Will Amazon’s new private label give Pampers a run for its money?

Discussion
Dec 05, 2014

Amazon has launched Amazon Elements, a new line of private label diapers and baby wipes offered exclusively to Amazon Prime members. The launch has been rumored for over a year based on job postings.

On a landing page for the new brand, Elements is described as "Premium Products. Transparent Origins. Exclusive to Prime."

At launch, there appear to be nine products listed under the label, ranging in price from $9.99 for 40 "Soft & Cozy" diapers to $44.99 for a "monthly pack" of 160 diapers.

[Image: Amazon Elements]

Seven of the nine products are available through PrimePantry, the national program featuring everyday household essentials Amazon launched for Prime members in April 2014. One pack (the monthly pack) is eligible for Subscribe & Save, another Amazon program offering savings for regular shipments of high-frequency consumables.

Amazon says it is developing the new products with customers in mind based on input from ratings and reviews. The company claims it won’t "design packaging for store shelves instead of customers" or "base our decisions on business needs instead of customer needs."

The Elements line also emphasizes transparency about the origins, safety, and environmental impact of each product. Amazon will disclose the source and purpose of ingredients used in its products, and each package will display a unique code with the product’s history from "creation to expiration."

Re/Code writer Jason Del Rey compared the brand’s positioning to that of Honest, the fast-growing diaper brand co-founded by actress Jessica Alba. Honest is available at Target but is not distributed at Amazon.

Elements is not Amazon’s first private label. It also offers the AmazonBasics line of electronics accessories as well as Pinzon (home décor) and Strathmore (furniture). The impact of these labels in their respective categories is unclear.

As Amazon’s investments in grocery and CPG categories through PrimePantry and the expansion of AmazonFresh have increased, the opportunities for strategic collaboration between Amazon and leading brands have appeared to strengthen. But the introduction of private label consumables could have implications for Amazon’s relationships with leading national brand manufacturers.

The diaper category has been instrumental in Amazon’s growth with families, in part due to strong support from leading brands. Amazon is reported to be a top five customer of P&G’s Pampers brand, for example.

The absence of competition from private label has historically been a key selling point for doing business with Amazon — one that may now be disappearing.

How successful do you expect Amazon’s new Elements private label will be? How will Elements affect Amazon’s relationships with suppliers?

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17 Comments on "Will Amazon’s new private label give Pampers a run for its money?"


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Frank Riso
Guest
3 years 4 months ago

For the families that have two working parents and do a great deal of shopping online, this is good news. It will be somewhat successful, but not a worry to the likes of Pampers, or even Walmart. Amazon suppliers will continue their relationship and all will be OK with only minor changes. The consumers are too numerous for anyone to back away from Amazon.

Peter Charness
Guest
3 years 4 months ago

Price, quality, convenience. If they get that part right then it works. As for suppliers, well, retailers carry multiple brands including private label, so it does seem to be an accepted model. And private label can get better placement in-store so if Amazon decides to make sure its own products get search and feature prominence that’s fair game as well. In fact Amazon goes out of it’s way to feature Marketplace and “this product can be found at a lower price” links.

Nothing particularly different here from any other retailer with a private label program. As to whether Amazon has the skills to be a fully integrated retailer/brand company AND make money at it—that’s another story.

Tony Orlando
Guest
3 years 4 months ago

If the product performs and saves the Amazombies money, then it will do well. If the product is produced in China, then many will opt out. Only a mother would know if it is good for their child, and the first purchase could be easy, but the second one will be made if it meets the needs of what a mom expects. Could be huge for them.

Max Goldberg
Guest
3 years 4 months ago

I expect consumers to use Elements if it’s priced below national brands and if it delivers on its brand promise. If successful, it will have a negative impact on national brands, but those brands are not in a position to pull their products from this retail giant.

Though Elements is offered only to Prime members, Amazon also controls another segment of the baby market through Quidsi and its diapers.com.

Amazon is determined to bring benefits to Prime members. Sometimes this will benefit national brands, other times it will not. Brands and retailers need to understand that there is no “business as usual.”

George Anderson
Guest
3 years 4 months ago

I haven’t seen the recent IRI or Nielsen numbers on disposable diapers and wipes, but these two categories include both popular value brands and frequent, aggressive price promotions from the premium national brands. In short, diapers and wipes aren’t cheap and parents are always on the lookout for deals. Amazon will need to keep its pencil sharpened because P&G and Kimberly Clark aren’t just going to stand by and watch their share slip away.

Keith Anderson
Guest
3 years 4 months ago
Amazon has been making lots of structural changes to its grocery and CPG businesses. This is another key move that could eventually give Amazon more sustainable economics and build loyalty with high-value households with kids. Most grocers have their own private labels, and like Amazon many are trying to build exclusive, “premium” brands. Private labels can definitely play a key role in growing a category and won’t necessarily deflate average selling prices if carefully managed with category expertise provided by branded suppliers. But there is certainly risk on both the retailer and supplier side. Amazon doesn’t have the leverage with CPG companies that it has with, say, book publishers. And CPG companies are among the most critical targets for Amazon’s exploding ad and media business. The Elements line has a shot at success, but Amazon may also have to commit to more strategic collaboration with key brand suppliers. I’m not sure they can grow their own brands’ equity as quickly as they might lose leading brands’ support if Elements is used to shift significant share… Read more »
Roger Saunders
Guest
3 years 4 months ago

Amazon’s decision to expand to this baby product and offer it to Amazon Prime members will boost the frequency of visits, as well as grow and protect an important segment for this e-commerce giant.

The Amazon Prime customer sits in the sweet spot of consumer targeting. Based on the November Prosper Monthly Consumer Survey, the Prime member has an average household income of $75,546, higher than the overall Amazon customer base, which has an average of $69,190 per household.

In addition, the Prime member falls into the age group that is in the child-bearing age, 24.5 percent of Prime members are between 25 and 34. The overall U.S. census figures for 25 to 34-year-olds indicate that 17.6 percent of the population falls in this demographic. Fully 14.4 percent of Prime members have children in the household under two years of age.

Ideal group of long-term consumers who are seeking time and cost savings.

Tom Redd
Guest
3 years 4 months ago

As Tony says, “Amazombies” may love this. But it is not new, it is not really that much more convenient, and price is not a number one concern for young parents. They do not mind spending more on their kids’ be-hinds’ gear.

Private label is private label. The marketing is the deciding factor and as an element of marketing price is key, but not the top priority.

I just became a Grandpa and I will not be getting Amazon diapers—ever. The Redd kids get proven top-quality, fashionable diapers.

Gene Detroyer
Guest
3 years 4 months ago

When in the history of private label has any supplier decided to stop selling to the retailer? Why do we always ask this question?

If the product is very good, it will be very successful. It is that simple.

Ed Dennis
Guest
Ed Dennis
3 years 4 months ago

The Elements label will only be as successful as the product quality they deliver. Diapers are not commodity items, as any mother will testify to. Pampers has set the quality bar, but has been matched by the Costco brand (which is also sold by Amazon). Both have established customer bases. How will Amazon generate trial and adoption of their products? Why would a consumer move from a known quantity to an unknown quantity? What is the incentive? Establishing an incentive that lowers the risk for moms is the key to getting this brand off the ground. I don’t expect other suppliers to gripe too much as their options are rather limited. There is no Taylor Swift diaper brand out there that is so strong that they can afford to lose a large distribution channel.

Doug Fleener
Guest
3 years 4 months ago

Once again Amazon moves to compete with a key vendor they’ve worked closely with to expand the product reach. Amazing.

If the quality is there, Elements will be successful.

Lee Kent
Guest
3 years 4 months ago

Amazon can be very successful with this concept as long as the quality, price and even packaging are spot on. This is a great subscription line for those with babies. Set up your subscription, alter sizes as baby grows and voila!

As for suppliers? Competition is always there. Some moms won’t buy anything but Pampers and so be it. Others will give it a try.

This could be a winner, for my two cents!

Gene Hoffman
Guest
Gene Hoffman
3 years 4 months ago

Yes, Amazon’s program has convenience and appeal. Its new Elements private label will enjoy some success if a “mother quality” exists in the products, if there are no legal, patent or similar violations and if P&G lets Amazon do a better PR job. Otherwise expect Amazon’s relationship with suppliers to possibly be jeopardized.

Gajendra Ratnavel
Guest
3 years 4 months ago

Amazon is at a point now that competing with suppliers is not a big deal anymore. This just goes back to other “competing” activities we’ve discussed here before. The suppliers will puff their feathers and beat their chests but it is still better for them to be with Amazon than not.

Bill Bittner
Guest
Bill Bittner
3 years 4 months ago
I think it was the Chairman of the old Gimble’s department store who said “I know that half of my promotion spending is wasted, I just don’t know which half.” This has got to be even more true as omni-channel distribution combines with ubiquitous promotion to obfuscate the motivation behind a particular purchase. Who knows why the shopper showed up today on the website, walked into the store or chose this moment to make an in app purchase? Maybe you have some hope if the purchase included the presentation of a coupon, but maybe the purchase would have occurred anyway and the coupon only needlessly gave away some of the margin. Worst case, the consumer fetched the coupon on their mobile phone after they had already decided to buy. Now ask again about private label. If the retailer offers high-quality products at a reasonable price point without the overhead of promotion costs I think they are a winner. The key to all this is that I don’t believe today’s consumer is willing to sacrifice quality… Read more »
RIchard Hernandez
Guest
3 years 4 months ago

As already mentioned, private label products are contingent on the quality of the product and the price of the product. Having someone change from a national brand to a private label brand can be tricky—there has to be that confidence and in some CPG categories (and there is that brand loyalty), it just doesn’t work. It will be interesting to see if any cannibalization occurs in the future.

J. Kent Smith
Guest
3 years 4 months ago

Hard to argue with Amazon’s successes, and I’m sure there are companies all over lining up to source and otherwise help them. Contending with own brands is something national brand providers are accustomed to so it’s unlikely to be a giant shock to the relationships, at least not a sustaining one. It will be interesting to see how Amazon presents these items—the online version of “to the right” as would be done on shelf. Net net I would rank the prospects fairly well and insofar as suppliers get bent out of shape, well, that would say they’re bent out of shape everywhere else.

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