Insights

Amazon White Label: Signaling the End for Brands?

whitelabel

There’s a battle going on for the future of retail.

History has already been written about where retail will happen (Amazon reported nearly 70% of holiday shoppers in 2015 did so via mobile device) as e-commerce has already consolidated into online marketplaces. However, whether retail results in a better or worse experience for consumers in the medium and long term is yet to be determined.

As a leading third-party retailer on the Amazon marketplace, we know when Amazon makes a splash. With the introduction of marketplace innovations – Prime, PrimeNow, Pantry, Fresh, Echo, PrimeAir, Dash, and more – we’ve felt the ripples and waves. We navigate these changes in ways that we believe provides the best experience for consumers and the best experience for brands.

Amazon’s recent announcement of a push into white label brands (see Amazon to Expand Private-Label Offerings—From Food to Diapers, WSJ May 15, 2016) is another one of these splashes. For us, the announcement was the expected next step towards providing Amazon customers an injection of new selection.

As the article points out, white label products range from lower priced, re-branded items that come off the same assembly line as their premium cousins. Or, they can simply be lower quality products. The common denominators are consumer demand and price point.

At its best, this can be an opportunity, even for premium brands, to increase access and open new price points for consumers with reformulated but safe alternatives. At its worst, white label strategies ride the brand value of premium products and take advantage of consumers by delivering low quality, or in the case of consumable products, possibly unsafe options. This downside here is premium brands being forced to surrender and give up on the marketplace.

Consumable nutritional products have been (and continue to be) one of our largest categories. We are acutely aware of how brand value can be lost in an instant when consumers are faced with issues of poor quality and safety. We believe that transparency is critical to ensuring that this does not happen.

As Amazon makes a push into white label consumables, we all need to ensure that consumers are able to confidently and accurately understand what they are consuming. This applies to ingredients, quantity, potency, and other critical factors. Unfortunately, this is an area where consumers are already being challenged due to label inconsistency and out-of bounds claims.

We are optimistic that consumer demand for quality and safety will ultimately serve them well when choosing products. Consumers will have more choices – this is a good thing – but should not be used as a testing ground for the acceptable low bar on quality and safety.

No one player in the retail value chain is solely responsible for quality and safety – we all are. Manufacturers can work with industry stakeholders to set standards and ensure proper due diligence for their suppliers, retailers can educate consumers and promote high quality, and Amazon can align with manufacturers and retailers to make sure there is never a race to the bottom for quality and safety.

It is false, and perhaps irresponsible, to think that the future of retail will be shaped solely by the unstoppable demographics of changing consumer behavior. The future of retail will be shaped in large part by choices that retail sector stakeholders make.

Amazon can choose to take very seriously the ability for consumers to know what they’re getting, retailers can choose to promote education and transparency, and brands can choose to work with partners that care about their brand as much as they do. The battle for retail is happening with every one of these choices every day.

Amazon is an open source marketplace which means it’s a reflection of the practices and values of its third-party sellers, like us, which make up about half of the total marketplace sales. As an organization, we are working hard to set a high water mark for retail transparency, quality, and sustainability. I’m happy to say that we’ve been very successful, thanks in part to a laser focus on working with partner brands that care a lot about integrity. We think this contributes to the marketplace in the most sustainable way and provides the best experience to consumers.