The news: Amazon will significantly reduce the number of items it sells under its own brands following a profitability review of each private-label item it sells, per The Wall Street Journal.
Slow sales: Amazon’s house brands—like Amazon Basics, Goodthreads, Stone & Beam, and Solimo—compete in categories ranging from batteries to men’s clothing to furniture to vitamins.
Execution matters: Private-label brands are most effective when they are differentiated by more than just price, said Suzy Davidkhanian, eMarketer principal analyst at Insider Intelligence. That’s because price is no longer the only driving factor behind private-label brands’ success. Retailers like Costco are using their house brands to differentiate their offerings and drive loyalty (and repeat sales).
Antitrust considerations: Another factor behind Amazon’s strategic shift is the large number of antitrust regulators that have Amazon under the microscope.
The big takeaway: In a challenging retail environment, no retailer is immune to market considerations. After posting its slowest growth in roughly two decades and its first quarterly loss since 2015, Amazon is achieving two objectives in one move by trimming back on its private-label business: It’s focusing on more profitable lines while also attempting to reduce regulators’ antitrust concerns.
Go further: For more on private label brands, read our latest report here.
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