As the marketplace continues to evolve, retailers are on a constant voyage to differentiate and win market share. And, with consumers becoming more open to purchasing private labels and in-house brands, retailers are becoming relentless in pursuit of growth opportunities.
For years’ major retail chains have offered their consumers exclusive in-house brands which directly compete with global brands in the same category at cheaper prices. Reduced product launch turnaround times, easy access to product stocks, and the elimination of the need for big spend on traditional marketing and inventory in getting products in front of the shoppers, all contribute to their power to offer such great discounts. But, the game changes when the likes of Amazon foray into the same space.
Amazon Private Label Brands Overview
For decades Amazon have been selling products and know a little too well what people are buying and where they are buying it. In the past few years, Amazon has built an empire of Amazon private label brands consisting of products across a variety of categories and are growing year on year.
Along with Amazon, many other leading retailers like Walmart, Costco, Target are re-evaluating their online strategy for in-house brands. One such example is Jet.com, part of Walmart, who have rolled out a private label brand, Uniquely J, focusing on food categories like coffee, olive oil, laundry detergent and paper towels. With big retailers adopting such strategies, it’s evident the power of private labels brands is key to drive market share in an ever increasing competitive online marketplace.
So how big really is the Amazon private label market?
E-commerce analytics firm One Click Retail in its recent Amazon private-label research reported that Amazon’s ‘AmazonBasics’ private label goods are dominating its private brand with sales of over $250 million a year to date. Its apparel label Lark & Ro and baby care and vitamins brand Amazon Elements have each grown 90% in the last year and in the baby wipes market Amazon Elements Baby Wipes are ranking third behind Huggies and Pampers, with $10 million in sales to date in 2017. At that’s just the start of it!
According to Bloomberg, Amazon is also looking to make a foray into sportswear by launching a private label brand, enlisting vendors used by the likes of Gap and Lululemon.
Amazon’s private label sales are to exceed $20 billion by 2022, according to SunTrust Robinson Humphrey’s Analyst’s, accounting for roughly 5% of its total sales. With the vast growth of Amazon private label brands, to remain competitive, branded sellers will need to consider lowering their prices and look to innovative ways to overcome such hurdles.
Source: Business Insider
With access to a wealth of consumer insights, Amazon understands online consumer buying patterns better than anyone and has been building consumer trust for years. All these factors along with a mature recommendations engine, ensures that Amazon private labels are targeted to consumers, at the most relevant stage along their path to purchase.
How Can Brands Compete with Amazon Private Label Products?
• Everything starts with search
Close to 55% of product searches today start on Amazon. This makes it crucial to see how your products rank in terms of generic on Amazon.
Amazon Search Result for the term ‘Batteries’
In the above example, the first organic result after the 3 sponsored results is Amazon Basics categorised as ‘Amazon Choice’.
Similarly, when you search for Baby wipes, you can see the same, 3 sponsored Amazon Elements products dominating the space.
Amazon Search Result for the term ‘Baby Wipes’
Additional to sponsored product listings, it’s highly important to integrate relevant keywords in your product content so your products are showing every-time a relevant search is made. At the end of the day, you can’t dictate what Amazon decide to show when people search for products, but one thing you can do is try your best to get as close to ‘Amazon Choice’ results as possible.
• Leveraging website traffic
The traffic you receive on our website product pages is highly relevant, especially when purchase intent is high. A sophisticated D2C store can definitely drive sales, but many consumers still prefer to purchase from their favourite retailer.
One way to tackle this is to ensure you are driving consumers from the brand website to the correct product page on their preferred retailer website. Ensuring they hit the product page rather than a search query page will eliminate the possibility of consumers being distracted by other products along their path to purchase.
This kind of structured path to purchase can be achieved with ChannelSight’s Buy Now technology. The advanced performance insights- basket sales, product sales, retailer conversion comparisons and much more- Buy Now technology offers can help brands further optimise their D2C store and take advantage of upsell recommendations on product pages.
• Make the most of the consumer data you have
One way to tackle your consumers falling prey to Amazon labels is, making the most of the consumer data you have at your fingertips. Personalise the consumer experience, send promotional offers, combos, discounts and direct them to either your own D2C store or add to basket pages on third party retailers. The main idea is get the consumer to add your product to their basket and minimise Amazon label clutter along the way.
With the likes of Amazon and other private labels increasing market share, it’s vital for brands to monitor performance, price, content and stock on Amazon and other 3rd party retailers, to ensure they remain at the top of their game.
Interested in knowing more about how to reduce private labels and competitor clutter on your consumers’ path to purchase? Get in touch with the ChannelSight team today!