Amazon is (quietly) upending private branding. Will others follow?

Discussion
Source: Amazon's Lark & Ro
Dec 08, 2017
Carol Spieckerman

Through a special arrangement, presented here for discussion is a summary of a current article from the Spieckerman Retail blog.

Over the past few years, I’ve touted private brand development as one way to gain distance from Amazon.com while its sights were temporarily set elsewhere, with the caveat that the advantage would be short-lived.

Fast forward a few retail seconds and Amazon has procured hundreds of trademarks and launched piles of private brands across multiple categories practically overnight.

It might seem as though Amazon is just taking a conventional retail practice to a scale-bending level. But Amazon is also defining the evolution of private brands themselves. Research has proven that consumers don’t always associate private brands with their retail owners, but Amazon stands alone by combining a deliberate stealth attack with unprecedented scale.

Amazon-owned brands are presented just like any others on its site. Check out a Lark & Ro-branded dress and you’ll find standard-issue brand statements under “from the manufacturer.” You’ll find no proud declarations and nary a mention of Amazon in the copy. Even Amazon’s eponymous Basics line follows this low-key approach. Amazon doesn’t seem to care if shoppers associate its brands with the mothership. In fact, Amazon might even prefer that they don’t, to the tune of potentially hundreds of new monikers.

I see three main advantages to taking such a contrarian path, particularly in the digital space:

  • Unobstructed affinity – When shoppers aren’t encouraged to think about brand association or mull over private brand economics, they are free to focus on other attributes that play to Amazon’s strengths, like quick delivery, no-hassle returns and competitive pricing.
  • Margin multiplication – Amazon doesn’t have to carefully carve out “good, better, best” propositions and agonize over pricing architecture. Its shoppers define what value means to them during every visit. Amazon can present new brands at profitable price points at will, then track and tweak the details based on shopper response and competitors’ offerings.
  • Platform Loyalty – Amazon’s authority stems from the benefits inherent in its platform, which don’t necessarily parlay into products. Amazon’s inconspicuous brand portfolio ensures that the spotlight stays fixed on its established loyalty-drivers.

Will more retailers forego bragging rights to populate their online platforms with secret brands? Will we even know when and if they do?

DISCUSSION QUESTIONS: Is the scale or stealth-approach of Amazon’s private label strategy a bigger threat to competitors? What benefits or drawbacks might there be for other retailers attempting to emulate Amazon’s secret brand strategy?

Braintrust
"The secret to a successful private brand program has always been to build a stand-alone brand."
"The private label fashion arena was ripe for the taking, and Amazon has stealthily made significant strides to become a force to be reckoned with."
"Scale is the not so secret sauce for Amazon’s private label strategy."

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12 Comments on "Amazon is (quietly) upending private branding. Will others follow?"


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Lee Peterson
BrainTrust

If there’s anything “stealth” about Amazon to retailers now, then it’s already too late for them. But to your point, there’s no doubt that ability to scale, and scale at a rapid, bullet-like rate at that, is by far the biggest threat to retailers today. Remember, Amazon sold 5 million Echos before LAST Christmas right under everyone’s nose. That alone should’ve been a huge wake up call.

It’s like having your car stuck on a railroad crossing. Hopefully you’re alert enough to see that train coming, but what you do about it is altogether another story.

Brandon Rael
BrainTrust

The private label fashion arena was ripe for the taking, and Amazon has stealthily made significant strides to become a force to be reckoned with. Private label offerings have always provided significant value to the consumer. However, when you combine contemporary and basic trendy offerings at the right price, along with the Amazon Prime’s seamless shopping experience, you have a winner.

In addition, not all contemporary fashion brands are featured in the Amazon Marketplace. Through their pricing and Prime promotional strategies, the significance of the brand has been diminished, with value and convenience becoming increasingly more prominent in the consumers’ minds.

In the past, private label offerings were featured side by side with other fashion brands and priced more promotionally. However, via the Amazon platform, their private labels are front and center in their online merchandising presentation, which should be concerning to the fashion industry as a whole.

Bob Amster
BrainTrust

Amazon can afford the luxury of trying out different products, price points and private label names, simply because of its size, that other retailers may not. When this is the case, retailers would be wise to develop one or two private label brands for which they will be known and desired. It’s almost impossible for the vast majority of retailers to compete with Amazon in terms of scale, so they must devise and rely upon other means to compete for a slice the of the overall pie.

Joy Chen
BrainTrust

Amazon has seen huge success with their private label strategy in electronics and their Prime service. This is no different from taking that same private branding strategy to fashion or personal care. Their scale, clout and good value will be a major threat to any retail competitor.

Unfortunately, this private label strategy will not be successful for just any retailers as it has to tie to the broader company strategy. The only other retailer that has been successful in this regard is Target, which provides exclusive brands to uniquely offer value to their consumers.

Neil Saunders
BrainTrust

This is most certainly a threat, especially in apparel. Here, Amazon’s approach makes sense: buying a sweater or dress with the Amazon brand attached does not feel right. A softer sounding brand name like Lark & Ro is far more palatable. Put enough effort behind those brands and you suddenly have an asset and business that is valuable in its own right.

Private label development in fashion is something department stores should have executed years ago. They didn’t do this, at least not effectively, so are now finding the going tough. Amazon is savvier and will thrive in fashion as a result.

The online platform is undoubtedly an advantage. Like ASOS, Amazon can afford to stock thousands of garments and brands and is able to still display and showcase them in a way that’s logical and easy to digest. This is something physical retailers cannot do: they need to edit choice for fashion to work.

Ben Ball
BrainTrust

The difference between a private label and a proprietary (or private) brand is retail owner identification. The secret to a successful private brand program has always been to build a stand-alone brand — not piggyback off the retailer’s name with a cheaper clone. That is, unless the retailer IS the brand a la Lands’ End or Eddie Bauer. Understanding this difference has been the source of the continued underdevelopment of private brand share in the U.S. versus Europe for decades.

Kim Garretson
BrainTrust

I’m almost certain that Amazon deploys technology to “read” and synthesize customer reviews of its vendor-supplied goods in determining how to design, create, brand and promote its own goods attuned to the opinions and desires of its customers.

barbara warren
Guest
1 month 10 days ago

This creates yet another hurdle for competitors to keep up with the ubiquitous Amazon machine. Their ability to produce, react, and scale is clearly a Herculean advantage. That said, there’s also a vast population of consumers that cares deeply about connecting with a brand’s story and ethos, and want to be part of their community. Amazon can not provide that intimate experience.

Mohamed Amer
BrainTrust

I realize this oversimplifies reality, but we have highly differentiated brands that play on high-end luxury or certain lifestyle affinity and then a much larger pool that provides everyday value and performance. Private label fits well in this large value category and by sheer existence on Amazon, proper page positioning, search results, and favorable reviews (and videos), you develop a massive battle front for consumers’ attention and wallet. Scale is the not so secret sauce for Amazon’s private label strategy.

For retailers, they are competing in a new era of highly changed purchase behavior. Amazon competes head-on with Google on exploration and education during shopping journeys. Retailers will either have the brand prominence to initiate searches on their own native websites or to leverage social media and non-Amazon search engines such as Google to guide the path-to-purchase and locate their private label products on the first page of the results (on a mobile device).

Craig Sundstrom
Guest

I don’t know that I would describe this as “stealth,” since most people probably think everything they buy via Amazon “comes” from Amazon anyway (so one might say they’ve been doing this all along … albeit unknowingly). But whatever the semantics, I think it’s safe to say when the World’s Biggest Retailer — or soon to be such — does something, the “biggest” part ends up being more important than the details of what it is they did.

Kai Clarke
BrainTrust

Amazon’s approach to private labeling is all about money. Follow the money. That is why there is no “stealth” or secret brand strategy here. Amazon realized years ago that the majority of their shoppers would gladly pay a slightly lower price for a similar product when they saw the difference between Prime “guaranteed” products and non-Prime products sold on their website. When they took this a step further and advanced into the house branded world (as many others have before them), Amazon quickly realized that their house brand could quickly deliver great value, inside of a Prime managed SKU, regardless of the “branded name” on the product. Amazon has been proving this concept time and time again. It is not the name on the product, but the quality, and pricing of the product which consumers will purchase.

Kenneth Leung
BrainTrust

Amazon is building private label items because of its reach. It doesn’t need Amazon branded products in categories like clothing or food product (especially since it now has Whole Foods), just a good enough brand to stand on its own. Other retailers have a tough time emulating this because Amazon, at its core, is not a retailer, it is a service provider that delivers computing, entertainment, physical goods and retail endpoints. Short of a major retailer going full vertical integration with Alibaba, I don’t see emulation being a valid strategy.

wpDiscuz
Braintrust
"The secret to a successful private brand program has always been to build a stand-alone brand."
"The private label fashion arena was ripe for the taking, and Amazon has stealthily made significant strides to become a force to be reckoned with."
"Scale is the not so secret sauce for Amazon’s private label strategy."

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