How powerful is Amazon’s private label?
According to sales data analyzed from 9/2015 to 8/2016 Amazon (AMZN)’s private label brand has dominated sales of a number of products, moving Amazon from a retail channel to a competitor in particular markets. The statistics are quite telling for such items, and we note here both speakers and batteries that are sold online. At the top of the triangle, 89% of all speakers and 94% of all batteries sold online are sold through Amazon, with estimated market sizes of $1b and $113m (online), already an amazing capture rate, but digging deeper, in just 2 years, Amazon accounts for almost half of online speaker sales, and in the last year (8/15 – 8/16) grew 67% y/y.
In the online battery business, as noted above, 94% of batteries sold online are sold through Amazon, already a staggering metric, but Amazon’s own brand accounts for almost 1/3 of all battery sales online and has grown 93% over the 8/15 – 8/16 year. While price is certainly a factor, especially in the battery category, where brand loyalty is extremely low, Amazon has created a speaker product, the Echo, that has significant appeal to consumers, and while it doesn’t have the highest conversion rate[i], it does have the highest proportion of product views.
All in, Amazon has taken it incredible retail might and begun to use that strength to hawk its own products, and while competing with its customer base, is likely going to expand the number of categories in which it sells its own brands, despite the conflict. While it is hard to imagine that this will not cause some consternation with its B2B customer base, Amazon’s reach is so great that in the long run, BTB customers will have to accept that Amazon itself could dominate their product category, potentially thinning the competition to those able to produce more competitively priced (batteries) or more innovative product (speakers).
[i] Product views over product purchases
In the online battery business, as noted above, 94% of batteries sold online are sold through Amazon, already a staggering metric, but Amazon’s own brand accounts for almost 1/3 of all battery sales online and has grown 93% over the 8/15 – 8/16 year. While price is certainly a factor, especially in the battery category, where brand loyalty is extremely low, Amazon has created a speaker product, the Echo, that has significant appeal to consumers, and while it doesn’t have the highest conversion rate[i], it does have the highest proportion of product views.
All in, Amazon has taken it incredible retail might and begun to use that strength to hawk its own products, and while competing with its customer base, is likely going to expand the number of categories in which it sells its own brands, despite the conflict. While it is hard to imagine that this will not cause some consternation with its B2B customer base, Amazon’s reach is so great that in the long run, BTB customers will have to accept that Amazon itself could dominate their product category, potentially thinning the competition to those able to produce more competitively priced (batteries) or more innovative product (speakers).
[i] Product views over product purchases
Fig. 1 - Online Speaker Brand Market Share - Source: 1010 Data
Fig. 2 - Online Battery Brand Market Share - Source: 1010 Data
RSS Feed