One problematic aspect with the Amazon Marketplace is Amazon‘s vertical integration as a retailer and seller of private labels.
The Amazon Marketplace is as big as it is today because Amazon, the retailer, already was popular. In fact, marketplaces have a far better chance of succeeding if they are attached to an already successful e-commerce business. This way, you already have solved the chicken-egg-puzzle as one side (the customers) of the two sides of a marketplace is already on board.
But Amazon itself is also a pretty good case study of the downsides of this aspect. Amazon, the marketplace provider, Amazon, the online retailer, and Amazon, the private label seller, interact with each other in an almost completely opaque manner.
Imagine Google not only running the search engine but a successful web shop and logistics operation as well. Amazon is already exactly that and more, given its position as a shopping search engine in countries like the US.
That is already the case with the generic looking ‚Amazon Basics‘ label for electronics and some of the other Amazon brands.
Do these brands get preferred treatment in Amazon‘s ranking? They most certainly can get Amazon‘s attention easier than others when an issue arises.
This aspect becomes more problematic when you get to the newly discovered secret brands by Amazon. Not letting customers know that brand XY is from Amazon is one thing. This can become a trust issue. But it also can make sense branding-wise. Not letting the brands selling on your marketplace know about what private labels you run is a whole other thing entirely.
It is dishonest to an alarming degree. And it shows, yet again, that Amazon is using its market power in way that portraits a very confident company. (Remarkable, really, given the still rather small overall market share even in mature markets like the US. It is not online retail that counts, but all of retail.)
Quartz did the legwork and found a lot of hidden brands by Amazon, and more to come:
Trawling through over 800 trademarks that Amazon has either been awarded or applied for through the US Patent and Trademark Office (USPTO), Quartz identified 19 brands that are owned by Amazon and sell products or have product pages on amazon.com:
Brand Product Arabella Lingerie Beauty Bar Cosmetics Denali Tools Franklin & Freeman Men’s shoes Happy Belly Fresh food James & Erin Women’s clothing Lark & Ro Women’s clothing Mae Underwear Mama Bear Baby products Myhabit Consumer goods North Eleven Women’s clothing NuPro Tech accessories Pike Street Linen Pinzon (by Amazon) Linen Scout + Ro Kid’s clothing Single Cow Burger Frozen food Small Parts Spare parts Smart is Beautiful. Clothing Strathwood Furniture
Only one of the brands makes clear that it’s an Amazon product: Pinzon, a bedsheets and towel brand. The rest appear to consumers like any other company’s products on Amazon. The only indication that any of these other brands might have an affiliation with Amazon is the fact that their company pages—like this one from Arabella—say that their products are “exclusively for Prime members.” It’s not clear that they’re exclusive because they are Amazon products, rather than products from companies that have struck deals with Amazon.
Amazon is pursuing or owning more trademarks with no accompanying products on the marketplace yet. Quartz also found products by companies on Amazon and by Amazon that don‘t have a trademark yet.
Perhaps what Amazon is trying to do as it rapidly expands into new businesses—especially business areas where it might not have forged partnerships with well-known brands—is to give the impression to customers that there are tons of options to choose from, when in fact, they’re really just choosing between different Amazon brands.
This may be true. A better margin (or any at all) through private labels is another. International expansion is easier accomplished with a wide array of brands that make it look like the marketplace is well filled. (Again, how do you get the two sides onto your marketplace?)
Another reason is simply because Amazon can: The data Amazon has collected over its existance wants to be used.
With the Dash Buttons, Amazon already is collecting data sets far more valuable than anything else in this market. Of course, Amazon will use this to A/B test private label products as well. As we wrote last year:
The convenience of the Dash Button crowds out any other means of shopping for that particular item and in the process creates unmitigated shopping data on that item. Thus, the Dash Buttons create data you can’t get anywhere else in this kind of quality.
For brands, this spots a bright light on consumer behavior.
But this data becomes especially interesting when thinking about how far Amazon may go with the company’s private labels..
For brands, Amazon‘s hidden private labels are yet another sign that most of them are just visitors in Amazon‘s world. And some of them are going to leave sooner rather than later. And I‘m not talking about the marketplace.
But Amazon‘s confidence is born out of the same fact why most brands have little to no choice in what to do anyway. The customers choose Amazon. And thus, you have to be on Amazon.
* Amazon’s Private Labels Are Fueled by Amazon’s Rich Market Data, Workout Clothes Edition | Early Moves
* Data from Dash Buttons Will Lead to Evolution of Brands & Amazon’s Private Labels | Early Moves
* “To Make Shopping Disappear”: More Brands Get 50+% of Amazon Orders Through Dash Buttons | Early Moves
* Amazon Tells Brands Like Cheerios Or Oreos to Start Building and Packaging for E-Commerce | Early Moves
* Here Is What a Big Part of Amazon’s Endgame Looks Like | Early Moves