Amazon Is a Private-Label Competitor, Not Just a Channel

NEW YORK -- Amazon, which is planning to push channel boundaries with brick-and-mortar grocery stores, convenience stores and pick-up points, has been extremely successful in taking market share from established consumer products goods (CPGs) brands in key categories, said a new report by 1010data Inc. By leveraging its online shelf space to introduce new private-label products, Amazon is changing the dynamic for category leaders as it is putting itself in direct competition with these suppliers, the report said.

Seattle-based Amazon now sells its own products in more than a dozen categories.

Using consumer spending data representing millions of consumers, 1010data analyzed sales trends from September 2015 to August 2016 for several key online categories including batteries and baby wipes and found Amazon heavily competing with category leaders and, in certain cases, even becoming the online category leader.

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Amazon is charging ahead in the online battery category with its AmazonBasics brand. Estimated online battery sales were approximately $113 million this past year, and 94% of all batteries sold online are sold through Amazon sites. Among the top 10 battery brands, AmazonBasics accounts for about one-third of battery sales online and boasts 93% year-over-year growth. With an online conversion rate that is 1.5 times greater than the category average, consumers are more likely to buy Amazon batteries once they view them online.

At the end of 2014, Amazon introduced Amazon Elements as a new product line. This new line includes baby wipes and is exclusive to Amazon Prime members. Despite the limited audience, Amazon Elements is now cleaning up market share as one of the top brands online for baby wipes with 16% market share based on total dollars sold among the top 10 brands, just behind Huggies (33%) and Pampers (26%). Furthermore, sales of the Amazon Elements baby wipes have grown 266% year over year, and customers who view Amazon’s product are three times more likely to purchase than the category average.

“No matter the market, the challenge for brands in an increasing number of categories is that Amazon is the top online channel. And Amazon is leveraging its dominance to sell its own private-label brands which compete with traditional suppliers,” said Jed Alpert, senior vice president of marketing for 1010data. “Reasons for Amazon’s success across different markets vary. In batteries, they have a price-competitive product in a largely commoditized market with little brand loyalty. … The bottom line for brands is they can no longer view Amazon as solely a channel and need to acknowledge Amazon as a competitor.”

New York-based 1010data uses sources of consumer spending data representing millions of consumers to provide an assessment of online and offline retail sales, market share and more and to enable clients to track consumer behavior using granular datasets.