How Amazon Steers Shoppers to Its Own Products

Speaking of Amazon and competing with partners, here's Julie Creswell on the rise of Amazon's own in-house brands:

Around 2009, Amazon quietly entered the private-label business by offering a handful of items under a new brand called AmazonBasics. Early offerings were the kinds of unglamorous products consumers typically bought at their local hardware store: power cords and cables for electronics and, in particular, batteries — with prices roughly 30 percent lower than that of national brands like Energizer and Duracell.
The results were stunning. In just a few years, AmazonBasics had grabbed nearly a third of the online market for batteries, outselling both Energizer and Duracell on its site.


“I think, effectively, you have a company that has conspired with about a billion consumers and technology to destroy brands,” Scott Galloway, a founder of a business research firm now called Gartner L2 and a professor of marketing at New York University Stern School of Business, argued in a presentation last year. “Their attitude is that brands have, for a long time, earned an unearned price premium that screws consumers.”

That's a pretty amazing way to think about it -- especially since it's not a negative thing! Also, a fairly obvious play if you just look at the data:

About 70 percent of the word searches done on Amazon’s search browser are for generic goods. That means consumers are typing in “men’s underwear” or “running shoes” rather than asking, specifically, for Hanes or Nike.

Lastly, to tie it all together:

Grundy said when the contract for the AmazonBasics batteries, which are made by a manufacturer in the Far East, next comes up for bid, likely bidders could include Energizer and Duracell.



Want to receive more content like this in your inbox?