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Some Amazon (AMZN) branded products may be going by the wayside as the company has already started dropping items from its lineup and is considering an exit from the business entirely.
Sales of Amazon’s private-label business accounted for 243,000 products in 2020. Those numbers were spread across 45 different brands, according to a report from the Wall Street Journal.
Amazon began offering its private-label merchandise back in 2009, with products ranging from electronic devices to vitamins, coffee, clothing, and furniture, which are sold under the Amazon Basics, Goodthreads, and Solimo names.
The report from the Journal said that Amazon is reducing its self-branded products due to regulatory pressure as it competes with its third-party sellers in its marketplace. In addition, the e-commerce giant has seen lagging sales from the products, prompting a cut in the items that are not reordered.
A source for the Journal said the company has discussed cutting the private-label inventory by more than half in the U.S., with a focus on keeping the products that are best-sellers and dropping its less-popular items.
But Amazon has been criticized for putting its brands before its third-party vendors, which has caused it to come under antitrust scrutiny, the news outlet said. It has also made for unhappy sellers on its platform, which have complained about similar products developed by Amazon.
Amazon is under investigation by the Federal Trade Commission as a result of its competitive practices and has garnered attention from other regulators such as the Securities and Exchange Commission, the Journal said.
In response, Amazon has argued that it provides access to nearly 2 million small and mid-sized businesses to sell on its platform and also competes fairly to benefit its customers.
Amazon issued a response to the Journal’s report about its decision to cut its private-label business: “We never seriously considered closing our private label business and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” the statement read.
In 2021, Amazon had revenue of $469.8 billion. Its house brands accounted for only about 1% of its overall retail sales.
As of Friday premarket hours, shares of Amazon were trading at $112.25, up $1.62, or 1.46%.
The steps Amazon has proposed to settle the case would also need to be take to comply with new EU legislation
Photo: AFP / SEBASTIEN BOZON
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