Amazon Continues Expanding into Private Label Brands
As of writing this article, Amazon is selling its own products in 8 categories with 135 private label brands and 322 exclusive brands. In December, Amazon Basics launched their first private label toys for children.
In July of 2018, Amazon Basics started selling motor oil. Most drivers don’t care about the brand of motor oil they put in their vehicle; instead, the choice is primarily driven by price. Amazon basics has a lower price than Castrol and Pennzoil and has the same price as Valvoline. Since July, the share price of Valvoline has dropped by 17%, hitting a low for the year in December.
For the search term “motor oil” the Amazon Basics product occupies 6 of the 22 results on the first page, including the 2nd sponsored slot (sponsored product advertisement) and 2nd organic slot. Amazon basics has a lower price than Castrol and Pennzoil and has the same price as Valvoline. In addition to paying for sponsored ads, Amazon brands have the opportunity to appear in special sections of search results called “Top rated from our brands.”
Amazon has been collecting data on the buying trends of customers for over 20 years. With the wealth of data, they are able to create successful product launches in each category. According to Bloomberg, Amazon’s brands are “able to capture 25 to 40 percent market share in a unique item within the first six months of sale”.
The dual role of Amazon as both a marketplace and a retailer has led to speculation from lawmakers around the globe. In September the EU started a preliminary investigation into Amazon over potential antitrust violations. German officials have launched a similar investigation. As Amazon continues to grow, their tactics come under more scrutiny from the public.