Amazon to use own labels to tackle new e-commerce norms?

Chennai: Amazon recently expanded its range of in-house brands, giving more reason for domestic retailers to fight e-commerce giants, despite the government, with its new norms tightening the leash around its neck.

In December last year, the government barred online retailers such as Flipkart and Amazon from selling products of companies in which they own stakes and disallowed them from entering into exclusive deals for merchandise, unveiling norms that industry figures warned could upend India’s $18 billion e-commerce industry.

This spelled disaster for the giants, especially Amazon, which even went as much to take off many of its popular brands from sale.

However, recently, expanded its range of ­in-house brands fivefold in two years, stoking claims its marketplace is unfair to shoppers and rivals.

This came just months after industry experts stated that the new e-commerce rules will force e-commerce firms to change their business model.

“E-commerce companies have to go back to the drawing board and see if their business models comply with the new requirements that are effective prospectively,” said partner, Deloitte India, Anil Talreja in February.

With the rapid and silent expansion of its own brands, Amazon has a way of tackling the norms, for it sells its own labels. The online shopping titan owns 138 brands, up from 27 in 2017. In the EU, Amazon has 23 ­private-label brands, which include make-up, barbecues and clothing.

The findings also come with problems for Amazon for it is now being scrutinised for growing its own-brand business, which do not carry a name or a logo and are routinely promoted in search results.

Last year, the European Commission said it would investigate whether Amazon has abused its position by gathering data about third-party sellers on its website to give its own product lines an advantage.

It must be noted that Amazon has sold its own brands on its platform for more than a decade. Well known in-house labels include Amazon Basics, clothing brands, food and healthcare.

Last week Amazon unveiled its first foray into skin care in the United States with a 14-piece line called Belei, an ­attempt to tap into the $16bn US market for personal care and beauty products.

According to Amazon, private label products are a common retail practice and these products are approximately only one per cent of its total sales. “This is far less than other retailers, many of whom have private label products that represent 25pc or more of their sales,” says Amazon.

Rival to FedEx & UPS?
Earlier this week, FedEx reported earnings per share and revenue below expectations for the third quarter. There had been increasing chatter in the analyst community that Amazon could be emerging as a competitor to the shipping giant.

According to one, that is most certainly investor perception. “While we continue to argue Amazon’s ambitious network build out is entirely to provide for retail distribution, it is hard to argue with a market that has nearly decided Amazon will eventually operate a two-way delivery network to rival FedEx or UPS,” wrote Barclays analyst Brandon Oglenski in his earnings recap note.

 

Like Google
Amazon.com Inc is combining some offerings in a way similar to Alphabet Inc.’s Google and could face sanctions in order to safeguard competition rules, the chairman of Germany’s Monopolies Commission Achim Wambach, has said.

“One could think in the direction of an unbundling on a product level at Amazon. Amazon Prime connects different services as well and only subscribers can view certain films or series,” said Wambach.

Last year, the European Union fined Google 4.3 billion euros ($4.86 billion) for breaching antitrust rules as the US giant imposed restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search.

Praveen Kumar S