Inside Amazon's $300 million private-label business
Stefany Zaroban | Oct 2, 2017
The merchant's AmazonBasics brand accounts for nearly 85% of all of its private-label sales so far this year, while its apparel and baby care brands are growing at 90% year over year.
New data released this week suggests that Amazon.com Inc.'s recent push into offering more private-label goods is paying off and driving big sales.
Amazon.com Inc. is selective about what information it discloses about sales on its platforms. It doesn't, for example, break out its private-label sales in its public filings. It only discloses revenue by media, electronics and other general merchandise.
2019 Amazon Report
However, a report from retail analytics firm One Click Retail suggests Amazon has sold roughly $300 million worth of its private label goods so far this year, a 12% increase compared with last year.
To put that into perspective, Internet Retailer estimates that Amazon sold $271.4 billion worth of goods globally last year—both of its own products and of products listed by other sellers on its marketplace. So its private-label business represents a very small amount of total sales on its platforms, and that 12% growth is far slower than total sales on Amazon—estimated at 20%. (Amazon's private label goods are sold globally, though some brands are only available in certain markets.)
Still, many merchants, and Amazon sellers in particular, compete head-to-head with Amazon private-label brands in categories like electronics, baby products, apparel and groceries, so understanding Amazon's private-label strategy could be important for some retailers.
The bulk of Amazon's private-label sales, or $250 million so far this year, comes from its AmazonBasics brand. Amazon launched AmazonBasics in 2009 primarily as an electronics brand, selling items like HDMI cables and batteries, but it has since branched out to include such home necessities as bed sheets, bath towels and knife sets.
Among the top 20 bestselling private-label products on Amazon.com, 19 fall under the AmazonBasics label, One Click says, with an Apple-certified USB charging cable as the top seller at more than $10 million in sales so far this year.
The one product that tops the best-selling private-label list outside of the AmazonBasics brand is the Amazon Elements Baby Wipes, which has generated $2.5 million in sales year to date, One Click estimates.
While AmazonBasics account for nearly 85% of Amazon's $300 million private-label business, the remainder is made up of sales from 45 other brands. And some of Amazon's newer and lesser-known names are driving much of the company's private label sales growth.
Women's clothing line Lark & Ro, which Amazon launched quietly early last year, has generated roughly $5 million in sales so far this year, One Click estimates, with 90% growth over last year. Amazon Elements, which is primarily baby care products and vitamins, drove $10 million in sales—also up 90%.
Amazon's private-label apparel products
Internet Retailer | Apr 18, 2017
Additionally, after Amazon acquired Whole Foods this summer, it immediately began selling approximately 2,000 of Whole Foods' private-label 365 Everyday Value brand products.
In its first month on Amazon, consumers bought more than $1.6 million worth of 365 brand products across Amazon's various grocery segments, including Amazon Pantry, Amazon Fresh, Amazon.com proper and Prime Now, One Click estimates. In the fourth week, the brand outsold Amazon Elements.
One Click's data suggests Amazon was not prepared for this level of demand for the 365 brand, as only 7% of the top 100 items remained in stock at the end of the first week of their listing on Amazon, resulting in a 38% drop in sales during the second week due to out of stock items.
"It's too early to quantify the full impact of the Whole Foods acquisition, but it is clear Amazon will make a major impact," says One Click Retail CEO Spencer Millerberg. "What makes this Whole Foods-Amazon combination so powerful is (1) the treasure trove of data now accessible, (2) the resources to produce nearly 50 labels and counting, and (3) unparalleled operational execution that can release over 3,000 products, 1 day after acquisition. Amazon sellers can learn a great deal about how to compete, simply by watching Amazon's private-brand strategy."
One Click Retail uses a combination of website indexing, machine learning and proprietary software to estimate Amazon's weekly online sales figures at the SKU level. Amazon did not respond to a request for comments on its private-label business.
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