Amazon Is Taking The Axe to Its Private-Labels
For over a decade, Amazon (AMZN) has built up its private-label business, which as of 2020 boasted 243,000 products under 45 different labels. The segment was previously identified as a key driver of growth. Former CEO Jeff Bezos once challenged the division’s team to capture 10% of company sales by 2022.
Initially just electronics were offered under the house brand. But as the team responded to the growth initiative, thousands of items from coffee to clothing were added to the collection.
The Thrill is Gone
It seems company executives are starting to sour on the division. This is likely due in part to the division’s mixed success with numerous items languishing unsold on warehouse shelves. In recent months, company executives did an analysis to identify low profitability items to be axed.
The product line has also attracted regulatory scrutiny and allegations of antitrust behavior and questionable business practices that allegedly gave the tech giant an unfair advantage as it competed with merchants on its platform. These accusations include using data on third-party sellers to create copycat versions. The company has also clashed with both the SEC and the EU.
For consumers who look to save by shopping store brands such as those offered by Target’s (TGT) “Up & Up” product line or Walmart’s (WMT) “Great Value,” Amazon’s shrinking private-label product line may disappoint. Still, Amazon executives assert they will not unwind the operation entirely, but rather focus on those products that are most popular with online shoppers.
With fewer products under the house label, the company plans to stock remaining product options at warehouses across the country where they can be quickly delivered to customers.
Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
Comments are closed.