Amazon’s portfolio of private brands has nearly reached 80 unique labels. The retailer already has the loyalty of over 100 million Prime members and its growing range of private label products is both benefiting from the loyalty of these consumers and, in turn, driving more loyalty with the success of leading brands such as AmazonBasics.

Today, Amazon’s approach to private labels is evolving. AmazonBasics and other early brands were aimed at dominating niche categories with no significant incumbent brands, such as batteries, lightning cables and pet carriers. Conversely, in its latest investments Amazon is more willing to enter categories with large, well-established brands, for example paper towels (led by Bounty), toilet paper (led by Charmin), and dog food (led by Blue Buffalo).

Despite owning the platform, Amazon is unlikely to unseat the #1 brands in these categories, but that may not be the retailer’s intention. One of the key advantages of private brands for any retailer is their ability to drive customer loyalty – producing items that are exclusively available through Amazon will drive more traffic to the platform, which also benefits Amazon sellers by bringing more consumers in front of their products. This puts brands in the unique position of seeing Amazon as both partner and competitor.

AMZ Q2 Update: Private Brands

 

 

We are closely monitoring Amazon’s private brands and as of Q2 2018, there are five brands in particular that are making a significant impact on the market: Mama Bear, Basic Care, Presto, Solimo and Wag.

Mama Bear

The real measure of success for a promotion is not the immediate impact on sales, it’s whether or not it generates a long-term lift. In Q1, Amazon ran a promotion on Mama Brand diapers and baby food, which drove weekly sales to a peak of $180K by our estimates, but more importantly kicked off an incredibly lift. Comparing December to March, estimated weekly sales grew from <$20K to >$100K, an increase of more than 500%.

In the three months after the promotion, Mama Bear diaper sales have increased another 50% from where they were pre-promotion and are still growing today. Mama Bear baby food, also included in the promotion, has tripled in size to reach an estimated $25K in weekly sales, though it’s not as competitive in its category as the brand’s diaper line.

 

AMZ Q2 Update: Private Brands

 

 

This is an example of Amazon’s more competitive approach to private brands. The diaper category is controlled by two major brands, Pampers and Huggies. Even with its rapid growth, Mama Bear doesn’t pose a threat to these well-established brands, but smaller competitors like The Honest Company and Bambo Nature are definitely feeling the pinch.

Basic Care

Amazon’s first foray into the Over-The-Counter medication market was only launched in late 2017, but is already beginning to establish a foothold in the market. With more than 70 distinct ASINs, Basic Care’s sales are currently being driven by Pain Relief and Antacids. Since January, sales of the former have doubled and sales of the later have tripled, with each category making up approximately a third of the brand’s total sales.

As of the end of Q2 2018, Basic Care already ranks as the #4 Antacid brand on Amazon, with a category share of 13% and growing. Interestingly, it’s public knowledge that Basic Care is manufactured by Perrigo, which also manufactures Amazon’s #1 Antacid brand, Goodsense. If Basic Care continues to undercut Goodsense on price, it has a very good chance of climbing to the top spot in the category.

Pain Relief is a much more competitive category. After strong initial growth in this space, Basic Care’s sales have already begun to level off though the brand only ranks as #8 with a category share of approximately 4%. As a result, Basic Care is unlikely to pose a significant threat to major name brands like Advil.

Presto

Presto, launched in November 2016, underwent a major expansion one year later, adding hand soap, all-purpose cleaner, paper towels, and toilet paper to its initial lineup of laundry and dish detergents. As of Q2 2018, Presto’s new paper products have quickly become the main driver of sales and growth, earning an estimated $350K in average weekly sales and ranking as the 6th largest brand on Amazon in both paper towels and toilet paper (and growing). Considering the brand’s rapid growth rate, we can expect Presto to become one of the leading brands in this space over time.

While Presto’s paper products are the clear winners, Amazon is still invested in growing the brand’s broader range of cleaning products, as demonstrated by Presto’s promotional history. Presto paper products have undergone some minor promotions including a few 10% off coupon options and the occasional 20% off Alexa deal, but the brand’s cleaning liquids and detergents have been much more heavily promoted. A “spring cleaning” sale which ran from March to May included 50% off all-purpose cleaner, 30% off laundry detergent packs, and 20% liquid detergent. These promotions did manage to push sales on these products, but it is still no comparison to the organic growth experienced by Presto paper products.

 

AMZ Q2 Update: Private Brands

 

Solimo

Most of Amazon’s private brands focus on one or two sectors, such as Small Parts replacement parts or Happy Belly food. But Solimo is more of a “grab bag” brand for Amazon, selling vitamins, sunscreen, disposable cups, razors, and other assorted goods.

At the beginning of Q2, Solimo introduced a new line of products: coffee pods. It’s actually surprising that Amazon has waited so long to release a private-label line of coffee pods, since coffee is the single largest grocery category on Amazon and one quarter of those sales were for coffee pods. In 2017, 7 of the top 20 grocery items on Amazon were coffee pods, so Amazon’s expansion into this space was, in retrospect, inevitable.

Typically, a private brand takes about 6 months – and at least one kick-start promotion – to achieve a notable rank. Solimo bucks this trend: though Solimo coffee pods are still in the initial growth phase, the brand’s top selling item already ranks among the top 25 coffee pod items on Amazon with an estimated $60K in average weekly sales. Solimo essentially became a major coffee brand overnight with sales comparable to established brands like Caza Trail, Peet’s, and Eight O’ Clock. Considering the high potential, every coffee seller on Amazon should be paying attention to this brand.

Wag

Amazon’s latest private brand is Wag Dry Dog Food, launched in May. The brand comes in 5 flavors, each of which was originally available in two bag sizes, each either 30, 15, or 5 pounds. The top sellers are all the 30 pound bags, which is consistent with other leading dog food brands on Amazon.

Interestingly, while the 30lb Salmon & Lentil flavor is the brand’s top seller, the 5lb of the same variety was pulled from the digital shelf on June 14th after a number of strongly negative reviews. These reviews (which only applied to this specific ASIN and not to any other Wag products) stated that the food was mostly crushed to powder by the time it reached the consumer. This demonstrates Amazon’s dedication to maintaining consumer confidence in its brands. As soon as the company learned that a product did not live up to its standards, it was pulled from the shelf and scrubbed from Amazon’s search engine.

Perhaps because Amazon has been attempting to remedy this product issue, Wag has not yet launched a kick-start promotion to drive growth for this brand. As a result, there is not enough data to predict how Wag will measure up to the competition on Amazon. As we move into Q3, Amazon may start putting more effort into this brand, and only then will we know if Wag poses a significant threat in the dog food space.

Private brand expansion is a major priority for Amazon, with new product lines being introduced across nearly every major category. Today, Amazon is more willing than ever to compete even in categories with large, well-established incumbents, but market leaders that have excelled at eCommerce for years have a head start and competing against them may be a battle Amazon doesn’t want to fight. Instead, private brands aren’t meant to eliminate the competition, they’re meant to drive loyalty. With Prime, Amazon already has a huge audience of loyal customers and private brands will only enhance this loyalty, which in turn benefits Amazon sellers by bringing more traffic in front of their products. Amazon may be a brand’s top competitor, but as the largest online retailer in the US, it’s also a necessary partner for any brand looking to succeed in eCommerce today.

 

 

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