Amazon.com is taking new steps to build out its burgeoning line of private-label merchandise.
Amazon, No. 1 in the Internet Retailer Top 500 Guide, has been creating its own private-label brands since 2004 when the world’s biggest online retailer launched Strathwood, a line of home and garden products that includes outdoor furniture, décor and lighting.
Now Amazon is expanding Pinzon, a house brand of bedding, bath and furniture products, with a new line of kitchen utensils designed by well-known Seattle chef and restaurateur Tom Douglas. The new lineup of designer kitchen products brings to about 350 the number of exclusive Pinzon SKUs Amazon now carries online. “Amazon’s private-label brands offer customers quality, value, ease of use and durability,” says Amazon senior private-label brand manager Kerry Morris. “It's very important to us to listen to our customers. Through customer discussions and reviews, we've learned what customers are looking for and build our offerings around their feedback.”
The new Pinzon line of designer kitchen products is the latest private-label development from Amazon, which generally launches or expands its own brands at least once annually. In 2008, Amazon expanded Pinzon to include furniture and in 2006 and 2005, respectively, launched Denali, a private label line of power tools, woodworking tools and accessories, and Pike Street, a line of bath and bedding products.
Amazon continues to launch more private labels to keep up with customer demand, says Morris. “It's our mission to offer customers everything they are looking to buy online,” says Morris. “We are always evaluating where we can deliver quality and value to our customers through our brands and will continue to look for new opportunities to do this.”
Amazon won’t talk in detail about its private-label business strategy, but observers note that having its own lineup of custom brands keeps Amazon competitive with other mass merchants such as J.C. Penney Co. Inc., which generates more than 50% of all sales from its own branded products such as Stafford, a line of men’s apparel, and American Living, a diverse line of apparel and accessories for men, women and children.
“Private labeling has worked in several situations for traditional retailers because it enables them to have a deeper margin on a set of products by cutting out the vendor or manufacturer and the associated cost of brand building at that level,” says Scot Wingo, president and CEO of ChannelAdvisor Corp., which helps retailers sell through online marketplaces like eBay and Amazon.com. “I think that’s part of what’s motivating Amazon to develop its private-label brands more aggressively. Amazon can also take advantage of its huge online business base to launch private labels more quickly than conventional retailers.”
As Amazon continues to add more private labels, other retailers also will be keeping close tabs on which merchandising areas Amazon will target next, says Wingo. “Large retailers are watching this trend carefully,” he says. “From a mid-tier retailer perspective, many of them sell on Amazon as part of their business. For these retailers, they are always concerned about steps Amazon takes that could put them in more direct competition.”
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