Back in 2017, Quartz had highlighted Amazon’s secret brands and how the e-retailer is leveraging data at its disposal to eliminate middle men. Most of these Amazon products do not reveal their affiliation to the retailer and appear like any other company’s products.
What is alarming is that Amazon’s private label businesses are not shy of copying some of the best-selling products on its site. With a slight variation in quality and heavy difference in price, Amazon’s secret brands sell them to gullible customers, who are none the wiser. As Amazon grows bigger than ever, it announced a stock split early this year.
Amazon’s secret brands and impact
Amazon’s private label business began with consumer electronics accessories in 2009.
For Peak Design CEO Peter Dering, Amazon copying big brand shits too close to home. Last year, he discovered that Amazon was selling a bag that was extremely similar to its bestseller called The Everyday Sling Bag. To add insult to injury, the tech company named its invention Everyday Sling. While the original costs around $90, Amazon’s version was selling for about two-thirds less.
Furious, Dering’s team put out a video mocking the blatant plagiarism, which caught the eye of talk show host John Oliver. Later, under intense pressure and backlash by Peak Design’s fans, Amazon stopped selling its product.
But that is not the end of it. Amazon has been pushing the boundaries of what is acceptable for some years now. Although there is nothing technically illegal about copying brand name products, Amazon’s secret brands have built a customer base by identifying popular products and selling its cheaper versions.
Many retailers engage in such practices but with Amazon’s private label business things take a different turn. According to Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, an activist group that fights big corporations, Amazon’s practices are far more harmful to retailers as they have access to a powerful data engine.
Amazon copying big brands
“Amazon has developed a lot of these private labels by gathering data, essentially spying on the companies that have to rely on its website in order to reach consumers,” Mitchell to CNBC. “They also know what search terms people are using, what they’re clicking on, how long their mouse is hovering in a certain place. And so they are able to analyze all of that data for a level of insights that simply are not available to your typical chain retailer.”
Amazon wields unquantifiable power over customers as it can redirect them to Amazon’s secret brands unlike other retailers who must rely on organic traffic. Mitchell commented that the ecommerce site’s “ability to take one particular product and shove it on page 10 of the search results while giving another product, say, their own product, lots of space right there on the first page of search results… we know that really alters and steers buying behavior.”
Experts also speculate that Amazon has not trademarked some of its brands as they have quality control issues and do not want to damage the overall brand image. Mitchell reveals that Amazon’s private label business has over 200,000 products online and has grown substantially in the last few years.
The origin of these cheaper brands are a mystery as Amazon does not reveal its suppliers or manufacturers. The Quartz report found that many companies listed on Amazon list the same address for a company in Delaware and do not have any other presence online.
Amazon has a lot of brands under its umbrella, including AmazonBasics, Happy Belly, Mama Bear, Pinzon, Presto!, Wickedly Prime, Goodthreads, Amazon Essentials, Mae, Ella Moon, Buttoned Down, The Fix and Lark & Ro. Meanwhile, the company has revealed that its in-house brands only account for 1% of its retail sales. The company’s revenue in 20021 hit close to $270 billion.
As the e-retailer rapidly expands its product base, Amazon’s secret brands give customers a wide variety of choices without paying a premium that brands command. But the repercussions are much more severe for small businesses who rely on Amazon for traffic and sales.
