Of course, you're running a monopoly. Have you no stick? Pay off some federal officials and get on with it for god's sake. Nobody likes to watch someone snivel.
Amazon Cuts Dozens of House Brands as It Battles Costs, Regulators
The company’s cuts include all but three of its 30 clothing labels, such as Goodthreads and Lark & Ro
By Dana Mattioli, WSJ
Updated Aug. 10, 2023 2:11 pm ET
Amazon began scaling back its private-label business last year following disappointing sales and criticism from lawmakers.
Amazon.c is jettisoning dozens of its in-house brands as part of a significant reduction of its private-label operation as it works to fend off antitrust scrutiny and shore up profit.
The Seattle-based company in the past year has decided to eliminate 27 of its 30 clothing brands, such as Lark & Ro, Daily Ritual and Goodthreads, according to people familiar with the matter. Some of the brands remain on Amazon’s site for now as the company sells off remaining inventory, but when completed its house-label clothing division will have just three brands: Amazon Essentials, Amazon Collection and Amazon Aware.
Amazon also is dropping private-label furniture brands, phasing out Rivet and Stone & Beam once its stock of those items is gone, some of the people said.
Exact numbers for brands being cut in other parts of the business couldn’t be learned, but Amazon Basics, which sells a range of home goods and tech accessories, will remain a focus for the company.
“We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands—like Amazon Basics and Amazon Essentials—for great value with high quality products at great price points,” Matt Taddy, vice president of Amazon Private Brands, said in a statement to The Wall Street Journal.
He said Amazon looks to eliminate products that “aren’t resonating with customers.”
WSJ breaks down the battles Lina Khan picked. Photo illustration: Xingpei Shen
After years of trying to build the private-label business, Amazon began scaling it back last year following disappointing sales and criticism from lawmakers and others who said it could conflict with the company’s business selling other brands. The company also cut back on giving its private-label products a boost on search results pages in special placements.
Amazon’s private-label business had 243,000 products across 45 different house brands as of a company disclosure in 2020.
The Federal Trade Commission has been investigating Amazon over a number of its practices, and is preparing an antitrust lawsuit against the company. Amazon’s representatives are scheduled to meet with FTC commissioners next week as part of a formality often called “last rites” before the FTC drops its lawsuit next month.
Amazon has said private brands account for just 1% of the company’s total retail sales. Given the small size of the business relative to the regulatory issues it creates, the company last year discussed offering to exit from the business as a concession to the FTC if the agency followed through with its lawsuit, the Journal reported. It couldn’t be determined whether Amazon has offered to regulators to exit from the business.
An Amazon spokeswoman said at the time of last year’s article that it hadn’t seriously considered closing the private-label business and planned to continue to invest in it.
Amazon now has cut the total number of house brands to fewer than 20, some of the people said, and retired tens of thousands of products that it had been making for those brands.
No new products are being ordered for the brands being phased out, which will cease to exist once their inventory is sold. Strong-selling items in brands that have been discontinued are being rebranded under Amazon Essentials or other remaining labels.
The changes are in line with a broader effort by Amazon over the past two years to curtail unprofitable businesses and products as it works to cut costs in the face of a postpandemic downturn. That effort has entailed cuts in unprofitable areas, such as the company’s nongrocery physical stores.
The private-label moves also address scrutiny of the competitive practices around its in-house brands that has vexed Amazon for years.
In 2020, the Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers. Amazon founder and then-Chief Executive Jeff Bezos was called to testify before a Congressional antitrust committee following the article.
“We draw a clear line against using non-public, single-seller data to determine which private label products to launch, and our policy goes further than any retailer we know of,” an Amazon spokeswoman said Wednesday.
After that 2020 article, Amazon curbed a yearslong practice in which its own brands were given a boost in the search results on its site in special placements—the kind of edge other sellers could only gain by buying ads—according to the people familiar with the recent changes. That change caused many of Amazon’s brands to be buried in search results, making it harder for items to sell. The cost of warehousing all that inventory was significant for Amazon, making it a target during the cost cutting.
Some companies have accused Amazon of selling copycats under its own brands. Williams-Sonoma in 2018 sued Amazon, claiming the tech company had copied its West Elm brand’s distinctive-looking orb dining chair under the Rivet brand and sold other items nearly identical to its designs.
Amazon later removed the items from its website and settled the lawsuit, with a favorable outcome for Williams-Sonoma.
Comments