Amazon’s size and penetration into the global market has put a lot of pressure on the other retail brands in terms of competition.

2. How big is Amazon?
• Amazon is known across the globe for
selling everything from A to Z. it is the
largest online retailer in the US, and now
it intends to produce everything too
• The might of Amazon is well known. You
can refer to our previous article “The
Amazon Effect” for more information.
Amazon is basically an “everything store”,
that is a platform where almost half of all
global online sales take place

3. Amazon is increasing it’s private label sector
• All the known brands, across various sectors, sell on Amazon. From Samsung to
Nike to Park Avenue to Microsoft, you can find every brand, you can think of on
the site. But this is not where the company plans to stop or slow down any time
soon.
• Amazon is working on its growing its private label business now. An Amazon
exclusive product catalog, consisting of a much wider selection of merchandise
at comparatively affordable prices, is the next step the company intends to take
• The rationale behind the move is very obvious. Selling their own brands, or
selling products from third-party brands exclusively on Amazon benefit the
company in many ways.

4. Why is this move making sellers so apprehensive?
• Amazon’s size and market penetration has made brands adopt an Amazon first
strategy, especially in their online retail segments. Now, these brands are butting
their heads with the retail giant itself, that too in almost every product category
• Till now the brands were only concerned with fighting off counterfeits and
competing with similar players on the site. Now, they are competing against a
huge company with a deep pool of resources, which makes their survival on the
site much more difficult

5. Why is this move making sellers so apprehensive?
• Past has proven that Amazon has the capability to turn into market leaders in
any category if they put their minds to it. A One Click Retail study has stated
that Amazon’s own label in baby diaper segment, Mama Bear has outshone
many small brands like Bambo Nature and Honest Company, recently. This year
itself, Mama Bear’s sales have grown by almost 40%. This is a clear testament as
to how fierce the competition is going to be
• But Amazon’s goal is much bigger than these small victories. Amazon’s private
labels force these brands to buy more advertisements on the site, yet still fight
for equivalent exposure as Amazon’s private brands. Its own labels are listed
high on consumer search results and titled as “Top Rated from Our Brands”. This
definitely makes it harder for other brands to level the playing field

6. Why is this move making sellers so apprehensive?
• Moreover, Amazon is already the dominant force in most of the retail sales
cycle, i.e. warehousing and fulfillment. It still is not yet there in the areas of
product development and manufacturing. Amazon though has the
resources to bring itself up to speed in these areas too

7. For mote insight on this topic, visit
www.stitchdiary.com