Amazon pushes manufacturers to create exclusive brands for it

Feb 1, 2019

After finding that it was too expensive for Amazon to develop exclusive brands independently, the company started pushing established food and beverage manufacturers to create exclusive, private label products to sell only on its site,. Companies making everything from mattresses to artificial sweeteners to coffee have already launched brands only available through Amazon.

Private-label has always presented a risk to manufacturers because it limits sales to a single outlet. But Amazon has worked to sweeten the deal with promises of rapid-fire customer feedback, marketing support and prominent position in search results.

According to a Nielsen study, private label products and exclusives are not new to the world of retail, but they’re growing in popularity. Predictions suggest the market could reach $220 billion by 2020, driven by a need for retailers and manufacturers to differentiate themselves.

Currently, Amazon has more than 100 of its own in-house brands across product categories, which it has sought to, highlight and promote over established national alternatives. For food and beverage manufacturers scrambling to keep apace of the transition to online shopping, an exclusive deal with Amazon presents an attractive option: access to customers and a door to the e-commerce world as traditional retail falter.

Alongside exclusive deals with existing brands, Amazon launched its own private label food brands in the past few years, including Happy Belly, Mama Bear and Wicked. But it hasn’t been easy to keep these brands popular. Happy Belly, a snack food brand, grew rapidly after its launch in 2017. But then sales declined more than 40% year-over-year in 2018, outpaced by other options from established brands. Going forward, Amazon appears more interested in partnering with existing brands to create exclusive deals, rather than maintaining its own food and beverage labels.

Brands that launch exclusive products for Amazon, not only get faster customer feedback, marketing support, and revenue from the sales, but they also can appear at the top of search results. With the site’s estimated 550 million products, that can give these products a lot of leverage.

 

 

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