With over 400 private label brands including more than 23,000 products, Amazon is competing head-to-head with its sellers. But how much of an advantage do they really have?
Amazon started selling its own private label brands back in 2007, and since then has scaled to over 400 brands and 23,000 products. Sounds high, right? Well that’s because not all of their products have “Amazon” in the name. You sneaky mom, Amazon!
It kind of seems like NBD until you consider that you, an innocent FBA seller, could be unknowingly competing with THE Amazon.
The bad news:
- Amazon has some unfair advantages, specifically in advertising, custom website abilities, and shopping data.
- If “Amazon” is in the product name (e.g. AmazonBasics, Amazon Collection, and Amazon Essentials), it’s probably crushing. For example, 5.4% of the top 1,000 search terms on Amazon result in a customer clicking on an AmazonBasics product as one of their first three choices.
Now before we all say “hey, no fair!”, let’s get to the good news:
- Forbes predicts that Amazon will slow down or even stop the expansion of its private label brands in 2021 aka right now. Why? Because antitrust investigations aren’t exactly making Amazon look great.
- Private label brands have historically only made up 1% of total Amazon sales. Amazon isn’t motivated to become the #1 seller and dominate every category.
Most of their private labels are no threat. However, there are several categories we’d recommend treading carefully in (or maybe not treading in at all):
- Electronics – Between big-name brands, patents, and manufacturing challenges, the odds are not in your favor.
- Amazon Basics and Essentials – Amazon has some pretty hard-to-beat prices. If you’re looking for profit margin, look somewhere else.
- “Hard to sell online” stuff – Furniture, home decor, women’s clothing…using advanced technology and logistics advantages, Amazon is making moves.
So if you’re up against an Amazon private label that matters, consider pivoting. There are still niche categories out there that Amazon hasn’t touched yet. Go where no FBA seller has gone before!
