As Amazon makes bigger plays in the grocery space, its private label game is accelerating.
Amazon currently has 10 grocery brands that include food, beverages and household items, including Solimo, Happy Belly, Wickedly Prime, Amazon Fresh, Mama Bear, Amazon Elements, Wag, Revly, Presto and OWN PWR. All have launched in the past three years. Across all its sectors, Amazon has 137 own brands, according to TJI Research.
Although food and beverage only comprise 2% of Amazon's private label sales, the e-commerce giant has released numerous products this year. In February, it launched private label milk under its Happy Belly line, which includes other dairy-related products like eggs, cheese and whip cream, as well as trail mix and nuts. Amazon spokesperson Nell Rona told Grocery Dive in an email that Happy Belly is its most popular food and beverage label. That same month, Amazon also debuted coconut water under its Solimo brand. Solimo's coffee pods currently sit on Amazon.com's Best Seller list among grocery products.
Amazon's push into private label is likely to soon expand even further. Soon after the launch of these products, TJI Research found that Amazon listed several job postings related to developing private label food and consumables, signaling the retailer's plans to more heavily invest its resources to building its own brands.
Rona explained that private label is Amazon's way of providing its customers with the widest selection possible and offering high-quality products at a value price. Amazon expert and chief marketing officer of Edge by Ascential Danny Silverman agrees. He told Grocery Dive that by introducing more private label products, Amazon is reaching more mainstream, value-conscious consumers that frequently shop at discount grocers like Walmart.
"They've launched a ton of things and not all of them have gotten a ton of traction," Justin Smith from TJI Research told Grocery Dive. "We've seen the most traction in consumer staples like more replenishment items."
With that in mind, Amazon's Happy Belly milk line may have greater chances of driving sales to the retailer's grocery segment.
"Milk is as basic as it gets," Silverman told Grocery Dive earlier this year. "What might follow are the bread and the eggs to get to that core basket and start to penetrate the shopper's wallet for those core shopping trips."
Known for its data collection, the online mega-retailer can use the information to curate products for customers, especially helpful in developing its own branded items. Amazon said it uses direct product feedback from reviews and focus groups to improve the items they currently offer. The retailer also closely follows trends, social media, suggestions from manufacturers and gaps found in product assortments to introduce new products.
The doubling down on private label the past couple of years is Amazon's attempt at reaching a larger share of wallet in terms of e-commerce spend. In 2018, Amazon led U.S. online grocery with 18% of market share and analysts expect the retailer to outpace Walmart from 2030 to 2035 in grocery sales. Grocery is top of mind for Amazon and private label is just another way for the retailer to threaten traditional supermarkets and gain loyalty from online shoppers. The retailer already has more than 100 million loyal Prime members in the U.S. that it can target, according to a Consumer Intelligence Research Partners survey.
"We see a common strategy among grocers to have private label products to not only provide value, but increase loyalty as they become accustomed to brands they think are trustworthy," Smith said.
So what might be next for Amazon's private label? It may soon get prime time play on physical shelves as the retailer plans to open its first grocery store in California early next year, with more to come. Silverman said he could see the retailer stocking its shelves with its private label brands, which he said might resemble a Trader Joe's or Aldi rather than a typical supermarket with mainstream products.
"House brands have become an essential strategy for Amazon," Silverman said. "They will be a formidable competitor."