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Amazon’s effort on private label brands may cause fear to other sellers

The retail giant is stoking more fear to other seller and brands as they dive deeply in private label businesses.

Amazon is reported acquiring and partnering with private label businesses wherein Amazon sells their own branded products, including third-party brands which are exclusively sold through Amazon.

The company first got into the private label brands in 2009 and slowly expanded to exclusively brands. It has already over 120 private label brands.

Both Amazon and private label brands are benefitting from each other in many ways. These brands are giving Amazon a better profit margin while they are expanding their product selections. This move by Amazon brings pressure to other bigger brands to lower their prices to stay in the competition.

Amazon recently launched their “Amazon accelerator program” for outside companies to join their “Amazon family of brands”. It also comes with a special “feature” that promotes their own product. “Similar items from Our Brands” will be shown at the bottom and when a user clicks on the advertisement, it will go directly to the page of Amazon’s offerings.

Amazon’s effort on investing in private label brands is a clear sign that the company wants to be the “Everything Store” and will also give more fear to its competitors.

Amazon is powerful in the retail cycle like warehousing, fulfillment and storefront but is weak in expertise areas like product development and manufacturing. The action the company is making in diving deeply in private label brands may fill their missing pieces and become an end-to-end retail service provider.

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