Following reports that Amazon has scrapped 27 of its 30 own label clothing brands, Matt Taddy, vice president of Amazon Private Brands says: “We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands – like Amazon Basics and Amazon Essentials – for great value with high quality products at great price points.”
Amazon is streamlining its private brands and rebranding many popular items under its existing ones such as Amazon Basics, Amazon Essentials and Amazon Aware.
GlobalData retail analyst Neil Saunders tells Retail Insight Network the company categorises a lot of private labels into clothing and other sectors but he describes its approach to private labels development as “a bit scattergun and not always entirely consumer-centric”.
He adds: “One of the biggest issues is that Amazon’s own labels tend to get lost in a sea of other things on the website and consumers can easily overlook them.”
However, Amazon claims to be thoughtful about its private brand selection with Taddy explaining: “If there are products that aren’t resonating with customers we deprecate those items and look for other opportunities to better meet their needs.”
Head of apparel at GlobalData, Chloe Collins agrees with Saunders and says that although superior for other categories, Amazon does not cater to fashion shoppers noting that its website “lacks inspiration” and holds so many brands that its in-house ranges get lost and lack a strong identity.
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She also agrees that the company’s tactic to cut its number of brands is a good move and believes Amazon still has a long way to go to build its credentials as a fashion destination but suggests it should “try to get a few core ones right first, so its efforts aren’t being spread too thinly.”
US publication The Wall Street Journal has reported the Federal Trade Commission is preparing an antitrust lawsuit against the company with Amazon representatives scheduled to meet with FTC commissioners next week as part of a formality often called “last rites” before the FTC drops its lawsuit next month.
The publication claims Amazon has said private brands account for just 1% of the company’s total retail sales and adds: “Given the small size of the business relative to the regulatory issues it creates, the company last year discussed offering to exit from the business as a concession to the FTC if the agency followed through with its lawsuit.”
However, Saunders explains: “There is nothing remotely unusual about Amazon developing its own private labels as most retailers, including Walmart and Target, have their own brands in apparel and other categories. It’s a standard part of business. So is pruning ones that don’t work.”
He continues: “If Amazon is cutting labels that are not successful, then it has obviously not been able to use all its power and knowledge to outcompete other brands.”
Amazon’s Q2 2023 results still surpassed Wall Street’s expectations with an impressive 11% year-on-year rise in earnings results.