Competing Against Amazon Private Label Products

Private label brands have been around for years, so they’re nothing new (think Kirkland brand at Costco), but in the already competitive Amazon landscape these are yet another obstacle for brands to overcome. The expansion of Amazon private label products on has been troubling to established brands and independent sellers on the site in recent years. Gaining an advantage against countless other sellers on the most competitive retail site in the world is difficult enough, but competing against Amazon on their own platform? How can anyone expect to win that battle?

What started with Amazon Basics batteries and phone cables in 2009 has now blossomed into a global e-commerce microcosm, with somewhere around 88 Amazon-owned labels selling approximately 158,000 private brand products on the site (the Wall Street Journal quoted 243,000 products across 45 house brands in 2020). Amazon private label products span a wide variety of categories including electronics, clothing, grocery, jewelry, pet supplies, home & kitchen, and more.

shopping cart by laptop

With Amazon selling so many products across so many categories, competing against them in the marketplace may seem like an impossible task. But, though Amazon’s product offerings are exceptionally well-varied, they are only dominant in a few key areas. Depending on what you sell, and how you sell it, Amazon’s advantage on its own platform is not guaranteed.

Do Amazon Private Label Products Have an Unfair Advantage?

Competing against Amazon-owned products on Amazon’s sales platform, where success is often determined by the use of Amazon Ads, can feel like playing a rigged game, and rightfully so. The expansion of Amazon’s private label products has brought with it many allegations of anti-competitive practices by regulators, and Amazon had to answer to those allegations in front of Congress in 2020.

As Amazon alone controls the sales data from its sellers, one of the biggest questions brought forth about Amazon selling its own products on the site was whether they were using other brands’ data to compete against them. In the congressional hearing, Jeff Bezos said, “We have a policy against using seller-specific data to aid our private label business, but I can’t guarantee you that policy has never been violated.”

Similarly, does Amazon give its own products preferential placement in search results? Just because they know they shouldn’t doesn’t actually mean they don’t. Still, there is reason to believe that Amazon isn’t playing too unfairly here: If they actually are rigging the game, they’re not doing a particularly good job at it.

Amazon says its private label brands account for 1% of sales, which equated to $4.7 billion in 2021. Compare that to their competition and those numbers seem paltry. Target’s private label products account for 33% of their total sales, with 20% for Costco and 15% for Walmart. Additionally, the added pressure from regulators seems to have forced Amazon to drastically reduce the number of private label products on its site. Comparing the number of products theoretically available this year (158,000) to 2020 (243,000) indicates that they might be moving away from a focus on selling their own branded products.

Which Amazon Private Label Products are the Strongest Performers?

The rapid expansion of different types of products sold under the Amazon moniker over the last decade may be impressive, but only a few of those products are truly winning at the buy button. Those that are a threat to competitors on the site appear to be simple everyday consumables.

Though Amazon Basics products make up only 5% of the private label products that Amazon has launched, they account for more than 57% of sales. This means that it is the original products Amazon began offering in 2009 that are still its best sellers: batteries, phone cables, water filter replacements, etc. The other myriad brands Amazon has put into the marketplace have not gained any real traction against bigger brands. This means that competing against Amazon in all of those other unmonopolized categories is still completely feasible.

When competing against these stronger private label products, we suggest focusing on what sets your products apart from the Amazon offerings (both in product page content and Amazon Ads ad copy). Unique selling propositions are always important, but especially when Amazon’s own brands may seem to have a leg up on the competition. Another idea is to keep your Amazon Ads strategy strong and continuously adjust for changes in the market, such as seasonality, trends, and more.

How to Compete Against Amazon Private Label Products

The areas in which Amazon has the strongest foothold are products that people need but don’t particularly want to buy. If Amazon’s batteries are half the price of Duracell and Energizer, or their water filter replacements are half the cost of Brita’s and still work with the Brita pitcher, customers are going to jump at the chance to save money on these functional, unglamorous items.

But brands selling items that appeal in any way to the customer’s wants have the upper hand against Amazon. If a customer prefers wearing branded running shoes that they know will perform well, they’re rarely going to choose an Amazon Essentials pair simply because it costs less.

The best way for brands to utilize this advantage is with quality ad and product copy. What brands can leverage–and Amazon lacks–is a story about their products. Using both ad and product copy to sell the story of the brand and its products is the best way to resonate with a potential customer. Use info-rich product descriptions to impress the features and benefits upon the reader (if the product doesn’t have impressive features and benefits, you might want to start at square one by improving your product). Make sure you use a consistent voice and imagery across all of your channels; the goal is to cultivate a strong brand presence so shoppers search for your brand specifically.

Another advantage that brands have over Amazon is that they are decidedly not Amazon. The product page is a great way to convey to potential customers that your brand cares about animals, the environment, or any other legitimate causes that other brands don’t have the best track record with. Similar to the point above, if your brand doesn’t have any focus on improving the exploitation of living things or the world in general…it probably should. If not for the betterment of humanity, then for the fact that many people generally prefer to buy from brands that don’t seem like they would burn down a rainforest to appease their shareholders.

If we take Amazon’s word for it, they are not gaming their own algorithm to place their products above anyone else. This means that any brand can put in the work to improve their products’ search results, which improves sales, which improves search results, ad infinitum. Understanding the ins and outs of the A9 algorithm, at least as much of it as Amazon permits us to understand, is crucial to improving conversions.

Similarly, Amazon claims that its products have no unfair advantage over brands who invest in Amazon Ads. Solid Amazon Ads campaign strategies can dramatically improve brand awareness, search impressions, clicks, and sales. While it may not be explicitly anticompetitive, if you’re not paying to advertise with Amazon, you’re not selling as many products as you could.

Partnering with an agency like content26 that understands the intricacies of both product content, Amazon Ads, and demand-side platform (DSP) advertising is the best way to ensure your products enjoy every advantage possible over the competition. Amazon may control the game and own the board, but with the proper expertise and guidance, any brand can produce impactful ads and content that will create loyal customers.

Let's work together.