Barely 24 hours after Procter & Gamble announced their second record quarter in a row, Amazon has embarked on the expansion of its private label products with the introduction of a wide range of competitively priced health and personal care items under its Solimo brand. The Solimo 5-Blade MotionSphere Razor for Men is perhaps the most notable with a price point at $7.49 making it lower than equivalent razors from long-established brands such as Gillete, Schick and Bic.
Amazon first launched its private label brands back in 2009 and according to TJI’s Intel’s Amazon brand database the company now has 132 private label brands. What is significant about Amazon’s approach is that it is using the vast amount of product and consumer data it holds to create its own range of products which can rival the best-selling branded goods on the Amazon marketplace. Amazon analyzes sales of third-party brands on its website and uses this data to decide on the products it will offer as private labels. If its private label version of a popular product has good take-up, Amazon then increases production and vigorously promotes it on its website.
What the growth in private labels demonstrates is that traditional product-based competition is becoming increasingly challenging, if not obsolete. While a few mass-market products within the portfolio of a multinational can maintain real features to benefits advantage, most categories see an increasing commoditization, price reduction and overall parity of benefits across branded and unbranded skus.
Certainly, the job of R&D departments and an open approach to innovation will continue to provide leading manufacturers with superior products, but unless brands can turn the conversation around, such superiority might not last long enough to pay back the R&D investment and make a profit. In such a scenario, brands need to adapt their strategy to compete for their share of consumers’ spending.
If the future of successful brands is not (only) in their physical products, what can be done to claim back the lost market shares? Observing thousands of products, market strategies and communication assets from our clients and their competitors, we see how fewer and fewer brands are doing a really great job at promoting their “brand story”.
A well-crafted brand story communicated across channels and certainly through online retailers’ platforms, gives shoppers the possibility to relate to the product itself. Take Burt’s Bees, founded by a couple who had a passion for candle-making and beekeeping and transformed their passion into the natural skin care brand we know today. Customers are aware of Burt’s Bees’ brand story and their commitment to natural ingredients. This means that when they search on Amazon for quality skin care products, they are more likely to type ‘Burt’s Bees’ than more generic terms such as ‘beeswax lip balm’. Amazon’s private label power therefore loses its potency.
Marketers and their trade marketing partners need to join forces to communicate brand stories that sell across channels, creating excellent assets that engage and convert. While some effort goes on “own” platforms (website, social media), online retailers are often left behind but brands cannot win the race for the consumer’s purchasing power by focusing only on the upper side of the funnel.
Want to find out more about transforming product content into a selling machine? Read our two-part deep dive on the myths of product econtent marketing here: part I and part II or get in touch with our experts.