Amazon niches strategy: house brands

  • Amazon has its own vulnerabilities, but it knows about it and attempt to apply its strategy in niches with house brands. Would you like to know how it does that?

  • Amazon is and will be a pebble in many eCommerce´s shoes (or a huge rock) but, as I have said more than once, it has its weaknesses. Let's talk about Amazon niches strategy with house brands and how it tries to cover one of these most critical vulnerabilities. 
  • The strategic advantage vs Amazon

  • We all know that these people are amazing. They have cover each and every of the elements of the market, they control from producers and distributors to logistics, but they do all this by projecting a very positive image to the audience

    I hope that if you have an eCommerce you keep reading this article, because they seem to invulnerable. The truth is that they are not, there are some ways to gain a competitive differential advantage vs Amazon, in fact, we could talk about 2 of them. 
  • #1 – Local segmentation

  • It may seem that this platform dominates the world, but it is not truth at all. It is present in 11 national marketplaces (USA, Canada, Mexico, United Kingdom, Germany, France, Italy, Spain, China, Japan and India) it is a global company, but it does not have the same presence around the world. 
  • It is true that it controls the Western market, especially North American and European mainstream (at least by e-commerce penetration) However, in Asia it does not get that dominant position. In China, Alibaba group and all its branches as Aliexpress sell much, much more, in India it has a much more atomized competition but equally quarrelsome led by Flipkart. 

    What do I mean to say with this? Well, I simply to show that Amazon controls markets where it feels comfortable,
    where it understands user´s psychology and his context much better. This is not to say that you create an online store in China or India to compete with Amazon, I propose you to use that vulnerability more locally. 

    Amazon, which is a giant, finally and after lacks to go down to the nearest level
  • INSIGHT:  If your products are of a very local nature then you have advantages to play with like sustainability and, especially, the intimate knowledge of your segment. Amazon can sell a gas barbecue gas for cooking paellas but a local company in which boasts expertise and, above all, local knowledge of the product (in fact, they are located in Almussafes) can win the game before the user seeking an authentic experience. It is an argument that cannot be refuted so easily.
  • #2 - La hyper-specialization

  • This is a matter which is worth to talk at length. In the collective imagination, Amazon remains a benchmark for volume and depth, and inventory management. If we compared with the retail world, Amazon is still that mall, the classic Corte Inglés or Wallmart. 

    I like the analogy with retail because it is clear that these stores have always existed and that customers know them and use for convenience, volume and depth of inventory (does this ring you a bell?) However, they have not become the only player of any market because of that. Local shops or hyper-specialized shops still have their marketshare among the proximity and the advanced buyer who seek and enjoy personalized and expert recommendation. 

    Amazon knows its role and its customers very well, and, on this side, it is aware of having a lack. 

    Hyper-specialization is such an interesting subject that we are going to develop it in upcoming posts, rather than extend longer on this post. 
  • Amazon is moving to niches with house brands

  • Then, what is Amazon doing? What strategic move can it do? Well, it turns to what these giants always do when a problem/competitor arises: spend money. To be precise, we can say that the strategy is divided into two lines.

    On the one hand, we have the 'house brand' with those products that incorporate its own name. Here we can find: 

    • Amazon Basics: these are products which are sold very well. We can find under this brand cables, batteries, computer covers, but also office or household items. 
    • Amazon Essentials: basic clothing, from inside jackets, trousers, tracksuits...Amazon is very interested in style and its niches. 
    • Amazon Elements: If we talk about niches this is one of the clearest. The company launched this specially designed line of dietetics supplements for athletes who are looking for higher performance (an expert and demanding audience, but who usually invests in these products, which are also of high rotation) 
  • Beyond these brands it shares branding with, Amazon has many others that apparently could be of any seller on its marketplace. There is no evidence, at first glance, that they are Amazon products... but they are.
    It is, for example, mainly fashion brands with different segmentations (here you can see the intention of making its offer vertical in certain niches). We could distinguish between clothes to go to the office, another more casual, pyjamas, sportswear or shoes and suits or dresses for events requiring etiquette. All for men and women under different names. 

    Of course, we will also find clothes for children, 6 of 76 Amazon own brands are aimed at children. 

    Not everything is fashion. We can also find food products as appetizers Happy Belly or Wickedly Prime of a superior range, and even, it dares with furniture of different styles or diapers for babies. 

    It is clear that Amazon represents the paradigm of horizontality in eCommerce, but it also knows better than anyone, how to detect (and with more than reliable conversion data) what works best. For this reason, and even though it is trying to copy certain niches with specific brands, smaller online shops, with a craft component and product knowledge are able to continue fighting from specialization and the best and most personalized customer service possible. 
  • What do you think about this Amazon niches strategy? Do you see it as a threat or you think they may not reach the level of detail of small stores? Share your thoughts with us!

  • Images | Amazon, Google and Fotolia. 

Jordi Ordóñez

Jordi Ordóñez is an eCommerce and SEO consultant with more than 16 years of experience in online projects. He has advised clients such as Castañer, Textura, Acumbamail, Kartox or Casa Ametller. Write in the official blog of Prestashop, BrainSINS, Marketing4ecommerce, Photography eCommerce, Socialancer, and SEMRush among others. He is an editor on the Oleoshop blog.

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