Here’s how the retailer uses its own shopping holiday to push its private-label brands.
That surge of adrenaline that comes with getting an incredible deal is one of the many things makes Amazon Prime’s shopping holiday, “Prime Day,” irresistible to shoppers—this year, enough of them that the site crashed. Maybe you grabbed a $30 Echo Dot, or saw a $109 pricetag, blacked out, and woke up inducted into the cult of sous vide cooking. There’s power in a good deal, which is why the retailer sold 100 million products during this year’s event. And if you were one of the people who contributed to the five million apparel items sold on Prime Day, it’s likely you did it from a brand with an unfamiliar name: brands like Buttoned Down, 28 Palms, Goodthreads, and Peak Velocity, all of which are private-label brands that are owned and produced by Amazon.
Prime Day isn’t just a useful tool for Amazon to bring a “record number of Prime members” onto the site, according to the retailer’s press release, or to get new ones to sign up for a yearly membership. It’s also designed to further push into the world of fashion. Amazon has long been interested in becoming a larger force in that sphere—it has its own Amazon Fashion site and owns the more boutique ecommerce shops Shopbop and East Dane—but it’s had mixed results so far. Some brands have pulled out of selling on Amazon after the site failed to quickly extinguish copycats, while others, like Calvin Klein, have found it to be a way to move lots of product and fast. But Amazon is able to plant a perfect trap on Prime Day, when customers are particularly deal-hungry. The site uses this to their advantage, aggressively discounting and pushing their own clothing brands, as well as extending the amount of time clothes from their own label are on sale. Prime Day is over, mostly, unless you’re buying Amazon—this year, private-label brands are on sale for a full week.
Amazon took up to half off their own apparel, nosediving way further than the competition—button-up shirts from Buttoned Down were $32, shorts from Goodthreads were only $13, and Peak Velocity sweatpants dropped from $29 to $15. Not only is Amazon able to promote these products heavily on its site—if you search for a button-down on Amazon, the bar at the very top directs you to a whole bunch of options from its brand…Buttoned Down—but it ensures it has the best price, too. Unsurprisingly, the strategy works wonders for Amazon. Take this Goodthreads button-down as an example: the retailer was able to drive so many purchases of the shirts during Prime Day that it’s now the best-selling shirt on the whole site, ahead of household names like IZOD, Columbia, and Calvin Klein. All of this, of course, is orchestrated carefully by Amazon.
Amazon got its start in private-label brands back in 2009, with batteries. It was easy for the retailer to find success as a battery maker: the site tracked what customers were paying for Duracell and Energizer and then priced its own batteries 30 percent lower, according to a recent New York Times article. Now, Amazon’s batteries sell better than both its competitors on its own site. Amazon employs the same strategy to sell clothes—it has its own line of basic fare like hoodies and tees under the Amazon Essentials label that’s built to compete with the Hanes and Kirklands of the world. The Times story reports that the retailer is able to use all the data flowing through its site to only create items that it knows its customers already want, taking the guesswork out of design.
That Amazon has all the answers to the test might seem unfair to the other brands that sell on Amazon, but they don’t have much of a choice. Opting out of Amazon means taking products off of what’s about to become the largest apparel seller in the U.S. But staying on the platform isn’t painless, either: sell through Amazon, and you sacrifice tons of valuable customer data—to Amazon. “Amazon can analyze [product] reviews and figure out why customers were dissatisfied with a certain product,” Cooper Smith, an analyst at research firm Gartner L2, told the Times. “Amazon can then turn around and create a private label for a similar product, but improve upon it based on what customers say.”
And clothes, not batteries, are Amazon’s future: the profit margins on a $60 28 Palms Hawaiian shirt are much higher than they are on batteries, which don’t cost much yet are heavier than most clothes.
Prime Day is the best chance for Amazon to put that 28 Palms Hawaiian shirt in front of customers at a price that is irresistible. And that Amazon Dot or Spot (the best-selling products during this year’s event) that customers just couldn’t resist giving a try? Amazon’s using those to push its labels, too. Ask Alexa to buy you a new shirt, and in two days you’ll have something from Buttoned Down or Goodthreads waiting at your door.
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