Amazon now has 80 private label brands, and the number keeps climbing, according to L2’s Amazon Intelligence: Private Label report.
The report reveals that Amazon’s private label business is far larger than industry analysts believed as recently as four months ago, even excluding Whole Foods’ well-established 365 Everyday Value brand. The Clothing, Shoes & Jewelry category accounts for 69 of those 80 private brands, signifying the growing importance of fashion to Amazon’s retail strategy.
Amazon’s recent private label foray into niche categories within Clothing, Shoes & Jewelry, such as Women’s Bags and Men’s Polos, seeks to tap into millennials’ indifference toward shopping for established name brands—especially since many of these brands don’t officially distribute on Amazon. Only 35% of brands in L2’s Digital IQ Index: Fashion officially distribute on Amazon or its subsidiaries.
Although retailers typically reassure national brands that their private label initiatives are there simply to fill white space, Amazon is investing significant paid media dollars behind its brands on Amazon.com. For example, Goodthreads, Buttoned Down, and Amazon Essentials own 16% of Sponsored Products on search terms related to wovens (e.g. dress shirts). For polo-related keywords, they own 13% of Sponsored Products.
For now, the total addressable market for Amazon private label brands remains limited to Amazon shoppers who are brand-agnostic or who easily switch between brands; many consumers will continue to be loyal to their favorite brands. The best defensive strategy for national brands against private label trends is to “out-brand” them across marketing channels where retailers have less experience.
Traditional media, such as TV, still proves to be an effective marketing tactic for more established brands looking to drive digital commerce sales. When Garnier ran a national TV ad campaign for a specific skin care product, micellar water, the brand’s score on L2’s Amazon Performance Rank tool (which measures Amazon Best Sellers performance) soared. Google searches for terms related to micellar water also spiked, and Garnier was well positioned to take advantage by directing consumers to its product listings on Amazon.