Amazon started off as a book retailer, selling goods published by other firms and it expanded as a retailer into other verticals over time. Subsequently it started letting other merchants sell their goods on the marketplace. But one of the growing trends for Amazon is that it’s making considerable advances when it comes to selling its own private label goods.
In the first half of 2017, it’s reported that the retailer sold a total of $2bn worth of its own products. A great chunk of this was by way of its various devices such as Echo, Kindles and Fire tablets and the rest. But it doesn’t stoper there and you may be surprised by the other items Amazon sells itself. Indeed, almost 10% of the $2bn dollars came from AmazonBasics, which was the top performing private label for Amazon.
AmazonBasics sells things like phone cables, chargers, pet related goods, homewares: nearly 2000 products in all. And that generated $210m in sales in the first half of this year.
And, as Chris wrote earlier today, they’re increasingly involved with creating fashion brands too.
This sort of activity is good for Amazon because it means that they likely profit more from such sales. But it is also a salient reminder for Amazon sellers out there: Amazon is your competitor.
Obviously on eBay it’s just retailers making the sales. eBay never sells its own goods. But on Amazon not only do they sell goods themselves they manufacture them for sale too and also have the power to give themselves prominence. So if someone searches for a particular widget they can ensure that they get top billing in the search results.
They can also manipulate the competition in other ways, with fees for instance. A few years back they dramatically hiked fees for electrical accessories making it unviable and unprofitable for third party sellers in those categories.
Do you sell in a category where you are competing with Amazon and one of its private label brands?
5 Responses
Amazon seem to be increasing the amount of Sellers who are being brought into its Vendor brand – allowing more third party marketplace items to be covered and branded through Amazon.
I am sure they will use seller and vendor metrics to determine what they can manufacturer and source themselves through the “basics” brand, also the brand awareness and competition is of some concern to sellers, ultimately their decision will be based on – “do we make more money from the third party or ourselves”
I think governments have to take some initiative as amazon should not be allowed at all to sell their own products or other products via their own platform . It is marketing itself as a marketplace but at the same time it is selling on that marketplace, this is not loyal competition . I think amazon should be fined same as google was and asked to stop this practice for good or stop being a marketplace and sell just it’s own products. What they are doing now is wrong and illegal I would say.
Amazon does not make any profit on its fire range of tablets and also echo range. They are sold at cost to bring people into Amazons ecosystem where they then sell goods and services such as music and videos.
I read an article last month that for India’s month long religious festival in India which starts in october, Amazon will be introducing a 100,000 own branded goods which will also possibly find their way on Amazon s US and EUROPE market places. I presume that Amazon has taken advantage of India’s very cheap and extensive Labour pool and set up manufacturing their.
Own branded goods is very profitable because it should have a mark up of between %30 to over %100. What Amazon should start doing is selling its own branded smart home appliances which would then compliment it’s echo range of smart speakers.
You can’t blame them for doing it, especially with items sold through FBA, like it or not they are a powerhouse.
You pay them to sell your items, store your items, send them out and you still make a profit, a profit they could be making themselves.
Many Amazon buyers never look anywhere else but their market place
I dont agree with tyler, without 3rd party sellers they would have never become a powerhouse. I would really want some governments to take initiative and ask them to choose to be either a marketplace or an e-commerce website, they can,t have the best of both worlds which is what they are having now. We boost their popularity by offering our products on their website for which they charge, they should just stop here but instead they use us only to get back to us and compete again us on they marketplace which is totally wrong