take down the battery market, and its outstanding performance has made Amazon aware of the market potential of its own brand products. With its large-scale expansion of its own products, creating new products for different consumer brand markets, Amazon launched only more than 50 private brands for different markets in 2017. Currently, the number of its own brands has exceeded 100, but few The name of the brand is Amazon. It is a brand new name, such as Spotted Zebra, Men’s underwear, Good Brief for men’s underwear, Wag for dog food and Rivet for household items.
On the Amazon platform, it is difficult for consumers to see that these brands are operated by Amazon, but only in the retailer model. This can effectively distinguish between e-commerce platform and its own brand. Own-brand products are also one of the Amazon e-commerce business support services. In order to attract more consumers to become Amazon Prime members, some private-label products are limited to Prime members only. According to SunTrust Robinson Humphrey’s report, with the support of the e-commerce platform, Amazon’s own-brand product revenue is expected to grow by 100% over the next 4 years to US$25 billion, equivalent to 2017 annual Macy’s annual revenue. .
Amazon’s own brand has a unique advantage in pricing, not just competing with rivals at a low price. Amazon conducts a comprehensive analysis of user data, search results, sales data, etc., and uses product design, pricing, and display to guide more users away from the opponent’s products and to choose their own branded services. For example, using Alexa, Amazon’s voice assistant, there is often only one option to buy a battery, which is AmazonBasics.
The growing revenue from private label revenue also poses a threat to retailers on the Amazon platform. Even if Amazon takes market and profits, these retailers have no choice but to continue to sell products on the Amazon platform. Using the advantages of the platform to sell its own brands, the law also faces controversy over suspected monopoly.
If you search for a battery on the Amazon platform, the advertiser’s product appears first on the results page, followed by the AmazonBasics brand battery, often with labels such as favorable reviews and best-selling labels. However, some products have high ratings and few evaluations. . Big brands often invest millions of dollars in Amazon’s platform to promote products and purchase better product placements, but Amazon’s own brands are getting more and more promotional resources.
Walmart, Costco, a large retailer, once launched its own branded products. Since there is no need to invest a lot of money in national marketing promotion, the prices of these products are lower than those of its main competitors. Amazon’s approach is nothing special. Amazon only needs to look at which products have better sales, greater demand, or market gaps. At the same time, manufacturing and shipping costs are relatively low, and they can develop their own branded products.
Amazon also has technical advantages and large user profiles that other retailers do not have. When a user searches for a product, 70% will not specify a brand, but will only search for a product category. What Amazon can do is make its own brand products appear at the top of the search results page. It can also send targeted product promotion emails to attract pop-up ads. The user enters Amazon’s website. But other retailers need to join the Amazon Retail Analytics Premium program to use partial data to analyze user behavior. The price for joining the program is at least US$100,000 or 1% of Amazon’s cost of merchandise on the shelf, and retailers can use only part of it. Information, not all information.
Amazon can analyze user reviews, identify product categories that have a large number of bad reviews and high demand, and design and upgrade products based on user evaluations. When Amazon developed its own branded products, it did not start in large quantities. Instead, it ordered small quantities of goods from manufacturers, tested pricing and sales on Amazon’s e-commerce platform, proved the market prospects of the goods, and began mass ordering or product upgrades. The competing brands are fighting a battle that is hard to win.