Amazon Cuts House Brands

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… when the hand gets caught in the cookie jar

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I had noted when looking for something on the site yesterday that some listings had the former brand name as well as the current brand name, they did not eliminate the products.

I therefore believe the antitrust issue to be journalistic speculation.

IMO this is a good move for Amazon. These brands had no more value than the wacko Chinese brands. As for the products, my experience with Amazon brands has been they have as little QC as the wacko Chinese brands. I buy my cheap Chinese products on Ebay where the price is lower.

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I wonder really how much more this just has to do with Branding and unaware consumers. Would consumers be more likely to purchase an item if they knew for sure that it was Amazon’s house brand.

Obviously when Amazon is in the name such as Amazon Basics, Amazon Essentials etc people will at least associate that brand with the same thoughts they have about amazon. Maybe not necessarily quality, but that it’s a brand name/generic that people recognize. It’s the equivalent to Target’s Up&Up brand.

But I think you loose a lot of that reputation when you don’t attach your name or make it obvious that it’s your house brand label. I think somewhere Target does list on its website all of it’s house brands, simply I believe because you get a longer in store return time with all Target branded merchandise. With things like Cat&Jack it’s pretty easy to tell it’s a Target brand.

However I think Amazon lost a lot of focus on some of these brands that I never even heard of. If it’s not listed specifically somewhere that Rivet is an Amazon brand, people will probably just scroll on through. I know I do a lot of scrolling past things that are unrecognizable brands or brands I am unfamiliar with, especially if I have to take time to research.

Now I could understand the whole ‘anti trust’ thing if perhaps Amazon’s brands were ranked higher just simply because it’s Amazon brand and not because it has the amount of sales/reviews…but that’s going to go hand in hand with any familiar brand.

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Here is the full article…

Amazon.com AMZN 0.52%increase; green up pointing triangle is jettisoning dozens of its in-house brands as part of a significant reduction of its private-label operation as it works to fend off antitrust scrutiny and shore up profit.

The Seattle-based company in the past year has decided to eliminate 27 of its 30 clothing brands, such as Lark & Ro, Daily Ritual and Goodthreads, according to people familiar with the matter. Some of the brands remain on Amazon’s site for now as the company sells off remaining inventory, but when completed its house-label clothing division will have just three brands: Amazon Essentials, Amazon Collection and Amazon Aware.

Amazon also is dropping private-label furniture brands, phasing out Rivet and Stone & Beam once its stock of those items is gone, some of the people said.

Exact numbers for brands being cut in other parts of the business couldn’t be learned, but Amazon Basics, which sells a range of home goods and tech accessories, will remain a focus for the company.

“We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands—like Amazon Basics and Amazon Essentials—for great value with high quality products at great price points,” Matt Taddy, vice president of Amazon Private Brands, said in a statement to The Wall Street Journal.

He said Amazon looks to eliminate products that “aren’t resonating with customers.”

After years of trying to build the private-label business, Amazon began scaling it back last year following disappointing sales and criticism from lawmakers and others who said it could conflict with the company’s business selling other brands. The company also cut back on giving its private-label products a boost on search results pages in special placements.

Amazon’s private-label business had 243,000 products across 45 different house brands as of a company disclosure in 2020.

The Federal Trade Commission has been investigating Amazon over a number of its practices, and is preparing an antitrust lawsuit against the company. Amazon’s representatives are scheduled to meet with FTC commissioners next week as part of a formality often called “last rites” before the FTC drops its lawsuit next month.

Amazon has said private brands account for just 1% of the company’s total retail sales. Given the small size of the business relative to the regulatory issues it creates, the company last year discussed offering to exit from the business as a concession to the FTC if the agency followed through with its lawsuit, the Journal reported**.** It couldn’t be determined whether Amazon has offered to regulators to exit from the business.

An Amazon spokeswoman said at the time of last year’s article that it hadn’t seriously considered closing the private-label business and planned to continue to invest in it.

Amazon now has cut the total number of house brands to fewer than 20, some of the people said, and retired tens of thousands of products that it had been making for those brands.

No new products are being ordered for the brands being phased out, which will cease to exist once their inventory is sold. Strong-selling items in brands that have been discontinued are being rebranded under Amazon Essentials or other remaining labels.

The changes are in line with a broader effort by Amazon over the past two years to curtail unprofitable businesses and products as it works to cut costs in the face of a postpandemic downturn. That effort has entailed cuts in unprofitable areas, such as the company’s nongrocery physical stores.

The private-label moves also address scrutiny of the competitive practices around its in-house brands that has vexed Amazon for years.

In 2020, the Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers. Amazon founder and then-Chief Executive Jeff Bezos was called to testify before a Congressional antitrust committee following the article.

“We draw a clear line against using non-public, single-seller data to determine which private label products to launch, and our policy goes further than any retailer we know of,” an Amazon spokeswoman said Wednesday.

After that 2020 article, Amazon curbed a yearslong practice in which its own brands were given a boost in the search results on its site in special placements—the kind of edge other sellers could only gain by buying ads—according to the people familiar with the recent changes. That change caused many of Amazon’s brands to be buried in search results, making it harder for items to sell. The cost of warehousing all that inventory was significant for Amazon, making it a target during the cost cutting.

Some companies have accused Amazon of selling copycats under its own brands. Williams-Sonoma in 2018 sued Amazon, claiming the tech company had copied its West Elm brand’s distinctive-looking orb dining chair under the Rivet brand and sold other items nearly identical to its designs.

Amazon later removed the items from its website and settled the lawsuit, with a favorable outcome for Williams-Sonoma.

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Thanks for the read @Chimanimani!

When they played on a level field, they, um, “found out”. And that reinforced the claim from 3Ps that Amazon brands had been unfairly favored, at our expense, and proved the complaints from legislators true.

Two things can be true simultaneously, without undercutting either thing. It can be wise to eliminate a small and unprofitable area of business–and most especially when that area is disproportionately “causing regulatory problems” (i.e., under investigation because appears prohibited).

So Amazon is limiting both financial and legal/regulatory liability by consolidating its PL brands and its product offerings (moving profitable products to a different brand while phasing out the rest), and providing greater transparency to both consumers and the government by sticking with “Amazon” brand names.

It’s a smart move. But I doubt it’s enough. And it won’t stave off IP theft complaints on the eliminated products.

IMO a key reason for the demise of some of these PL products is they are crap. That Amazon, in search of price, did not mandate adequate quality control measures, and they are as bad as the products 3P sellers have sourced on Alibaba.

One way or another, they had to raise their cost, and frankly it is more profitable for AZ to let 3P sellers sell crap than to deal with their own returns, customer bad feelings, and increased human efforts to raise quality.

There is no 3P seller IP in most of these products, and the regulatory issues revolve around unfair competition by use of sales data.

As always, Amazon is acting in its best interest as it sees it.

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