Most Amazon brands are duds, not disrupters, study finds
|Toronto Star 18 Mar 2019 at 11:43|
SEATTLEâThe explosion of Amazon.com Inc.âs private-label products â batteries, baby wipes, jeans, tortilla chips, sofas â has prompted concern that the worldâs biggest online retailer could use its clout to promote these house brands at the expense of merchants selling similar products on the web store. The issue even surfaced in Sen. Elizabeth Warrenâs recent proposal to break up big technology companies.
Turns out most Amazon-branded goods are flops that donât threaten other businesses at all, according to Marketplace Pulse. In a study, the New York e-commerce research firm examined 23,000 products and found that shoppers arenât more inclined to buy Amazon brands even when the company elevates them in search results.
A study suggests popular political and media narratives about Amazonâs market power are overblown, despite the company capturing 52.4 per cent of all online spending in the U.S. this yearÂ Â (JOHANNES EISELE / AFP/GETTY IMAGES)
The study suggests popular political and media narratives about Amazonâs market power are overblown, despite the company capturing 52.4 per cent of all online spending in the U.S. this year, according to EMarketer Inc.
âThis idea that Amazon can introduce a product and magically use data to dominate a category is just a conspiracy theory,â says Juozas Kaziukenas, founder of Marketplace Pulse. âThere are a couple of successful examples everyone uses, but most of their products arenât successful at all and many other companies continue to outsell Amazon even after it introduces its own competing brands.â
The study used sales rankings and the number of customer reviews as indicators of sales volume for different products, including Amazonâs own brands and brands sold exclusively on the site. Amazonâs success has been limited to basic products like batteries where shoppers are inclined to seek generic alternatives to save money, the study found.
But when competing against such categories as apparel, where household names have an entrenched position, such Amazon brands as âA for Awesomeâ childrenâs wear donât stand out, the study found. Kaziukenas was scheduled to present his findings Monday at the Prosper Show, an annual meeting of 1,500 Amazon vendors, merchants and consultants in Las Vegas.
Amazon didnât immediately return a request for comment.
Amazon sells more than 550 brands, both its own private-label goods and brands suppliers have agreed to sell exclusively on the site, according to TJI Research in Denver. Most of the Amazon brands have been introduced within the past two years, prompting criticism that the Seattle-based giant has an unfair advantage as the owner of the platform that makes the rules.
In her call to break up tech companies, Warren cited a 2016 Bloomberg story about a laptop stand maker whose sales plummeted after Amazon began selling a very similar product under the AmazonBasics name. Amazon shouldnât be able to sell products on a marketplace it controls, Warren says.
These are exceptions that demonstrate Amazonâs strength selling generic alternatives in categories where brands donât command much value, Kaziukenas says. Amazon hasnât been able to win over consumers with its fashion labels and other categories with more brand loyalty.
Popular direct-to-consumer internet brands like Casper mattresses and Harryâs shaving products have used social-media campaigns to promote their products, while Target Corp. uses compelling displays in its physical stores to promote its fashion brands. Amazon just puts house brands on the site without giving shoppers a compelling reason to buy them.
âSelling cheap batteries is very different than building brands,â Kaziukenas says. âEven when Amazon says âcheck out our own brands,â consumers donât know what it means and wonder why should they buy this thing they never heard of before.â