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Amazon readies its own private-label brands

Amazon is preparing to expand its business with the addition of several new lines of private label brands that it will begin selling in the coming weeks.

The company's private brands will initially be available to Amazon Prime Subscribers and will include perishable foods, tea and coffee, vitamins and baby food as well as other household items such as laundry detergent and diapers.

The names of a few of Amazon's new brands have been released and they include Happy Belly, Wickedly Prime and Mama Bear. It is believed that the company made the decision to begin selling its own private label brands after seeing the success that Costco, Walmart, Target and other major retailers had when they began to sell groceries.

The chief architect of brand consultancy at Brick Meets Click, Bill Bishop explained how Amazon could benefit from launching its own private label brands: "Amazon is carpet-bombing' the market with new products. Private label allows them to test out new prices and distinctive flavours with less risk."

Generally the profit margins of private-label portfolios are higher than brand-name goods since they are able to forgo the additional costs associated with brand development and marketing. In 2015, store brand sales were able to reach $118.4 billion in the US which was a $2.2 billion increase from the previous year.

This is technically Amazon's second foray into private brands since last year it was heavily considering adding milk, cereal and baby food to its Elements brand. Hopefully the company has used the extra time to develop its private label brands even further.

Image Credit: Jeramey Lende / Shutterstock

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.