UNITED STATES - How does a company like Amazon stay at the top of its retail game? By asking its suppliers to build a line of exclusive products. According to The Wall Street Journal, the online retailer is asking consumer-packaged-goods (CPG) companies to create brands that will be exclusive to Amazon.com. Amazon’s reasoning behind this? Developing brands on its own is costly and time-consuming, people familiar with the matter explained to WSJ.
In recent years, Amazon has been stealthily adding more in-house brands. Online retailers often have a higher profit margin due to in-house brands, because consumers don't have anywhere else to purchase the products they want.
One may wonder why brands would be interested in creating these exclusive products in the first place—because I certainly was. In exchange, Amazon will help suppliers launch their products, promote customer feedback on new products, and provide marketing support. Another component is that suppliers will appear at the top of search results, which, according to WSJ, puts brands ahead of other non-exclusive suppliers. With a platform consisting of about 550 million items, that’s quite the incentive.
How will this strategy continue to play out for Amazon? AndNowUKnow will keep you posted on the great online retail race.
