Home
Internet
Internet Features
Amazon's Own Label Underscores Strength of Online Grocery Shopping

Amazon's Own Label Underscores Strength of Online Grocery Shopping r1627

By Reuters | Updated: 6 December 2014 12:15 IST

ment

Amazon.com's launch of its own private label brand of consumer goods, starting with diapers and baby wipes, underscores the website's maturity as a grocery retailer and the migration of grocery shopping online.

And if successful, the line's sharp prices could pressure profit margins for other makers of consumer goods, such as Procter & Gamble and Kimberly-Clark.

Amazon Elements, a new line of , everyday products available to of its loyalty programme Prime, whose hip could exceed 40 million US households this year, according to Bernstein Research.

Elements will offer information - such as where and when items were made, why each ingredient was included and where the ingredients were sourced.

"The two things customers told us they want are products that meet their high standards and access to information," Sunny Jain, Amazon.com Consumables vice president said in a statement. "We're excited to offer Amazon Prime added selection, beginning with diapers and baby wipes."

Most large grocers have their own private labels, so Amazon's move should not be a huge surprise, said Will Hayllar of OC&C Strategy Consultants. But it does underline Amazon's confidence in its push into consumer products.

"This is a sign of Amazon maturing as a retailer and certainly a sign that they're getting some critical scale in a couple of pockets of G (consumer packaged goods)," Hayllar said.

Amazon Fresh, its grocery delivery programme, is now in about 10 U.S. markets. That is less than it had originally planned last year, a source said at the time. It faces competition from established companies like FreshDirect and startups like Instacart.

E-commerce s for just 3.7 percent of sales for fast-moving consumer goods like packaged food, drinks and toiletries, but that amount is growing as retailers like Amazon and Ocado gain traction among weekly grocery shops.

The Amazon Elements line is priced in between branded players' and basic lines, and its success could pressure margins at suppliers, said Bernstein analysts.

"This would be a challenge for G companies, both in of the top-line and their own margins, requiring G to change the way they fundamentally operate to adapt to this more dynamic and potentially deflationary online pricing environment," Bernstein said in a note.

© Thomson Reuters 2014

Comments

For the latest reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube. 86738

Further reading: Retailers