AmazonBasics is killing it (& the competition)

We pay a lot of attention to Amazon’s AWS, Prime and Logistics business, but we don’t pay as much attention to something which could become a big business for Amazon: the AmazonBasics private label brand.

The Seattle-based Internet behemoth launched AmazonBasics in 2009, and since then it has added over 2000 products to its private label brand. It accounted for about $7.5 billion in revenues, a drop when compared to $233 billion Amazon brought in 2018. But the potential of this business is pretty high — and according to Joshua Fruhlinger, AmazonBasics are best sellers in 22 out of Amazon’s 51 categories. Interestingly:

While Amazon’s private label is clearly helping to maximize profits, they are rarely #1 sellers. In fact, on average, AmazonBasics products tend to rank somewhere in the middle of the top-100, especially as of late. The only products to average in the top-10 of their respective categories for any significant time period include AA batteries, microfiber cloths, and AAA batteries.

Like every big-box retailer, Amazon was smart to introduce its private label products, except I bet it is way more focused and intelligent about what classes of products to target. Unlike other retailers, it has a lot of data that can help the company predict demand more effectively. And it can also slow down the production of products that aren’t much in-demand, by keeping a close watch on data. This kind of data loop is why presidential candidate Elizabeth Warren is all upset about Big Tech.

A letter from Om

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