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Amazon has made a strategic U-turn away from manufacturing its own exclusive products and having them made by third parties instead. The e-commerce giant has already closed over 220 exclusive deals.
Developing private brands “too expensive”
Amazon changed tactics last year and ceased the creation of ever new private labels for exclusive products, because of the prohibitive costs of the whole endeavour. The group decided to focus on promoting their existing private labels and to sign exclusive deals for new products with other manufacturers. Exclusivity – meaning the products are only available on Amazon – remains essential for the company to stand out among its competitors, of course.
American business website RetailDive was able to get hold of a report from market research agency Gartner L2, which points out that Amazon now has more ‘Exclusives’ partners than private labels: 223 compared to 119. The most important categories are groceries, health and beauty products and appliances.
In exchange for the costs of development, which are to be paid by the partners themselves, those brands will get access to the Amazon platform with its enormous reach as well as its entire distribution system (“delivered within two days anywhere in the United States”). In addition, partners get a discount on the commission. Whereas ‘ordinary’ third-party sellers going through Amazon have to pay a commission of up to 20 %, that number is only 5 % for Amazon Exclusives.
