Private label nuts, spices, tea, coffee, baby food, diapers, vitamins and laundry detergent sold under brands such as Happy Baby, Wickedly Prime and Mama Bear, will debut on Amazon.com in the coming weeks, and be merchandised exclusively to members of the retailer’s $99-per-year Prime service, according to a Wall Street Journal report.
SN discussed Amazon.com’s anticipated new private label offering with Julie Quick, SVP of insights and strategy for Shoptology, a shopper and retail marketing agency. Following is a transcript of that discussion.
SN: How might Amazon’s new private label offering impact its relationship with other brands, especially given its level of sophistication when it comes to personalized product suggestions?
Quick: I do think it was really interesting for Amazon to be getting into this business in which it’s dabbled before and is making a fairly large commitment to get into now. I think that any time a retailer, brick or click, provides a private label product they’re going to be competing with brands. I think the question is why does the retailer get into the private label business? Hopefully it’s not to compete with the products they already carry but to fill some gaps. So if we look at traditional supermarkets, most of them have entered private label to fill a value gap. To get that opening price point item that is of good quality but a little less expensive or you find companies like Trader Joe’s that have a private label because they didn’t find brands that exactly met their store’s point of view, so they needed things that were more clean ingredient or offered a unique flavor profile. So Trader Joe’s entered into private label for a really different reason. I think it will be intriguing to see where Amazon goes. What do they perceive as the gap in their current offering that they need to fill for shoppers and is that more about value? Is it more about a brand point of view or something else entirely?
From a strategy standpoint you’d hope it’d be about offering shoppers more variety instead of more duplication and you have to imagine that in the world of Amazon there are still some pretty significant gaps because a lot of the brands, even big companies, who we find lining the grocery store shelves, not all of them have made the launch into Amazon so the product selection in Amazon categories like paper, like food and other types of consumables is certainly more limited than what you’d find in a traditional market environment and I’m sure that Amazon wants to answer for that.
SN: The WSJ report mentioned that these items will be sold under brands such as Happy Baby, Wickedly Prime and Mama Bear. Why do you think that Amazon isn’t calling this an Amazon brand and sort of hitting people over the head with something that screams private label?
Quick: Well you know, when you think about the Amazon brand it does have a lot of trust, it does have a lot of love but a lot of that comes more from the availability and logistics as opposed to manufacturing for quality and so they may need to redefine an aspect of themselves that’s clearly got that mission. You don’t want it just to be about we do things fast, which is kind of Amazon’s core equity, we do things fast and on the cheap. You might need to create some new attributes around the brand and a new brand name might be a way for them to cultivate a little bit more of those other qualities.
SN: Why does it make sense for Amazon to expand its selection in this way now?
Quick: It is curious as to why they feel the time is so right but when you think about ecommerce, especially around consumables, it has moved really quickly. Even if you go back two years, the adoption and the trust in ecommerce for consumables was really different. So I think it’s just a matter of the opportunity has probably ripened versus where they were in 2014. And there has been enough change in the market for adoption that they’re looking at that now. Obviously their strategy to offer this to Prime members is also very interesting because they feel like they’ve cultivated a big enough base of passionates that they feel like they can translate all of that love and trust from the basics of the Prime service to potentially an exclusive line of products.
SN: What do you foresee happening here? Do you think Amazon will be successful with this?
Quick: I think it will be successful in some categories more than others. And so perhaps not every category they launch will stick because I think they’re going to find the boundaries of consumer trust. They are great at logistics and delivery and do have some credibility around product curation, although they’re known for being kind of an everything store versus a really selective store. Their trust as being a manufacturer or someone who coordinates that aspect of the business is probably going to vary by category. They’re probably going to be wildly successful in paper products and they’re probably going to struggle more in health and beauty and in food.
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