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Are Exclusive Brands the Real Amazon Threat?

Amazon’s private brands generated $450 million in 2018 and you can bet the company that dominates online U.S. retail sales has a plan to push that number even higher.

But while everyone is scrutinizing Amazon’s private-label push, the company has been ramping up investments in an area that could be its real game-changer: exclusive brands.

As of this month, Amazon sells 119 private labels, up from the two brands it launched back in 2009 when the experiment first began, according to Gartner L2’s Amazon Private Label 2019 report. That’s not even half of the 314 brands exclusive to the Amazon platform since it began rolling out these products in 2015.

Amazon sells 105 exclusive fashion brands, more than any other category. Taken together, nearly half (48 percent) of Amazon’s private labels and exclusive brands fall under the apparel category.

While Amazon develops and owns its private labels, exclusive brands are created by brand and manufacturing partners. They’re allowed to sell these goods only on their own website and storefront and on Amazon’s marketplace. These items don’t come with Amazon’s signature 100 percent guaranteed refund but are required to satisfy performance metrics around cancellation, shipping rates and product defects.

Amazon has managed to claim some market share with its private-label and exclusive brand efforts. Seven percent of best sellers in men’s apparel are some sort of platform exclusive, according to Gartner L2’s report. Brands stand to gain by developing items purpose-built for the Amazon consumer base. Starter, the iconic athletic brand reversed course on the Amazon bestseller front; by Q3 and Q4 last year its women’s leggings sold strongly enough to become the third highest selling product in women’s apparel. This turnaround shows the “potential upside” to participation in the Amazon Exclusives program.

Amazon showed its dedication on the own-brand front when it launched the Amazon Accelerator Program in the fall of last year, giving manufacturers an on-ramp to roll out exclusives quickly and with Amazon’s expertise at their disposal.

Private brands help Amazon personalize its offerings to the Indian market, according to Gartner L2. In addition to 23 exclusive brands, it also sells nine India-specific private labels, many of which address the taste for traditional and modern Indian dress as well as spices traditional to the cuisine.