Amazon Reduces Private Label | What Does it Mean for the Supplement Industry?
Episode description
Amazon’s private-label business started in 2005 with bedding offerings under the Pinzon brand name. It then expanded into consumer electronics products and eventually other categories under Amazon Basics. It now encompasses everything from vitamins and coffee to clothing and furniture under the veil of more than 1000 brands at this point that could be over half a million SKUs. At just face value, that’s a shit load of private label brands and products. In comparison, Target has about 50 private label brands...with Good & Gather being it’s largest SKU count at more than 2000. Similarly, Walmart has about 320 private label brands and about 30,000 SKUs. So, hearing that Amazon has started to drastically reduce the number of items it sells under its own brands is probably a sound business decision. This is a huge contrast from a few years ago when Jeff Bezos gave the private label team a goal to reach 10% of Amazon sales by 2022. At the time of stating that, Amazon reported its house brands only account for about 1% of its retail sales. This is likely the main motivation behind the huge proliferation of private label items. Over the past six months though, Amazon's new leadership instructed its private label team to slash the list of items and not to reorder many of them with discussions reaching the point where a reduction in assortment could be well over half. Heck, it has even been rumored Amazon had conversations about completely exiting the private-label business. So, why is Amazon now willing to throw billions in annual revenue away by deprioritizing private labels? But, shifting this back towards the supplement industry (and brands)…what does this all mean (if anything)?
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