Amazon May Not Pose As Big of a Threat As Once Imagined

Amazon sells more than 550 private label and exclusive brands on its e-commerce platform. Many of the private label offerings have been introduced in the last two years, creating shock waves throughout brick-and-mortar retailers with claims of unfair competitive advantages from manufacturers of everything from apparel to consumer-packaged goods. Those initial fears that Amazon would devastate more established industries have now proven to be unfounded. A recent Marketplace Pulse study of 23,000 products sold on Amazon found that consumers are not more inclined to buy Amazon private and exclusive brands, even when Amazon elevates them in search results and even though Amazon owns more than 50 percent of all online spending in the U.S.

Categories where Amazon private label brands have been successful include batteries, because consumers may like a money-saving generic alternative to Eveready or Duracell. Amazon's children's wear brand "A is for Awesome" has not stood out, according to the study. In his book Re-Engineering Retail, Doug Stephens points out that Amazon is the quickest way from "wanting to getting." The company basically commoditizes everything, but home goods, apparel, and luxury products are emotional purchases. Consumers have long-standing brand loyalty to fashion and other categories. The struggle Amazon has with its unrecognizable private label brands is that there is no reason for consumers to buy them other than price. If consumers are only concerned with the lowest price, Amazon's private label may be their preferred option. But for everyone else, probably not, at least for now.