Two Million Brands on Amazon

There are close to two million different brands on Amazon, according to Marketplace Pulse research. While a traditional retail store would have tens of thousands of products, with the largest Walmart stores surpassing one hundred thousand products, Amazon has infinite shelf space, and thus it has an endless number of products.

The fundamental difference between a retail store and Amazon is that stores are constrained by physical space, forcing them to curate selection for their locale looking for optimum pricing, selection, and inventory. Amazon, on the other hand, has no physical constraints (outside of the space in warehouses which self-select the best stock by increasing fees), allowing it not to be selective about products or vendors. It could have as many vendors on the wholesale side and as many sellers on the marketplace as there is out there.

Chris Anderson in the book “The Long Tail: Why the Future of Business is Selling Less of More” wrote: “These infinite-shelf-space businesses have effectively learned a lesson in new math: A very, very big number (the products in the Tail) multiplied by a relatives small number (the sales of each) is still equal to a very, very big number. And, again, that very, very big number is only getting bigger.” Infinite shelves have no marginal cost, the cost added by adding one additional unit of a product. Cris writes, “The act of vastly increasing choice seemed to unlock demand for that choice,” rendering unlocking that demand with no marginal cost a no-brainer.

Of course, all of that endless choice goes to waste if it cannot be discovered and found. Because of this, Amazon’s job is not curation but building search algorithms. It doesn’t need to decide which products and brands are best; all it needs to do instead is build an algorithm which can learn that. The product choices it displays first in search or the suggestion it provides when someone asks Alexa for a product is Amazon’s primary task. That algorithm hides the vast sea of products from consumers and - in theory - presents them with the best choice.

Because of the selection powered by Amazon search, many of the two million brands never get seen. Only 10% of those brands are one of the top 100 best sellers in any of the tens of thousands of categories on Amazon. Two hundred thousand different brands making up top 100 best sellers across Amazon is still an alarmingly large number, however. That number is notable because, yet again, marginal cost. Any seller on Amazon can create a “brand” in a few seconds by filling out the new product form. It doesn’t need to be a trademarked brand name; it can be any string of text.

More than 650,000 different brands were one of the top 100 best sellers across all categories on Amazon in the past twelve months. Given that only 200,000 brands are in the top 100 now, that’s 450,000 brands which came up and then disappeared. Simple math shows that it is more than a thousand brands every day for a year. Most of the two million brands on Amazon are random creations. In the context of Amazon, they are different brands because they are spelled differently, even though that includes misspelled, mistyped, and otherwise erroneous names. The quality of that list is the result of infinite shelf space with zero marginal cost.

The number of top 100 best sellers is constant. It is one hundred, of course. However, the number of choices competing for one of those one hundred slots is ever increasing. Every day there is more competition, every day there is more demand for aggressive and often illegal tactics to beat the competition. Amazon is at constant war with no end in sight to hide this from shoppers.

In categories like charging cables, phone screen protectors, and headphones brands get born and disappear daily. In the headphones category on Amazon, 2,435 different products from 766 brands were one of the top 100 best-sellers in the last twelve months. Those short-lived brands only exist on Amazon, and only as a different name in the product form, in reality, the manufacturer is selling the same product, often juggling suspensions by creating new seller accounts and thus new brands.

“A best-seller and a neverseller are just two entries in a database; equal in the eyes of technology and the economics of storage,” wrote Chris Anderson. The Apple AirPods wireless headphones, the undisputed best selling headphones on Amazon, are equal to dozens of new headphone brands created on Amazon every day. They are all just entries in a database.

These large numbers make the Amazon search algorithm ever so important. Every second it gets bombarded with new brands, new (often) fake reviews, and new sellers. In all that noise, it tries to find products consumers would like. On the supply side, it deals with an endless choice of products and brands, because that endless choice is what made Amazon. On the demand side, it needs to make that choice invisible. It’s when shoppers start clicking “Next Page” in search results when they realize that there is always the next page.

All of this has one major problem, however. Amazon is consumer-obsessed, and most of the businesses bombarding Amazon’s shopping platform are not. They are gently - and sometimes not gently at all - exploiting the massive demand on Amazon to try to squeeze their product in. The hidden cost of the infinite shelf space is degrading catalog quality, putting pressure on the systems and eventually consumers to make sense of it all. Amazon has not yet figured out how to tame what made Amazon - the infinite shelf space.

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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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