Amazon Is Good at Building Generic Products, Not Brands

Since the launch of AmazonBasics in 2009, Amazon has been building and testing more brands. Lately their focus has been in apparel, where last year Amazon launched 7 fashion brands.

Out of the 7 fashion brands launched last year, Lark & Ro is the most successful one. However, all of their fashion brands have an average rating of 4 out of 5 stars or less, and none of the products are best sellers in their respective categories. So while those brands are priced competitively, they haven’t impacted sales of bigger brands.

Some apparel brands still refuse to sell on Amazon, so Amazon launching their own brands is an attempt to fill demands gaps. Amazon has more data on products than any other brand or retailer in the world. So they’ve been using it to pick niches to build products in. But brands themselves have industry experience and years of work on their side, which so far has been more valuable than data.

AmazonBasics is no doubt successful though, with hundreds of thousands of reviews across over a thousand products. Most products are also well liked, with an average rating of 4.3 out of 5 stars.

There has been big stories about Amazon copying existing successful products, with titles like “AmazonBasics is copying all the best products on Amazon and selling them for less”. We think this threat is exaggerated. Amazon has launched some successful copies, but overall AmazonBasics has been more focused on launching generic brand-less products like cables and batteries. Anker, one of the successful electronics brands, is more at risk than anyone else.

We have noticed that Amazon prioritizes their own private label brands. When it comes to search results and product recommendations, if Amazon has a relevant product they will show it higher. As Amazon grows and starts to control majority of the US e-commerce market, prioritizing their own products won’t be accepted by regulatory organizations. They are currently using this technique to kickstart brands, but we don’t think they’ll be able to do so for long.

Amazon has so far done really well by launching generic products - products which do not depend on a brand. Batteries, cables, other electronics are a good examples of this. Customers do not pay attention to the brand, the only thing which matters is price. Amazon are using their scale to build these sort of products and under-price the market.

But Amazon hasn’t yet figured out how to build brands. Sales of Lark & Ro apparel products are growing, but likely a lot of this is driven by search optimization and Amazon prioritizing own products. Few customers have an emotional attachment to Lark & Ro, like they do with Nike, Adidas or any other brands. It might be argued that Amazon’s fashion brands are capturing the long-tail of the category where most customers do not pay attention to brands already though.

We think the threads posed by Amazon’s own private label brands are small for most brands. Amazon will continue to research and expand, but brands shouldn’t fear them too much. Like we’ve written in Un-Amazon-Able Is the Only Way to Compete with Amazon, brand building is not something Amazon has been good at, and thus it remains an opportunity for others.

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Juozas Kaziuk─Śnas

Founder of Marketplace Pulse, Juozas wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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