Amazon promoting retailer brands

Amazon Japan has launched a new sub-site selling private label products from 15 major retailers. The site brings together multiple sports, home centre and pet chains as well as drugstores and one supermarket. This is yet another sign of the growing popularity of retailer private brands. 

Amazon Japan opened a new online store in late July allowing people to buy private brands from several mass market retailers in different sectors. At the time of opening, 15 chains had signed up, including Seijo Ishii, Matsumotokiyoshi and Tokyu Hands. The online store offers 32,000 SKUs at present across 11 product categories, with Amazon’s own Amazon Basic products prominent among them.

This latest private brand development reflects  the confidence retailers now have in their own brand ranges. While the three biggest private brand players, Aeon, Seven & I and Isetan-Mitsukoshi, are not selling their lines on Amazon as yet, Aeon is involved through its Sports Authority subsidiary. Tokyu Hands, Cainz and DCM are three of six home centre and related retailers on the site, and two pet retailers are also involved. The online store offers the chance for retailers to reinforce the brand and value of their own lines, confirming that consumers are beginning to choose where to shop based on private brand availability – the holy grail for many retailers around the world.

Total private brand sales for Japan’s three largest FMCG retailers were estimated to be close to ¥2 trillion in 2013, about 16% of their total sales and growing at around 20% a year. While most private brands compete with the big, manufacturer alternatives by being 10-30% cheaper, larger retailers are also now selling brands at higher prices than manufacturer brands. Even the department stores are pinning their future on private brands (see Page 8 & Focus Page 13).

Amazon’s offer to put some of these private brands online in a special store provides retailers with some nice brand promotion and further dismantles the notion that they are just cheap alternatives.