FB Pixel no scriptAmazon's hidden card to foster private labels in India | KrASIA

Amazon’s hidden card to foster private labels in India

Written by Moulishree Srivastava Published on   3 mins read

Private labels have lately become popular among internet companies as it promises higher returns.

Despite being under the government scanner for promoting in-house products, Amazon India plans to scale Amazon Accelerator, a private label-focused initiative that ropes in manufacturers to create Amazon-exclusive brands.

“It can be for manufacturers to try and build their own brands or even supply for the widening range of Amazon private labels. Not all sellers could do this before as they would not have access to the data and other necessary inputs that will come from Amazon. They (Amazon) have just started reaching to new sellers,” said a person aware of the matter,” a source close to the matter told local media Economic Times.

Launched late last year by the Seattle-headquartered company, Amazon Accelerator is aimed at creating a bouquet of exclusive brands for the platform. Under the program, Amazon reaches out to sellers, helps them launch brands, provides these brands prominent positioning on its website, and offers personalized marketing support. The company also provides relevant data to the sellers on the most sought after products for them to capitalize on such opportunities. In turn, it gains the right to purchase a merchant’s brand any time for a fixed price on 60 days’ notice.

Some of Amazon’s popular private labels in India include AmazonFresh, MyBlush, Symbol, Solimo, and Presto. Its Indian arch-rival Flipkart and its group companies like Myntra have also invested heavily in private brands which are about 30 to 40% cheaper for consumers.

Since the backing from the US retail giant Walmart, which acquired the e-tailer in 2018, it has been ramping up the portfolio of in-house brands in electronics, fashion, and furniture. In May, it added Adrenex, a sport and fitness brand, to the list of its private labels such as MarQ, SmartBuy, Perfect Homes, Cara Mia and Ann Springs, and Miss & Chef. According to local media Business Standard, private label sales fetched the company around INR 500 crore (USD 69.6 million) in the calendar year 2018.

Amazon and Flipkart are not alone in their endeavor to stack up private labels to drive sales by appealing to the Indian middle class. Being low-priced alternatives to high-priced brands, private labels have become one of the central strategies for internet consumer companies as they offer healthy margins for the e-tailers.

For instance, SoftBank-backed e-grocery startup Grofers has been aggressively expanding its private labels since last year and now it accounts for 50% of its entire inventory by the number of units, and 40 to 45% in terms of revenue.  Under private labels, the Gurugram-based startup provides over 1200 products in categories such as staples, kitchen ingredients, FMCG (fast-moving consumer goods), personal hygiene products, among others. By the end of 2020 it plans to quickly expand to have 1,500 products in its private label fold.

“We are partnering with wholesalers in each city and put our brand name on their packages. We have worked a lot on reaching better price points while adding new products and this is our effort to make products available a little cheaper for customers,” Albinder Dhindsa, co-founder and CEO of Grofers, told KrASIA in an earlier interview.

Alibaba-backed Bigbasket, on its part, has Fresho, BBPopular, BBRoyal, and Tasties as private labels. At present, 35% of its total sales comes from private labels which the company wants to scale to 45% by focusing on FMCG products.

Similarly, online beauty startup Nykaa has been betting big on private labels. Earlier in August, it launched a new range of nail paints and lipsticks in collaboration with Indian fashion designer Masaba Gupta.


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