As brands continue to turn to Amazon’s platform to sell their products, it is no surprise that the ecommerce giant has also begun to capitalize on its own success as a retailer and slice up a piece of the pie. With its core customer base of Prime users estimated to be at nearly 100 million in 2018 and growing, Amazon’s appearance in Health & Personal Care through its private labels and exclusive brands has been met quite favorably by its customers.
Amazon released several of its Private and Amazon Exclusive brands close to the beginning of Q4 in 2017. This perfectly set up the stage for 2018 to gauge how these brands performed over the year.
We covered several of these brands under quarterly updates in 2018. However, given the vast number of brands released by Amazon across various categories, and with several of these brands also being released during 2018, we wanted to provide a closer look at the top brands’ performance since their release on Amazon – specifically in Health & Personal Care.
According to our estimates, the health and personal care market is worth over $5 billion on Amazon (includes both 1P and 3P) with half of the share in the category belonging to Nutrition & Wellness, followed by Baby Care. Health-related subcategories within this category like health care and nutrition & wellness were the main drivers of growth, with an increase in sales of 55% and 50% YoY respectively.
Interestingly, much of Amazon’s success within health and personal care in 2018 came from a select few household consumables categories such as Paper Towels, OTC medication, Baby Diapers and Wipes – all of which are dominated by only a handful of brands. Brands in these categories command an extremely loyal customer base due to their longstanding legacies, and continue to do so even as Amazon’s private labels and exclusive brands have been added to the mix.
However, Amazon’s rapid success in these markets seems to have less to do with encroaching on the dominant brands’ share and more to do with leveraging the loyalty and of its own increasing customer base.
“Presto!” with Promotions:
Presto!, an Amazon private label most popular for its paper products, was the crowning glory of Amazon’s success in Household Consumables. The most noticeable achievement was the brand’s rise from launch to 6% market share in just over a year.
Like Amazon’s other private label investments, Presto was heavily promoted in the initial period of its launch phase. However, Presto – unlike other private labels which usually see sales life after initial promotional phase – couldn’t sustain subsequent increase in sales after its initial promotional phase. In fact, much of Presto’s increase in sales came from longer promotional phases which lasted anywhere from 1-3 months. These deals initially began as 10% discounts on all of Amazon’s paper towels and bath tissues, and subsequently became “Subscribe and Save on First Order” type of deals.
Presto! is also one of the few consumables items that saw a push into Alexa deals in its initial phase during January 2018. Customers were offered 20% discount for ordering Presto! products by saying
“Alexa order Presto Flex-a-Size paper towels” or “Alexa order Presto ultra-soft toilet paper”. This shows that Amazon was keen on optimizing Presto! to Alexa’s voice commands.
This could potentially hint at Amazon leveraging its knowledge of customers’ engaging in repeat purchases of household paper products and the convenience of Alexa to facilitate these purchases. By encouraging customers to purchase its Presto! products by offering discounts, Amazon was further able to encourage customers to try out their product and leave reviews. Amazon’s heavy promotion paired with high number of customer reviews has also led this brand to earn the “Amazon’s Choice” badge in paper towels, and optimize it for sales for first-time purchasers on Alexa.
Transforming the OTC Landscape with Basic Care:
Just like household paper products, the share of over-the-counter (OTC) medication was also concentrated in select few brands, and customers’ brand loyalty and trust in these brands from brick-and-mortar purchases carried over to Amazon as well. But with the growing influence of Amazon’s convenience on OTC medication followed by established retailers like CVS and Walgreens losing significant stock value upon Amazon’s acquisition of PillPack, it was only a matter of time before Amazon rolled out its own branded OTC medication. And in 2018, it sure did.
The success of Amazon-Exclusive OTC brand, Basic Care, shows the power of Amazon to influence customers’ purchasing by leveraging their existing trust in the platform. Amazon hasn’t undertaken this rollout single-handedly – Basic Care is manufactured and owned by Perrigo, but sells exclusively on Amazon. Basic Care overtook Perrigo’s existing brand GoodSense’s market share on Amazon, hinting at existing customers’ willingness to switch to the cheaper, generic brands in a short period of time.
Basic Care has quickly gained popularity as it has also earned the Amazon’s Choice badge in several OTC categories such as Ibuprofen and Acetaminophen, optimizing it for Alexa purchases as well. Basic Care has also displaced several popular brands in other OTC medication categories, like OTC Stomach Relief medication. Brands Prilosec, Nexium and Lactaid have all seen shares decrease while Basic Care share has continued to grow.
With the FDA’s announcement in July 2018 that it is considering switching certain prescription drugs to OTC status and Basic Care’s booming success over the year, we will be looking out for more product releases from the brand in 2019.
Charting Waters in Baby and Personal Care:
Amazon saw great success in terms of growth in both Baby and Personal Care with its Mama Bear and Mountain Falls brands, especially with Mama Bear. However, the current market share of these two brands in their respective categories is still lower than other private labels. Despite Mama Bear’s rapid growth, the brand’s current market share is at 2%, while Mountain Falls is less than 1%.
Mountain Falls is quite an interesting Amazon-Exclusive brand. Manufactured by Vi-Jon, a company that prides itself as the “Proven Leader in Private Brand Products Industry”. Mountain Falls’ product assortment includes Personal Care items such as Body Wash, Shampoos and Hand Sanitizers, as well as some household consumables. Products made by Vi-Jon almost mimic the packaging of popular brands and openly challenge a comparison to these brands in their product page content on Amazon. For example, the title of a Mountain Falls body wash reads:
“Mountain Falls Clarifying Body Wash Salicylic Acid Acne Treatment, Pink Grapefruit, Compare to Neutrogena, 8.5 Fluid Ounce (Pack of 4)”
Another interesting recent development in Amazon’s Brands in this category is the release of the exactly same items under Amazon-owned Solimo brand.
This further solidifies our belief that Amazon could possibly be testing out how its Private Label products would perform in specific categories by releasing products under its “wildcard” brand Solimo to gather data and insights on customers’ purchase behavior.
What’s in Store in 2019?
On the whole Amazon’s expansion into health and personal care with its Private Labels and Exclusive brands has gone relatively well. When entering into a market dominated by much larger brands, most newer labels have not met with similar success in the span of a year. Although Amazon’s entry into Health & Personal Care might make the ecommerce giant seem like it is new to scene, it has always been there. Amazon knows the full extent of its customers’ purchasing behavior, which categories and brands are driving the most sales and which untapped markets have the most potential.
Amazon has the luxury to leverage its existing customer loyalty and knowledge of customers’ purchasing habits to introduce new products under its brands, a luxury new brands cannot afford. However, through its exclusive brands, Amazon has made it possible for brands to channel Amazon’s credibility into their brands and gain visibility.
With several Private Label and Exclusive brands being released in the latter part of 2018, we will be watching these brands closely in 2019.