The news: Amazon is shuttering dozens of its house brands, including 27 of its 30 apparel brands and its furniture brands Rivet and Stone & Beam, per The Wall Street Journal.
- The decision appears to serve two purposes: It’s yet another cost-cutting move by Amazon, and it’s a means of responding to the US Federal Trade Commission’s investigation of the company’s business practices.
- Included in that FTC inquiry are the tactics it used to develop and grow its private-label business. The Journal reported in 2020 that Amazon used the data it gathered from third-party sales on its platform to develop private-label products that competed with those sellers.
The context: While Amazon spent several years attempting to build out a wide-ranging private-label business, it began scaling back those ambitions last year after a profitability review of each private-label item it sells.
- That drove it to focus on producing fast-selling private-label items like phone-charging cables rather than a wide array of items that sell in low quantities.
- The company has also taken several other steps to cut costs, including multiple rounds of layoffs, pausing construction on its HQ2, and cutting ties with some European wholesalers.
The big takeaway: The attention the company’s private-label business has attracted far exceeds the revenues that those items generate; Amazon said its private-label business accounts for just 1% of its overall retail sales.
- That said, the company’s private-label business isn’t going away—it’s only getting simplified.
