Amazon private brands grew 90% over last year

Dive Brief:

Amazon’s AmazonBasics private label goods dominate its private brand sales, with over $250 million a year to date (a whopping 85% of total private brands sales in the U.S.), but its apparel label Lark & Ro and baby care and vitamins brand Amazon Elements have each grown 90% from last year, according to a new report by e-commerce analytics firm One Click Retail.
Lark & Ro sales doubled, from $5 million to $10 million this year, dominating Amazon’s $21 million in overall apparel sales this year, with the Amazon Essentials clothing sales reaching $3 million in that time. Other Amazon apparel brands include Buttoned Down, Mae and Goodthreads, the company said.
The bestselling private label item outside of AmazonBasics is Amazon Elements Baby Wipes, "Sensitive, 480 count," which has earned $2.5 million in sales year to date, according to the research. Amazon Elements, which ranks third behind Huggies and Pampers in baby wipes, accounts for roughly $10 million in sales so far this year. Amazon’s Whole Foods acquisition has also paid off handsomely online in the first four weeks, with the 365 private label selling over $1.6 million across its Pantry, Fresh and Prime Now programs. In the fourth week alone, 365 outsold Amazon's No. 2 Amazon Elements brand and now ranks No. 11 in first-party grocery sales (including Fresh and Pantry) on Amazon, according to One Click Retail.

Dive Insight:

AmazonBasics may be crushing other retailer’s private brands, but the Amazon Elements and Amazon Essentials lines aren’t far behind, along with its acquisition of Whole Foods 365 line. Many products are available only to Prime members, helping expand the value of Amazon’s annual $99 membership.

Amazon's other two private brands are the snack-centric Happy Belly (some $5 million in sales so far this year) and Wickedly Prime ($800,000 so far). The snacks focus complements Amazon/Whole Foods 365 sales nicely as they do not compete significantly with 365’s variety within Amazon’s overall grocery sales, according to One Click Retail.

When it comes to groceries, the Whole Foods acquisition is poised to accelerate Amazon’s competition in grocery thanks to the e-commerce giant’s data prowess and its manufacturing scale. Amazon’s ability to get Whole Foods 365 online impressed One Click Retail CEO Spencer Millerberg. "It's too early to quantify the full impact of the Whole Foods acquisition, but it is clear Amazon will make a major impact," he said in a statement. "What makes this Whole Foods-Amazon combination so powerful is (one) the treasure trove of data now accessible, (two) the resources to produce nearly 50 labels and counting, and (three) unparalleled operational execution that can release over 3000 products, one day after acquisition."

Still, Amazon isn’t the only one that will benefit from the sales information. Sellers, too, can learn a great deal about how to compete, "simply by watching Amazon's private brand strategy," Millerberg said.

But competing retailers are in a quandary because Amazon’s private label success presents a multi-faceted challenge to apparel brands. In addition to its various apparel, footwear and accessories private labels, Amazon is also experimenting with various sales and delivery models, including a new apparel subscription service (currently in beta), Prime Wardrobe.

While apparel makers can take more control of their brands on the website when they sell directly through Amazon, they run the risk of Amazon evaluating their best sellers and basing its own Essentials items on the performance, according to other research from digital insights firm L2. Even when they don’t officially distribute through Amazon, hundreds of their SKUs are available through third-party vendors on its Marketplace, according to the report. For example, there are more than 2,300 Amazon Marketplace listings for Tory Burch items, some with discounts as low as 71% off the manufacturer’s suggested retail price.

Amazon Essentials accounted for 4% of its daily best sellers, up from zero a year ago. Its top-performing item was the "Men’s Cotton Pique Polo Shirt," markedly similar to Dockers’ "Men’s Short Sleeve Solid Poly Pique Polo Shirt" at half the price. "With Levi’s/Dockers owning the second highest share of Best Sellers in the Men’s clothing category, this suggests Amazon’s private label brands pose the greatest threat to the very brands that are top of the category today," notes L2.

On Prime Day, for the first time, Amazon’s private label brands Mae (lingerie), Goodthreads (men’s dress shirts), Lark & Ro (women’s dresses) and Buttoned Down (men’s dress shirts) landed in Amazon’s Best Seller rankings in their categories, driven by full-screen visibility on Prime Day’s fashion landing pages, according to L2. In fact, and alarmingly for brands, Amazon’s Fashion landing page on Prime Day this year exclusively featured private label products, the research found. And those private labels maintained much of their momentum after Prime Day.

That’s not going to stop, either. "Amazon’s private label brands were the main beneficiaries of Prime Day, suggesting that in the future there will be fewer opportunities for legacy brands to capitalize on busy Amazon shopping days," L2 said in its report. Brands should expect the holidays to be another time when Amazon promotes its own labels.