Is Amazon's Approach to Private Label Brands Anticompetitive?

It's not what Amazon's selling, but how it sells.
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· 3 min read

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Lauren and Heidi; Blair and Serena; Amazon and its third-party sellers. All iconic frenemies, but only one duo is at the center of a sweeping antitrust probe. The House Judiciary Antitrust Subcommittee is scheduled to grill Jeff Bezos for the first time on Monday, although reports of a potential postponement bubbled up last night.

To recap: Amazon is facing allegations that it poaches third-party seller data to make its private label brands more competitive.

In the upcoming hearing, Bezos will likely testify that Amazon’s private label brands aren’t a threat. Are they?

Back to AmazonBasics

Across retailers, private label brands fetch higher margins than wholesale products, and provide customers value via lower prices.

By the numbers...Amazon’s private label wing is canary-sized.

  • Private label brands generate 46% of sales at Kohl’s and 33% at Target.
  • Amazon says its 45+ private label brands account for only 1% of its retail sales.

“Most brands are not losing sleep over Amazon dominating with their private label brands,” Fahim Naim, a former Amazon executive and CEO of e-commerce consultancy eShopportunity, tells me.

By the practices...Amazon’s methods for sourcing and promoting its private label brands elicit one big 🤔 from antitrust investigators.

  • In stores, retailers can give their private labels coveted endcap slots—but shoppers can roll down the aisle to see everything else.
  • Even if third-party sellers pay to appear higher in Amazon’s product results, Amazon can still promote its products over theirs.

Amazon has denied that it unfairly prioritizes its labels, but journalists with bigger reporting budgets than mine found otherwise. In 2020, Amazon employees told the WSJ that Amazon routinely pulls sensitive third-party seller data to develop competing products. A June ProPublica investigation found that Amazon has slotted its own products into its most prominent ad spots during the pandemic.

Could probes transform private labels?

Not at non-Amazon retailers, and hardly at Amazon. “The negative attention might cause Amazon to tone down some of their more egregious marketing efforts, like special ad placements not available to other brands,” Kiri Masters, CEO of Bobsled Marketing, said.

Alex Petros, policy counsel at Public Knowledge, told me new legislation could eventually limit how Amazon uses vendor data—eliminating private label dupes of third-party best sellers.

“Whatever the final remedy chosen, the implication for other retailers should be a fair playing field where the highest-quality and cheapest products win out,” Petros said.

Looking ahead...third-party sellers have other concerns, like Amazon’s power to remove or suspend accounts based on reviews, Naim said, and the proliferation of knockoffs overall.

+ While we’re here: Get ready for all four Big Tech appearances at the upcoming hearings with Morning Brew’s guide to antitrust. Shots every time someone says “monopoly” are optional.

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