Amazon’s retail genius: secret brands
Online retailer Amazon has been using a clever strategy to benefit from the popularity of its sales platform: the presence of secret, Amazon-owned, brands that outcompete more popular companies on price.
“Secret” is, perhaps, a stretch: when Mike Murphy, writing at Quartz, contacted the company to get a statement, they replied: “Amazon has a range of brands including Amazon Basics, Happy Belly, Mama Bear, Pinzon, Presto!, Wickedly Prime, Goodthreads, Amazon Essentials, Mae, Ella Moon, Buttoned Down, The Fix and Lark & Ro.”
Amazon’s share price is up 31% so far this year
SOURCE: Yahoo Finance
With a few exceptions (rather obviously, Amazon Essentials), there is no public record of ownership for these companies. And Murphy thinks Amazon has plenty more. That means the company is selling its own products as well as third-party ones – and those products are probably within categories where price is more important than brand recognition.
At Quartz, Murphy uses the example of batteries: if there were a much cheaper alternative available, how many consumers would care if they weren’t buying Duracell or Panasonic? The chances are that Amazon could be cleaning up in these areas.
Quartz has identified 19 brands that are Amazon-owned and operate on its website, only one of which makes the fact of its ownership explicit. The publication has also identified another dozen that it believes ‘could be’ Amazon-owned, and notes that the ecommerce giant “is pursuing (or owns)” another ten trademarks which do not (yet) have products listed on its site.
There is nothing illegal or unethical about this maneuver, and it makes great business sense. As Mark DiMassimo, direct-economy expert and CEO of ad agency DiMassimo Goldstein, told Quartz:
“Can you imagine anyone ever saying, ‘oh lord this Amazon personal lubricant is just so sexy?’ There are limits to the Amazon brand that Amazon would be wise not to cross.”
Dominion holds Amazon in its Global Trends Ecommerce Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.