The eCommerce giant Amazon’s efforts to create its own private-label offerings in different product categories appears to be on the rise, with the company reportedly recruiting partners in its Amazon Exclusives program, reported Retail Dive.
According to the unsourced report, by offering more brands the ability to create products exclusively for the eCommerce company, Amazon could help broaden its selection and differentiate itself even further from other retailers and online merchants. What’s more, the report noted that Amazon can accomplish this without having to spend the time, labor and effort to create and promote its own brands.
Amazon has been focusing on its private-label strategy since last year, getting companies to share 5 percent of their product revenue with Amazon in exchange for access to its exclusive distribution and protection from counterfeits. The report noted that while Amazon won’t get all of the revenue because it is partnering rather than developing its own products, it will be able to offer brand names and merchandise that consumers wouldn’t be able to get elsewhere, which could drive even more business its way.
While Amazon is just getting started in the private-label market, it is already resulting in some impressive forecasts. In the summer, SunTrust Robinson Humphrey projected that Amazon’s private-label business could reach revenue of $25 billion by 2022.
“As strong an eCommerce platform as Amazon has become over the last 20 years, we believe that the best [is] yet to come,” wrote the Wall Street firm at the time. “Private label is one of the highly underappreciated trends within Amazon, in our view, which, over time should give the company a strong … competitive advantage.” He noted that Amazon’s clothing and footwear private labels are the fourth most purchased brand, surpassed by only Nike, Under Armour and Hanes. The analyst predicted that total private-label sales in 2018 could be around $7.5 billion.
Date: February 21, 2019