“Amazon’s Strategy Whiteboard: The Private Label Threat” – Christian Sarkar
As Amazon grows, it has created a series of “store brands,” Amazon-owned brands imbued with emotion and imagery, that go well beyond the old days of “private label” generic-looking brands.
Our strategy whiteboard now looks something like this (here’s the previous version, when Amazon acquired Whole Foods):
No brand is safe.
David Kahan, CEO of Birkenstock, the German brand that dates back to 1774, has issued a warning that should be taken seriously by all brands, regardless of size.
“Birkenstock does NOT sell Amazon,” he wrote.
Read the full letter here.
Birkenstock prohibits shop owners from selling, distributing or shipping its products to resellers. It also sued Amazon in German courts, and won. The case it made that Amazon “failed to proactively prevent” the sale of fake Birkenstock products. The question arises for all brands: is selling fake brands an intentional strategy Amazon is pursuing?
Here’s what we do know. Amazon’s private label brands extend across a wide variety of categories – from luxury and fashion to more mundane household necessities? Amazon batteries, anyone?
Amazon has far higher aspirations. Its disruptive branding strategy has now taken aim at the higher end of the market. Analyst L2 reports that Amazon’s Find is the largest launch of an Amazon private label fashion brand to date:
The collection boasts more than 800 items, a multi-national marketing campaign in the UK, France, Spain, and Germany, and a 25% off promotion during the launch event. Notably, women’s items from Find are more contemporary and pricier than what typically constitutes Amazon’s private label offerings.
“Cool, and affordable,” says Cosmo.
Apparently there are 8 brands, that we know of, that Amazon employs to build its fashion presence in retail, including Ella Moon, Mae, Buttoned Down, Goodthreads, Scout + Ro, and Paris Sunday.
The brands are marketed as “exclusive to PRIME members.”
What happens when data-driven commerce meets fashion? L2 says Amazon is gaining traction by focusing on “basics” first – a classic “disruptive innovation” move ala Clayton Christensen.
Wait, that’s not all. Trawling through over Amazon 800 trademarks at the US Patent and Trademark Office (USPTO), Quartz identified 19 brands that are owned by Amazon.
What’s interesting is that Amazon is playing the old game of hidden brand-ownership. That is, consumers are kept in the dark as to who the brand owner actually is.
So what is a traditional brand to do?
The answer is actually quite simple: (1) stay off Amazon, (2) build brand equity, and (3) keep innovating. Let’s keep an eye on Birkenstock.
Christian Sarkar is the editor of this site, an entrepreneur, consultant, and activist. See the $300 House project and FixCapitalism.com.