Amazon’s aggressive private label strategy
Amazon is increasingly promoting its own brands. As the Lebensmittelzeitung now reports, the world’s largest online retailer is operating in the US market with a new aggressive tactic: An Amazon own brand is now displayed to customers above the purchase button as an alternative to the selected product. This clearly demonstrates that Amazon is increasingly competing with its marketplace sellers. How fair is such behavior?
Already in 2018, the “New York Times” reported that Amazon is increasingly breaking with its original business concept, namely democratizing trade by offering a platform to even the smallest retailer. Amazon is now often in competition with these very retailers. This is what Business Insider writes, referring to this article in its report. Amazon started very slowly with its own brands, but is now gradually working on directing customers away from competitors towards its own brands.
Successful marketplace sellers are being “amazonized”
The fact that Amazon is pursuing a consistent private label strategy in more and more product ranges has been observable for years, explains Dr. Hans-Christian Riekhof, Professor of International Marketing at the Private University of Göttingen. “Price and assortment strategically, this is of course highly attractive for Amazon, especially to oppose a cheaper private label product to the bestsellers of the brand manufacturers in the Amazon assortment. Especially since this usually has significantly more attractive margins.”
Amazon learns a lot from the sales figures of the sellers on the Amazon Marketplace. When bestseller products are then replaced by Amazon products, this is called “to be amazonized”, explains Riekhof. The fact that Amazon displays an Amazon alternative directly above the “Buy” button in the offers of its marketplace sellers in the USA means for the customers that they can decide what they find more attractive. “Whether the Amazon Marketplace remains attractive for the strong sellers in the long term is another matter”, says the marketing expert. “And whether they perceive this strategy as fair, likewise.”
Photo: Simon Steinberger by pixaby.com
Further links:
Lebensmittelzeitung (Paywall):
https://www.lebensmittelzeitung.net/handel/Produktplatzierung-Amazon-rueckt-Eigenmarken-in-den-Fokus-142348?crefresh=1
Stern (2017):
https://www.stern.de/wirtschaft/news/amazon–die-geheimen-eigenmarken-des-onlineriesen-7577786.html