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Amazon is scaling back private label business: WSJ

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Dive Brief:

  • Amazon has been “drastically” cutting back the number of items it sells under its private label brands, according to a Wall Street Journal report that cited anonymous sources.
  • According to the Journal, Amazon leaders over the past six months have told the private label team to reduce items and not reorder amid disappointing sales and antitrust scrutiny by enforcers and Congress.
  • The e-commerce giant, the Journal also reported, has even considered exiting its private label business. “We never seriously considered closing our private label business and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” Amazon said in a statement to Retail Dive.

Dive Insight:

Amazon’s private label business for years has been the subject of hype, speculation, fear, measurement and governmental scrutiny.

In the latter case, Congressional investigators framed Amazon’s own brands as a conflict of interest for the company, which both operates a massive e-commerce platform for third-party sellers and brands, as well as owns its own brands which often compete with others selling on its site.

Members of a House of Representatives subcommittee scrutinizing big tech companies have more recently accused Amazon executives of lying about whether the company has used specific data from other brands on its platform in its own private label business, and whether it prioritizes its own brands in its web search algorithms. In March, the House of Representative’s Judiciary Committee referred the matter to the Justice Department.

For its part, Amazon has pushed back on the premise that its interests were in conflict with those of sellers and brands that use its marketplace platform. “Amazon and third-party sellers have a mutually beneficial relationship, and our interests are well aligned,” the company said in 2020, after a scathing House report was released. That same House investigation found that inside Amazon, sellers were referred to as “internal competitors.”

Even if the company gains an advantage from seller data, Amazon’s private labels have not necessarily dominated its site. Marketplace Pulse has found that in some categories Amazon’s private labels represent less than 1% of sales. The biggest exception from that research was apparel, which Marketplace Pulse found to represent 9% of Amazon’s sales.

In the Journal’s account, Amazon has been trying to refocus around its most popular private label products, similar to the strategies of fellow retail giants Walmart and Target, after the e-commerce specialist in past years worked to broaden and diversify its private label goods.

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