Amazon is going to sharply reduce its private label offering to fewer than twenty brands. Of its fashion brands, 90 % will disappear – leaving only three remaining. The e-commerce giant wants to cut costs and avoid problems with anti-trust authorities.
Cutting costs
The US behemoth wants to eliminate 27 of its 30 own fashion brands, the Wall Street Journal reports. Only Amazon Aware, Amazon Collection and Amazon Essentials would remain. Across all sectors, fewer than twenty private label brands would survive.
Fewer in-house brands first and foremost mean lower costs, as production and marketing can be streamlined. Especially in the apparel and furniture sectors, Amazon has a large number of private-label brands. Moreover, Matt Taddy, Vice President of Amazon Private Brands, admitted that a number of those were not catching on enough with consumers.
The decision to cut the number of private brands is part of broader cost-cutting efforts. At the presentation of its quarterly results earlier this month, it was already revealed that previous cost cuts (such as 27,000 layoffs and reduced marketing spending) had resulted in Amazon’s net profit rising to six billion euros.
Antitrust issiues
There is also the not-to-be-underestimated rationale that antitrust authorities are conducting thorough investigations into Amazon’s handling of supplier and customer data. According to critics, Amazon would use sales data from third-party vendors to see which products sell well and then create its own versions of them. The e-commerce giant would also allegedly prioritise its own products over those of third-party sellers in search results.
The cancelled private brands will not disappear immediately: they will remain on sale until stocks are exhausted – although obviously no new products will be ordered for them. Incidentally, this is not the first time Amazon has considered cutting its private brands: it was also rumoured action last year – but this time it seems really serious.
