216.696.8700

“Store Brands” in the Internet Age: What Amazon’s Private Label Brand Means for Third-Party Sellers

November 4, 2022
AmazonBasics

Since the launch of its AmazonBasics brand in 2009, Amazon has been growing its private label business from common staple goods like discount batteries to a full-fledged suite of more than 100 private label brands. As its AmazonBasics brand has grown, so too have seller concerns related to Amazon’s ability to compete with those sellers in a way beyond the manner that typical brick-and-mortar retailers like Costco, grocery stores and pharmacies have been doing for years.

Private Label

One particular seller, Peak Design, took to advertising to point out Amazon’s practices through its AmazonBasics brand, publishing this video pointing out Amazon’s imitation of Peak’s product (including an identical name) and the differences in quality between the original and Amazon’s replication.

While Peak’s video was amusing (and effective—Amazon removed its version of the “Everyday Sling” from the marketplace), it only scratched the surface of the deeper issues lying beneath Amazon’s private label brands. As glossed over in Peak’s video, Amazon can access sales data for all of the products on its site to determine which items it may want to create its own private label version of. Any common physical retailer may do the same when they realize a particular inventory item is “flying off the shelves,” but Amazon has a unique advantage in the private labeling game.

Seller-Specific Data

Unlike traditional retail stores, where products of a similar nature are shelved together, Amazon has the unique ability to promote its own products over and above products from other sellers on its platform by leveraging its internal algorithms and search mechanisms. By understanding search terminology related to products on its website and controlling how results for those searches are displayed to an end user, Amazon could technically use its data to make products from its private label brands the first results when consumers seek out similar successful products.

When asked at a Congressional hearing whether Amazon uses seller-specific data of this sort when making decisions in creating its private label products, Jeff Bezos responded that while Amazon has a “policy against using seller-specific data” to aid its private label business decisions, he clarified they “can’t guarantee . . . that that policy has never been violated.”

Anti-Trust Legislation in the E-Commerce Space

Amazon’s private label business, and the decision making behind how that business is developed, is under particular scrutiny in light of the pending anti-trust legislation in the e-commerce space. Although Senate Bill 2992, the American Innovation and Choice Online Act, remains in the Senate Judiciary Committee, its potential impact on Amazon’s private label brands could be significant.

KJK’s eCommerce practice group continues to monitor the status of S.B. 2992. If you have questions about Amazon’s private label brands, please contact Jon Groza (JWG@kjk.com; 216.736.7255) or another attorney within KJK’s eCommerce team.

Copy link
Powered by Social Snap