The product lines will range from baby food and household items to snack foods, and have distinct brand names like Happy Belly, Wickedly Prime, and Mama Bear. These new product lines will be available only for Amazon Prime members. This announcement comes at a time when penetration for online perishables is just getting off the ground in the U.S., and as Amazon rolls out Amazon Fresh in more markets. Amazon may be seeking to bolster it's fresh grocery delivery service and it's Prime membership base with introduction these new food products.
Consumers no longer view private label brands as mere low-cost alternatives. In a 2014 report, Nielsen found that perceptions of private label brands are overwhelmingly positive, with 71% of global consumers saying that private-label quality has improved over time. Though price remains the primary driver of private label purchase intent, consumers are also seeking value with 67% of consumers believing that private label offers extremely good value for their money. Though Amazon so far has remained mum on the subject, the online retailer might take an approach similar to Costco's Kirkland brand and bring to market superior quality products that fill voids in branded product lines, rather than competing head-to-head on price.
Amazon's History of Private Label Products
Almost seven years ago, Amazon launched its private label brand “AmazonBasics” in order to offer customers lower prices on popular electronic devices. Since then the company has aggressively pushed into different markets, including pantry items and fresh groceries, opening up new categories for its potential sale of private labeled goods. For example, the company launched Elements diapers and baby wipes late in 2014. In addition, Amazon also appears to have several in-house clothing brands that remain officially unannounced.
Amazon Prime Private Label Creates Additional Competition
Retail brands that have been slow to adopt Amazon within these markets will now face fresh competition. Amazon product pages are known to garner high customer engagement, have pages filled with professional photos, and come with complete descriptions. Poor performance across these key metrics will now further hurt brands, and optimizing on content is more important than ever. Brands will now have to keep an eye on traditional competitors, third parties on the marketplace, niche brands that optimized for the online channel, and now Amazon Prime private label.
Amazon has been creating multiple incentives for customers to sign up for different tiers of its Amazon Prime program. Selling these new Prime private label items exclusively to Prime members will certainly limit sales, but it does create another incentive for shoppers to use Amazon Fresh or Amazon Prime Pantry instead of the numerous other competitors that have been ramping up their online presence
