Amazon India is looking to create own private brands in fashion and groceries category apart from significantly expand its existing private electronic accessories brand AmazonBasics, according to a report in Livemint.
AmazonBasics, which debuted in India in September last year, currently offers products like Headphones, HDMI cables, Laptop backpacks, laptop sleeves, micro USB cables and tripods among others.
Cloudtail, a 49:51 joint venture between Amazon Asia and Infosys founder NR Narayana Murthy’s Catamaran, sells these products.
The US Story
Private labels is not virgin territory for Amazon, especially in its home country, the US. In June this year in the US, Amazon.com launched its own lines of consumables, Happy Belly coffee and Mama Bear baby food. It is also selling nuts and trail mix under the Happy Belly brand.
The e-commerce behemoth has been selling private-label electronics and home goods under its own brands for many years in the US. It also launched the Elements brand in 2014, a line of diapers and baby wipes.
VP of Strategy and Insights, Profitero, Kieth Anderson writes in an article: “The primary lever for private-label products is margin-related. In other words, if you owned the product and you’ve eliminated the intermediary, you can save on marketing and distribution cost.”
“A lot of value-tier private labels minimally invest in building brand equity in traditional equity-building activities. You spend very little on marketing, and instead you perhaps give those brands prominent shelf space.”
In India, Amazon has hired former Myntra chief creative officer Gautam Kotamraju to lead private labels.
Kottamraju has worked 18 years in the fashion business, and helped create Myntra’s large private brands business, which generated more than 20 per cent of Myntra’s gross sales within two years of its launch, according to Livemint.
Private Label Fight
Experts say Amazon is foraying into the private label territory more and more aggressively to take control over marketing, development, and packaging – something which typically results in higher margins for the retailer.
Amazon is not the only major e-commerce brand which is entering the private label space. Indian rival Flipkart is ready to take a second chance at selling own branded products, according to a report in The Economic Times in June.
Flipkart had been planning to launch private brands in jewellery, mobile and fashion accessories and license these brands to sellers whom it deems capable of fulfilling its quality manufacturing benchmarks and product specifications.