Amazon's Stealth Brands: Everything on Amazon Is Amazon
nytimes.com
nytimes.com
At some point I feel like I'm being astroturfed.
People are amazed Amazon sells pasta and batteries under their own brand? Sounds like Ikea to me.
Amazon has several problems they haven't corrected in years - generally not great prices, fake products being co-mingled with genuine items, fake reviews, flaky or slow shipping (esp. with their own delivery people). I've even had a few brand new books arrive with binding or cover damage. Ugh.
There's absolutely nothing interesting about Amazon doing this, it merely makes for a story because it's Amazon. Walmart has been doing it for 25 years as - by far - the world's largest retailer. They have four times the retail scale of Amazon. The Great Value brand is all over their stores, they also have numerous others such as Sam's Choice (since 1991).
Amazon's traditional online retail sales are close to growing at single digits now, they've seen a persistent slowdown quarter after quarter. Walmart's comps are the best they've been in a decade and their online sales growth has been accelerating again, climbing 40% in Q2 and 43% in Q3 (this is after rolling past the Jet.com numbers year over year as well; contrasted to eg 8% type online growth in 2016). If Amazon isn't careful, they're about to get their ass kicked in online retail. Unthinkable just a few years ago.
https://www.bloomberg.com/opinion/articles/2018-11-15/walmar...
Or, for that matter, Macy's. Someone else in this thread posted a link, so here you go: https://www.macysinc.com/macys/private-brands/default.aspx
Amazon reported a 35% YOY growth in the US 3rd quarter, and 15% overseas growth and you call that "close to single digits"? What you didn't mention is Walmarts "crazy" 40%/43% growth in online sales puts it squarely in 4th with a whopping 3.7% of online sales, compared to Amazon sitting at, what 49%?
There's a lot of interesting things to discuss about Amazon's market dominance without misleading numbers used to imply Amazon's outlook is poor. Amazon currently holds almost 50% of the online retail market, while the next 9 companies share 20% and you're talking doom and gloom.
Two counterfactuals to consider:
1. For this to be true, consumers will have to know Amazon is behind the brands. Works for AmazonBasics, but the ones in this story I'm not so sure since their providence is a bit buried.
2. Fakes appear more often in higher-end products. Store brands (like AmazonBasics, Kirkland, etc) are typically geared at low/med end of market.
Both of these hinge on brand perception. If Amazon can improve brand perception of their store brands, they're going to be more willing to say 'these are Amazon brands' on their listings. And the more they can do that, the more incentive misalignment exists on fakes. I don't think 'these aren't fake' is enough to improve brand perception alone as quality matters a lot, but it probably does contribute.
Of course, every retail category is different. I imagine there are some categories today where the intersection between fake problem + Amazon brand means the incentives are aligned to soft-pedal any real progress on fakes.
AmazonBasics also seems to be really solid stuff every time. I was assuming it was just a recommendation but the manufacturer and brand is someone else.
There are several things that could be described by the 'amazon fakes' problem.
First, i want to say that when I do "shipped and sold by amazon" I almost never have problems sometimes they pack inadequately. But usually not, and more than once, they've sent me a case/box of something when I bought a single something, so I'm going to say the "shipped and sold by amazon" products are usually pretty good, if often more expensive than usual.
The problems usually start with the "shipped by X, fulfilled by amazon" though they can be reliably returned. The problems get worse when it's "shipped and sold by X" - often it is a pain to return those, too.
1. it is often that the reviews for several "similar" items will be consolidated somehow, so you'll get these really great reviews for... a thing that this is not. (this was intended, I think, for different sizes of the same item, for example, but it is sometimes abused)
This, in my experience, is pretty common. It's less common that it's flagrantly abused; usually it's just three related things where all the reviews are crunched up. But sometimes, there's a real stinker in there. Again, I think that the 'fulfilled by amazon' makes the cost of fraud higher, just 'cause it's so returnable. (on the other hand, I'm lazy and I'm paying for convenience. returning garbage is a pain in the butt)
When it is done, it's like, you get your new digital camera or whatever, it's generic as advertised, but it got a bunch of credible, good reviews, and the unit you got is essentially garbage.
This might be the most common scam I've seen?
2. there are a lot of shady sellers that claim to sell you brand X thing and then you get it and it's a "brand X" thing.
This doesn't happen as often, and it happens more when it's shipped direct than when it's fulfilled by amazon, but it happens, and has happened to me. Someone was selling pretty okay "Apple" chargers... I mean, they worked mostly okay? but they certainly weren't genuine as they were advertised and priced.
I am generally okay paying extra for the convenience of amazon, so I think I'm their target customer? but I have been burned a few times by fake products sold as the real thing. I mean, not so often that it's still less convenient, for me, at least, (and I'm usually able to return the thing) but it does vastly diminish the power of an 'everything store' if sometimes I buy a brand name thing and get a knock-off instead.
The whole point here is that you are paying extra for convenience. If I wanted to deal with sometimes getting the knock off version, I'd use ebay or aliexpress or whatever and save a few bucks.
Sorry, anecdote and vent. But yes, we need verified vendors that actually ship you what you order.
(I'll be a good boy and pick up mouse traps from Home Depot. I've learned my lesson the hard way.)
What compounds this is that complaining about other sellers misdeeds typically goes nowhere. The only way to avoid such things on the seller side is to have your own brand in the brand registry so you have complete control over product details.
And that's basically the point for everything Amazon does. They aren't doing anything other companies don't, it's just they do it on a massive scale.
With "store brand" specifically, the idea is that Equate or other store brands were well known to be comparable, if slightly less good versions of name brands. In economics terms they were "substitute goods" from brand names, but depending on quality they may not be "perfect substitutes."
In the case of Amazon, if they have brands that are at first glance not Amazon brands, but actually are amazon brands, then they are kind of doing an end run around what was an implicit agreement between consumers and retailers. Namely that a retailer will make it explicitly clear, with obvious branding, what is a "store brand" and what is not. Simply stating "our brands" isn't obvious enough to make that connection if you are only spending 30 seconds on a product description page.
This is something that Amazon is great at actually.
how are brandings such as Kirkland Signature(Costco), Simple Truth(Kroger) or 365(Wholefoods) any more obvious than what Amazon is doing with "our brands"?
The comparable to Signature/Truth/365 would be Amazon Basics. The branding is consistent and minimal.
As the article points out, Amazon has dozens of other house brands that are not associated with Amazon. Amazon's argument would be that they are perfect substitutes, so branding them consistently with Amazon Basics would make people think they are lesser quality. So they just give them a new house brand.
Target is doing the same thing by the way [1] but they just don't have the massive scale.
[1] https://corporate.target.com/article/tag/385/owned-brands
You can buy simple truth milk, chicken, soup, and diapers at Kroger stores.
Amazon has multiple distinct brands per category, which makes keeping track much harder.
Many of those brands are not obviously private label. Whole Foods and Costco are the exception in that they have only 1 store brand that everything is labeled under. This is probably because they are high-value brands unto themselves and it's advantageous to put their own stamp on it.
some cross boundaries as I have found Kirkland brands outside of Costco.
if anything Amazon at least is up front about it.
The biggest clue is usually that it is the only brand that isn't a big name, and yet, there is plenty of it. On Amazon, there is a huge variety of lesser known brands, so you can't assume that just because you didn't hear about it, it must be the store brand.
The pricing is another clue. Store brands usually have a well defined spot, with no competition in that spot. Typically between the no-name stuff and the name brand. Amazon has a lot of brands in every price range.
I am of course assuming that it is not obvious. If a brand bear the name of the shop, or is used for every product category in the shop, it is obvious.
The question is, should people need to read the fine print to know what they are getting? Said another way, what level of generalized a-priori knowledge is reasonable for a consumer to have in order to know what additional information the manufacturer/retailer needs to provide for the consumer to make an informed decision?
It's a playful allusion to viral conspiracy meme graphics. Designers at the NYT do not use non-antialiased lines and JPG artifacts unintentionally.
Heaven forbid a store sells its own products.
What if Nintendo starts selling their most profitable products on their store?
Or Whole Foods starts stocking expensive food products?
Or the Rolex store in the mall promotes their most expensive watches, when the $5 timex keeps time better?
When will the madness end?
Tragedy of the commons is a remarkably powerful business model. Everyone knows that collectively they're going to be fucked over by Bezos in a generation or so, but since everybody knows it, they're powerless to avoid it, because individually each person is just screwing themselves over by not buying from Amazon.
How so? I haven't noticed Amazon UK being particularly competitive on price for many years.
I just randomly checked a camera backpack, £219 on Amazon and Wex both with free delivery.
Canon 6D2, £40 cheaper than Amazon on Wex and Currys.
Amazon are like Ryanair these days, coasting on a low-price reputation that is long gone. They each do occasional headline sales of things people don't want for pennies but the overall trend is up.
Something I've noticed is that many of the Amazon deals in the UK are really just price matches to other retailers, they know they can still likely make a profit due to their favourable tax arrangements.
Do you think that supermarkets selling house brands hurts consumers?
Don't dismiss it. If a $10 store brand shirt lasts you 5 washes, then you were hurt by not buying a $20 brand one that lasts you years. (granted that you may not have $20 at the same time you need a T-shirt)
Same for food items: store brands might be xx cents cheaper but lesser taste, quality and nutrition might put you in red.
> "As is often the case with Amazon, what seem like strange or inexplicable new behaviors are often old retail strategies unfolding on the internet, quickly, and in plainer view. Brooke Mille is no more a lie than any other brand: It’s just newer and faster and more online. And it has a lot more company."
In other words, nothing new here, Amazon is doing what retailers have always done, just on Internet scale. As someone who worked in retail for a long time, I kept waiting for the punchline but I should have read that last paragraph first.
It's hard for me to figure out why this is newsworthy. I wish the New York Times would stop publishing stuff like this. Amazon does a lot that is interesting, evil, novel, etc. to report on. This article just adds noise.
Up until now, when i read stories about the market share of Amazon private brands(and i'm quite curious about that subject), i never heard about those kind of hidden brands mentioned in the story. And of course, they we're mentioned in market share calculations.
Taking that into account, it's possible that Amazon has or will have:
1. A large/dominating market share in many categories.
2. It would be a secret, preventing questions about a monopoly to rise.
As they say, man bites dog is a story. Dog bites man is not. But if you're new to the dog bite beat, you may not know what's news and what's not.
On the other end you've got Amazon not even bothering with a logo and selling a 100% cotton t-shirt for $14.99. (2)
And the Amazon shirt is rated 4.5+ stars.
As a consumer I love what Amazon is doing,
Retail "brands" are the most notorious of all of the middle men.
And they had to be - how do you deliver a product to a physical retail location that needs at least a 2 - 3x on each product sold to pay the rent, the front of house employees, etc?
As a result these "brands" were never product innovators, mostly they're perfunctory with giant marketing budgets to build their "brand value".
Remember Nike's "pumps" innovation back in the day? Was that a product innovation or was that a marketing innovation?
And this reality in retail brands has led to all sorts of notorious abuses - on the subject of Nike they famously figured out how to arbitrage child labor - relying on shit hold labor conditions for ~30 years until they got caught truly well and good with their pants down w/a famous LIFE Magazine story.(3)
Amazon's supply chain innovations flattened the market, and now we see cases as laid out here where the overseas factory owner is building the brands, or building the brands in collaboration with Amazon. It's not going to be perfect, but at least it's a step in the right direction.
Amazon is clearly in the middle of calibrating their own own morale compass, but as a consumer I delight in seeing the mid-market retail kings getting stomped on.
(1) https://www.okayplayer.com/news/style-kanye-west-apc-120-pla...
(2) https://www.amazon.com/Goodthreads-Short-Sleeve-Crewneck-Cot...
(3) http://mallenbaker.net/article/clear-reflection/nike-and-chi...
How is that better or different than any offerings from H&M? Or any of the other even lower end brands?
Reebok was the pump. Nike was “air”.
And the way this operates, Amazon is just a middleman somone else manufactures the shirts they just don’t provide the brand. Which means the actual manufacturer has little reasons to care about quality.
How does the profit and costs break down on a t-shirt sold online?
Curious to hear since you sound like an expert in the field.
Standard Oil had a large number of small subsidiary oil companies under different names, many of which weren’t clearly understood to be owned by Standard. It was one of their ways of preventing anti-trust accusations against them.
Amazon Prime is effectively a postal commerce version of Standard’s rail rebate system.
Lots of respect to those guys, whether you agree with their actions on a moral basis or not. They’ve been reading up on their history.
Apple seems to do the same under Cook too, focusing obsessively on making sure their suppliers don't have any undue profit whilst they themselves demand $100s in profit per telephone, to toss on $100s of billions they desperately avoid taxes on.
The only profit these organizations want to pursue anymore comes at someone else's expense, rather than creating more value.
Peter Thiel said: " So anyone who has a monopoly will pretend that they are in incredible competition". This seems like one of those cases.
Amusingly, Costco sells their Kirkland items on Amazon. Or, rather, somebody called "ShippedFast" does. Now who's ShippedFast? They seem to be in Florida and the phone number maps to a residence. But Amazon doesn't disclose the identity of the seller.
[1] https://hip2save.com/2018/09/11/brands-costco-kirkland-items...
People will, in person, buy something from Walmart instead of Kroger over $2, but Amazon has somehow figured out how to keep people on their site by properly measuring demand elasticity.
Not to mention most listings on Amazon now are ads for products on Amazon. Tide, etc pay for top placements in the stores. So Amazon gets fulfillment cut and money from ad revenue. It's pretty impressive.
It's like there's a late-stage capitalism barrier to entry to get to the good stuff on every platform these days. I mean who out there actually wants autoplay videos and unending push notifications?
It sailed way over my head apparently, what's the punchline here?
Intentional terrible graphic design has been used before by other notable publications like Bloomberg: http://incitrio.com/wp-content/uploads/2014/09/tim-cook-bloo...
And the interesting thing is, that they found almost a risk free way(for them), to do those tasks. Which fits Bezos's experience as an investor, always dealing with profit vs risk.
For example, for small/medium companies, creating efficient supply chains for varying demand was risky. But for Amazon, with it's size and great demand control and forecasting, it's probably not that risky.
The same with creating a new private brand - Amazon has a lot of knowledge of what sells, They control free ad inventory, and they control their customer, via search.
So it would be interesting to ask: what things businesses do are still risky - and would be left to external companies to do ? And what risky things can Amazon de-risk and take in-house ?
Everything works.. Just and no more.
Their web interfaces and APIs are clunky, and there is a lack of any way to flag up an undelivered package.
So, as both Abebooks and the new site list used books for sale by various bookstores, many of the same books are listed on both sites, and my new vendor might even present a better selection of what I look for. That's good. But some of the vendors that offer the lowest prices deal only through abebooks.com, ie Amazon/Bezos, and they list very many books on the Amazon/Bezos site. Coincidentally, one of them, the Book Depository, shown as being located in England, is owned by Amazon, ships free to the US, but when the packages arrive, they appear to have been shipped from the US.
All of that is business as usual for a megacorp, but another bookshop that sells beaucoups of books through Amazon's abebooks is Seattle Goodwill, a non-profit. This raises my eyebrows because I live in a state near Seattle in which Goodwill's non-profit status has been in question because of high compensation given to its executives. I suspect that the relationship between Amazon and Goodwill may be somewhat complex. Amazon gives its customers free shipping to donate items to tax-exempt Goodwill, Goodwill then sells the items through an Amazon subsidiary, Amazon gets a commission on the sale, what's going on? Goodwill is a non-profit that does 'job-training'. Are 'trainees' not earning Seattle's high minimum wage part of this business? What does this operation look like? Anyone know?