Amazon has totally changed the world in which consumers shop today. The convenience of Prime, the super affordable prices, the variety of recommendations, and a ridiculously easy refund policy makes them THE most preferred e-commerce platform today. Starting with book sales to offering electronics, sportswear, batteries and frozen foods, Amazon has now aggressively moved into establishing their own private label brands. Going to extreme lengths to gain market share no matter what the cost, they have grown to be a giant to reckon with.
One reason for their dominance is that they are offering more and more variety on their e-commerce platform in different geographies. Many of their cleverly camouflaged and successful brands can be tracked down to differently named labels that offer direct competition to named brands, purely on the basis of price and strategic placement in search results. Though loss leader pricing hurts Amazon's bottom line, it grants them the influential position of power to flood markets with cheaper products that are comparable in quality and function to named brands.
Amazon is not waiting for major brands to join their e-commerce site. While in the initial years their strategy was to open up their highly trusted platform to third-party marketplace sellers and brands, they have now become the competitor that sellers fear most. Why? Because they can put anyone out of business.
Many sellers believe that while Amazon provides an opportunity to start out on an even playing ground based on buyer reviews and product performance, they undoubtedly give their own brands preferential treatment over others. Many of the strict rules that get other sellers suspended don't affect Amazon in any way. Having already established themselves as a leader in worldwide logistics, they have the undue advantage of having built inroads into China, the back factory of the world. Now, access to factories is relatively easy.
Let us not for a moment forget, that Amazon sits on over 2 decades of priceless data on market demand, customer behavior and successful product lines. And they have proven time and time again that they are capable of mimicking the best and making it even better.
Do you recognize these names? They are Amazon's in-house brands. Some of these are offered to just the Prime members while other distribute broadly.
Amazon's underlying goal is simple: To be the largest e-commerce site in the world that offers everything a consumer would want.
Top name brands are fearfully aware of the encroaching shadow that Amazon casts on their market share. Most brands are scrambling to cut costs to stay competitive and innovative, and yet, they are either falling behind or shutting down. The few name brands that do sell on Amazon are losing profit margins and Ad space due to Amazon’s evaluation algorithms that are based on product performance instead depth of the pocket. Consumer trends suggest that the public is no longer as concerned with name brands as they are with price and are finding that the in-house and private labels hold the same if not better quality at a lower price than brand name items. As a consumer shown these two options, which would you pick?
Once Amazon dominates a particular market niche, they WILL have an unfair advantage because they control the algorithms on their platform and grant themselves more prominence in ad placements and product recommendations. Their steady expansion and aggressiveness in taking over every possible market is slowly becoming a reality. Amazon’s sheer perseverance to offer products at low prices continues to make such an impact on a vast spectrum that few other e-commerce sites can compete.