Amazon cuts choice of private brands amid poor sales

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The company has begun to significantly reduce the number of items it sells under its own brands, and the company has discussed the possibility of exiting the entire private-brand business to ease regulatory pressure, according to people familiar with the matter.

Private label Amazon, with 243,000 products across 45 different home brands as of 2020, has been a source of controversy as it competes with other sellers on its platform. People said the decision to downsize home brands resulted in part from the disappointing sales of many items. It also came as the retail and tech giant has faced criticism in recent years from lawmakers and others at times Gives advantages to its own brands At the expense of products sold by other sellers on its site.

Over the past six months, people said, Amazon leadership has instructed its tag team to cut the list of items and not rearrange many of them. Executives have discussed reducing the assortment of private brands in the United States by more than half, one of them said.

Dave Clark begins reviewing Amazon’s own business.


picture:

Lindsey Wasson/Reuters

The move began after a review of the business by Dave Clark, a longtime Amazon CEO who took over as president of global consumer business in January 2021, the people said. Mr. Clark has left the company Last month. As a result of this review, Mr. Clark pushed the team to focus on the best-selling staples, similar to

targeting a company

“Up & Up” or

Walmart a company

People said the brands were “great value,” rather than offering the wide range of items that Amazon currently offers.

Private-branded Amazon started in 2009 with consumer electronics products such as cables and has expanded into other categories. It now includes everything from vitamins and coffee to clothing and furniture, with brand names like Amazon Basics, Goodthreads, and Solimo. However, Amazon said its brands only account for about 1% of retail sales. Amazon’s revenue last year, including other companies such as Operation Cloud Computing, was $469.8 billion.

The increasing volume of its own offerings has put Amazon in competition with other sellers on its platform, angering those sellers and leading to antitrust scrutiny.

In 2020, The Wall Street Journal Explain in detail how Amazon employees used data from its platform On external individual sellers to develop Amazon-branded products that compete with those sellers. The magazine also reported that year how some major brands were angered by products Amazon developed for their own labels that closely resembled their items, claiming that the tech company copied their designs.

Amazon said at the time that it was opening an internal investigation into how private label employees used seller data and whether they were in violation of the company’s policy not to use such data. In testimony to Congress, then CEO

Jeff Bezos

“I can’t guarantee you that the policy was never violated,” he said.

Amazon deals with these competition issues was under examination From a congressional committee investigating major tech companies and from regulators including the Securities and Exchange Commission, which the magazine reported in April She was studying how the company revealed some details of its business practices. The Federal Trade Commission has been investigating Amazon’s competitive practices.

Amazon Basics products are on display at a 4-star Amazon store in Berkeley, California, in 2019.


picture:

Case Clifford/Bloomberg News

Amazon said its platform provides an opportunity for the nearly two million small and medium-sized businesses selling there, and that they compete fairly and in a way that benefits their customers.

People said scrutiny has prompted Amazon executives over the past year to consider exiting private brands entirely, and how the company might do it. Some people said executives decided to take action only when necessary, likely as a concession they could make if the Federal Trade Commission or another regulatory agency were to threaten or sue.

After publishing a copy of this article online, Amazon said in a statement: “We have never seriously considered closing our own brand business and continue to invest in this space, just as many of our retail competitors did decades ago and continue to do today.”

A spokeswoman declined to comment on whether she discussed the possibility, or to reveal how many private label items she cuts.

US lawmakers have proposed legislation targeting big tech companies, including Amazon, that would prevent dominant tech platforms from favoring their products and services. On Thursday, Amazon proposed concessions to Two antitrust cases settled against it in the European Union. Amazon has promised not to use non-public data about sellers in its marketplace, after the European Union accused Amazon of violating competition law by Using non-public information from merchants to compete against them.

Mr. Bezos, who stepped down as CEO last year to take over as CEO, has long been a supporter of private business. Some people said that in the past he was concerned about his relatively small sales.

A few years ago, Mr. Bezos gave the private label team a goal of reaching 10% of Amazon sales by 2022, the magazine reported. The people involved said the team responded quickly by adding thousands of items to try to sell the juice.

Too many items have ended up in repositories or need to be flagged.

Under Mr. Clark, private label teams reviewed the profitability of each private label item, identifying items that did not sell enough to reach the profit threshold and targeting them for phaseout. The strategy now is to make quick-selling private-brand merchandise, like Amazon’s phone charging cables, that can be placed in warehouses across the country for quick delivery, some people said, rather than tens of thousands of items selling in low quantities.

write to Dana Mattioli at [email protected]

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