Yes! Amazon Has Not Cracked Private Label

Much is made of Amazon’s private label prowess, but Jumpshot presents a mixed picture. AmazonBasics accounts for 88% of its private label conversions, and it leads only in electronics (which are nearly half of those purchases). Take out AmazonBasics, and the e-commerce giant owns just 7% of conversions market share. “Amazon doesn’t have private labels cracked,” the report notes.
— Jumpshot via Retail Dive

I agree. For a number of reasons. But before going there, we need to address the stigmas of private label. 

Private label brands have been on the retail scene for decades. There will always be a customer willing to purchase a lower cost brand and not fall victim to marketing. 

All multi-brand retailers give private labels a shot. Depending upon the category, private label sales can account for up to 40% of the overall category sales.

So why is Amazon any different for releasing private label product? Some may argue because they can take the first search result spot. Is that any different than Target providing an end cap in the most important aisle in their stores? Brands pay for that spot. Just like they do on Amazon. 

I'd even argue that setting up a private label on Amazon is harder than in-store. Why? Imagine the long tail of brands and products on a marketplace like Amazon versus a store shelf that may have several brands. Gaining scale is much more difficult. 

Another argument I hear about Amazon is they will steal your sales data to release their own private label. Is that true? Yes. But is that any different from selling a brand to Macy's, Kohls, Target or Walmart? Nope.

Focus on private label or branded merchandise often depends on the type, size or financial state of a retailer. Retailers short on top brands looking for margin improvement might emphasize private label whereas retailers with a strong portfolio of brands may push private label aside.

So has Amazon completely cracked private label? No. The process takes time and refining. We will see this play out for as long as Amazon keeps selling product. Private label is here to stay and always will be.