Dive Brief:
- Amazon.com Inc. is setting its sights on being the latest retailer with its own fleshed out private brand of grocery products, called Elements, according to unnamed sources reported by the Wall Street Journal.
- Amazon already carries diapers and baby wipes under the Elements label, but earlier this month, Amazon "sought trademark protection for more than two dozen product categories," including "coffee, soup, pasta, water, vitamins, dog food and household items like razors and cleaning products," the Wall Street Journal reported.
- For Elements, Amazon would partner with other manufacturers, which would create the products, and the retailer would attest to quality. This could be problematic if Amazon has to deal with quality control issues, as it already did for its line of diapers.
Dive Insight:
In expanding Elements, Amazon would be taking a fairly traditional food industry route, lining up its store-owned brands next to name brands. With its own private brands, Amazon could, like other food retailers and manufacturers, secure higher margins without having to pay for additional marketing and branding for those products.
According to market researcher Information Resources Inc., private-label products also tend to be about an average of 28% less expensive than similar name-brand products. Thus, Amazon could reinforce its reputation as a low-cost retailer while attracting bargain-hunting grocery shoppers and consumers looking for an easier way to make more than one different type of purchase all at the same retailer.
This wouldn't be Amazon's first foray into private brands. The Elements label already exists, housing just the diapers and wipes for now, but Amazon has other private brands as well, and also had ones that didn't work out. This would be Amazon's first line of perishable goods, which would seemingly enable the online retailer to enter the food industry in a big way adding onto its other grocery strategies, including Amazon Fresh grocery delivery and Prime Pantry.