Amazon announced its Prime Day event for 2022 as the “biggest Prime Day event ever” earlier this week, with over 300 million items sold worldwide. However, its private-label business does not appear to be thriving as much.
According to an exclusive report by The Wall Street Journal, the commerce giant has drastically reduced the number of items it sells under its own brands, and is considering the possibility of exiting the private-label business entirely to address regulatory pressure.
Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories. However, it has been a source of controversy ever since because it competes with other sellers on its platform.
Citing people familiar with the matter, the source notes that the decision to scale back the house brands resulted partly from poor sales for many of the items. As a result, Amazon leadership has instructed its private-label team to slash the list of items and not to reorder many of them.
Executives discussed reducing its private-label assortment in the U.S. by well over half, one of them said.
Amazon has said that its house brands only account for about 1% of its retail sales. Amazon’s revenue last year, including other businesses such as its cloud-computing operation, totaled $469.8 billion.
The growing scale of its own offerings increasingly put Amazon in competition with other sellers on its platform, angering those sellers and resulting in antitrust scrutiny.
Amazon has not yet issued any official comment regarding the report about the possibility of the company cutting down its private label business.
Update July 15, 2022: Amazon has told CNET in a statement it is not closing its private labels:
“We never seriously considered closing our private label business and we continue to invest in this area,” a spokesperson said, “just as our many retail competitors have done for decades and continue to do today.”
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