Almost every major retailer pursues its own private label. Amazon is no different. With hundreds of exclusive brands and private labels, the online retailer has invested significantly in its private-label business. Amazon’s brands span a wide variety of categories, from food and beverage to furniture, sporting goods, and beyond.
There are two types of Amazon brands: private label and exclusive. Amazon refers to both types as “Our brands,” but there is an important difference. Amazon private label is managed and run by Amazon. Exclusive brands are created and managed by a third party that exists outside of Amazon. In exchange for exclusive rights, the online retailer provides support through enhanced marketing services — something that’s been criticized publicly as an unfair advantage.
Do Amazon’s Brands Have an Unfair Advantage?
Advantage? Yes, in ways specific to the marketplace. Unfair? Not necessarily. Amazon is a private business. Like any business, they promote themselves to their customers. A big piece of that promotion involves promoting and marketing their own brands.
Take their private label supplement brands, for example. After scrolling past the top five positions and editorial recommendations, there’s a carousel that exclusively lists Amazon brands.
Any brand that didn’t make it into the top five spots will land below this carousel. Most would call that an advantage for Amazon, but is it fair? It depends on who you ask. There is a line of fairness somewhere, but it’s difficult to decide where it gets drawn and who does the drawing. It’s a push-and-pull situation. Amazon pushes to promote its products, and the public and government policies push back. The last push was in 2019, which was when Amazon dialed back its promotion of private label products after it was met with public and political scrutiny.
Should brands feel threatened by private labels and Amazon exclusive? Not necessarily. Private labels compete against brands, but even with advantages, Amazon’s brands only account for 1% of their sales. That percentage is significantly lower than other retailers.
Amazon’s private label may not be capturing a significant slice of the pie, but that may change in the future. Consumers are becoming more and more accepting of private labels. A study performed by Kantar Consulting found that 85% of the US population routinely purchases private label products. Much of private label’s appeal comes from a low price point, but that’s not the only driving factor. That same study found that 43% of consumers choose private label products based on quality. That’s the number brands should be worried about. Brands rely on a perception of quality to keep their competitive edge, and if that slips, it will be harder to compete against private labels.
Maintaining a Competitive Edge by Focusing on Premiumization
Distinguishing a product as a premium option is the key to competing against private label brands. There are several areas brands should focus on to establish themselves as a premium option: quality, convenience, experience, and trust.
Amazon knows how to use its own platform better than anyone. It takes full advantage of every content feature. Brands need to do the same while driving a message of quality. That means titles, photos, product descriptions, and A+ Content all need to be perfectly dialed.
A product title is the first thing a customer sees. A well-written title should include the brand name, product name, a brief description of the product, and any other relevant details. Here’s an example of what that looks like:
Product photos should be of high quality and accurately portray the details of the product. This is trickier than it sounds. Low-quality photos can misrepresent color, texture, and other product detail.
Both of the above photos were taken from live Amazon listings and represent the same product in the same color, but there are obvious differences. One shade of red looks different than the other, the left backpack appears to have a different shape, and the actual product materials look different. To stand out as a quality product, brands should ensure that product photos accurately portray what the shopper is buying. Failing to do so will result in high return rates and low customer satisfaction.
Product descriptions are a brand’s chance to call out product features. Writing skimmable content that highlights the benefits of both the brand and the product is the best way to do this. Here are two more examples from the backpack listings used above:
Example 1 calls out brand benefits, product design details, and other features. Example 2 hardly calls out anything. Example 1, while not perfect, begins to give an impression of quality. Example 2 does not.
Aside from listing details, brands can add creativity and brand messaging to their listing with A+ Content. This feature is only available to brands that have gone through the Amazon Brand Registry process. It’s a brand’s chance to extend more of its messaging to shoppers and highlight products.
By combining all of these types of content and following best practices, brands can distinguish their products from private labels and maintain a competitive edge.
Quality is great, but quality alone won’t keep a brand competitive against private label brands. Convenience is another factor brands need to consider, and Amazon is the king of it. Convenience on Amazon comes down to shipping speed and return options.
Amazon private label brands are always Prime eligible, offering one- or two-day shipping, with extremely flexible return policies. These are the new standards in e-commerce, and brands need to keep up.
Brands can fulfill orders via Fulfillment By Amazon (FBA) to keep up with shipping speed, but returns are trickier. Amazon can take a loss more comfortably than most brands. It doesn’t make financial sense for brands to accept every return, but offering a flexible return policy that is convenient and easy for the customer is a good start.
A brand is only as strong as the customer experience it provides. Shoppers expect a highly-personalized level of customer service when purchasing a quality item. Brands can meet those expectations by being personable and prompt in every customer engagement. That means responding to reviews, answering customer questions in the Amazon Q&A section, and answering messages in a timely manner.
Brands need to reinforce their message of quality. On Amazon, that comes from customer ratings and reviews. If a product is advertised as a high-quality item but has terrible reviews and ratings, chances are shoppers aren’t going to trust in the item’s quality.
Brands can earn customer trust by maintaining a strong presence in their reviews. That means responding to every review, both positive and negative. Responding to a positive review is putting the proverbial cherry on top of the cake. It’s personable and increases the chances of repeat business.
Bad reviews happen. When they do, responding in a timely and empathetic manner is critical for brands. Responding to bad reviews adds context to a bad situation and lets unsatisfied customers know they’re being heard. Brands that do this strategically may even be able to turn the situation around, turning an upset customer into a brand advocate.
Amazon has developed hundreds of its own private label and Amazon exclusive brands spanning a multitude of categories — from food and beverage to furniture, sporting goods, and beyond.
Like any other private business, Amazon promotes itself to its customers, and a big piece of that promotion involves promoting and marketing their own brands. Still, private label brands only make up 1% of Amazon’s US CPG sales.
To compete with private labels, brands should focus on positioning themselves as a premium, high-quality option.
There are several areas brands should focus on to establish themselves as a premium option:
- Quality – On Amazon, content is the best tool for highlighting a product’s features. Brands should optimize titles, photos, product descriptions, and A+ Content to communicate quality to shoppers.
- Convenience – Two-day and one-day shipping are now standard expectations for shoppers on Amazon. Brands need to be able to keep up with those expectations by fulfilling via FBA.
- Experience – A brand is only as strong as the customer experience it provides. Brands can separate themselves as a quality option by being personable and prompt in every customer engagement.
- Trust – Brands can earn shopper trust by reinforcing their position of quality with reviews and customer feedback. That means responding to every review, both positive and negative.