While Amazon-branded CPG products are growing at 81%, the business still has miles to go before reaching the private-label share that its competitors maintain.
“As a more recent entrant into the grocery space, Amazon is still well behind the competition when it comes to private-label CPG,” said Andrew Lipsman, principal analyst at eMarketer. “With all the talk of Amazon competing with sellers on its platform, this is a good reminder that the situation isn’t especially unique. At the same time, it highlights Amazon’s massive opportunity as it wades deeper into online grocery—and why CPG brands already contending with tight margins won’t welcome the added competition.”
Amazon has recently expanded its exclusive brands portfolio, which is now rapidly outpacing its number of private-label brands. March 2019 data from Gartner L2 found that Amazon had 52 exclusive grocery brands and just five private-label grocery brands. This discrepancy was similar for other CPG-heavy categories such as pet and beauty.
Amazon private labels can be a source of frustration for third-party brands selling on the platform, whereas exclusive brands could be an opportunity—albeit one that comes with unique pressure. “Amazon’s rollout of private-label exclusives put some brands under pressure with a sort of prisoner’s dilemma,” said Keith Anderson, senior vice president of strategy and insights at Profitero.
A January 2019 report by Feedvisor showed that 66% of US brands are concerned with the competition from Amazon’s private-label business. Additional data from a June 2018 Jumpshot survey found that a quarter of US marketers are concerned about biased private-label competition on marketplaces.