The idea behind AmazonBasics is the same as any in-house or store brand, i.e. offer reasonably-priced products to buyers for generating more revenue and consolidating your own brand.
For buyers, AmazonBasics is just another brand option on the world’s largest e-commerce platform. On the other hand, it is the biggest common competitor for many private label sellers operating on Amazon. In household goods and electronics, AmazonBasics has more than half the share of all the private label sales of the platform.
What is AmazonBasics, and how has it come about? Is it a threat to private label sellers? And how are sellers supposed to compete against AmazonBasics’ “home advantage”?
This article will try to answer all such questions in the following discussion.
AmazonBasics was launched in 2009 as a low-priced private label for small electronic accessories like cables and plugs. The success of those basic electronic accessories enabled Amazon to continue to add more products from across different niches to AmazonBasics portfolio.
Today, AmazonBasics offers more than 1500 products that people usually need regularly and thus buy frequently. These are the main categories in which AmazonBasics offers products.
With such an assorted product profile, AmazonBasics now accounts for over 57% of the total sales generated by Amazon-owned brands.
In terms of Amazon’s overall sales, AmazonBasics contributed $7.5 billion to the annual tally of $232.9 billion in 2018, with projections suggesting that this share would continue to swell. The rising popularity of AmazonBasics is also evident by the fact that many of its products now stand as best sellers in their respective categories.
In recent years, AmazonBasics has garnered a lot of success but with loads of criticism. The criticism usually comes from third-party private label sellers. It directs toward the tactics that Amazon uses to make its home product line successful.
Let’s dissect the criticism and reservations that sellers have about AmazonBasics.
Undercutting is one of the oldest ways to go one up on your business competitors. Amazon allegedly also uses it to make sure its own brand fares better than other private label sellers. Being an e-commerce giant, Amazon has this residual leverage to source products at an exceedingly lower price than what any individual third-party seller can manage to do.
As a result, AmazonBasics manages to price its products lower than what other sellers list in any given category. Here, we’ll share with you a couple of examples to illustrate how Amazon does that.
These are just three examples from different product categories. You can find a similar scenario in almost every product category that AmazonBasics deals in.
It is important to mention that there is no foul play behind Amazon’s own products ending up in Best Sellers Ranks (BSRs). Since those products are cheap and garner good reviews, they often win Buy Boxes that subsequently help them climb the best seller ladder.
Like Google, Amazon holds one of the biggest repositories of valuable data, particularly related to retail shopping. Apparently, Amazon is using this data to boost its home brand AmazonBasics.
The Wall Street Journal reported on Amazon’s use of third-party sellers' data (which it isn’t supposed to do) to find out which products are doing well, at what prices, and among which demographics. After conducting this research and shortlisting the products, Amazon launches its own versions at lower prices under the banner of AmazonBasics.
It has also been reported that Amazon has tinkered with its search algorithm to ensure its product search engine boosts its own products.
Amazon usually denies those charges. However, the mounting evidence suggests that the platform does copy others products and rigs search results.
No, private label sellers shouldn’t leave Amazon at all. Amazon certainly leverages its home turf, where AmazonBasics competes against other private label products. However, it doesn’t imply in any way that sellers should not operate on the platform with a private label. Venturing into Amazon with your private label is still one of the most lucrative e-commerce prospects.
Let’s look at why you can still succeed on Amazon despite AmazonBasics:.
Firstly, Private label sellers don’t need to consider Amazon their arch-rival. There are many examples of startups carving their place in niches that are already crammed with big brands. The success of Allbirds and Atoms with their sneakers in the market dominated by the likes of Nike, Adidas, Reebok, etc shows that you can make your private label a success even if it operates against the big name of Amazon.
Secondly, private label sellers should not consider AmazonBasics infallible either. If you sell a top-quality product that fulfills consumers’ needs and wants with a sound marketing plan and good customer service, you’re most likely to do well in your niche.
Despite the alleged rigging in support of AmazonBasics, Amazon does not dominate the best-sellers category. Moreover, there are many brands and private labels ranking ahead of AmazonBasics products.
In short, even with AmazonBasics as your competitor, there is still a lot of opportunity to dominate a particular category. Surprisingly, right now, private label sellers have over 90% of the Amazon pie. We will discuss how you can do that in the next section.
Today, this percentage might be slightly higher. But still, almost 90% of Amazon sales belong to third-party sellers, proving that AmazonBasics products do not pose a threat big enough to prevent sellers reaching their potential on the platform.
Let’s go through five crucial areas to focus on so that your private label succeeds:
Researching and choosing to sell an item that is not part of the AmazonBasics product line will rule it out as competition
However, it is important to mention here that it is virtually impossible to conduct this kind of research manually. You will need a well-developed purpose-built product research tool to unearth categories and products where Amazon is not in attendance.
It is nothing short of a challenge to beat AmazonBasics in the price category. Nonetheless, there are areas where you can undoubtedly beat AmazonBasics, such as through your customer service. its size and volume makes it difficult to provide consistently good customer service to its customer base.
On the other hand, you can offer a customized customer service experience that promptly addresses your customers queries and concerns. With that, you can set up a more lenient return policy. This will all help you to increase your customer base.
It is important to understand that not every customer is after low prices. You can find numerous products doing better than their AmazonBasics competitors while having almost double prices. This is because many buyers first assess the quality of a product and its features/specs and then look at its price tag.
Therefore, you need to be excellent with the quality that you offer when you are competing against an AmazonBasics product. Also, you can go one up on Amazon if your product has better specifications and more features than its AmazonBasics counterpart.
AmazonBasics items don’t get top slots in BSR for many product categories. Similarly, they are not shown on the top of the search results for every customer query either. Therefore, how you optimize your listing will play a vital role in deciding the fate of your product while competing with AmazonBasics. A third-party private label listing often defeats AmazonBasics products (not talking about the sponsored ones) simply because it is perfectly optimized.
Listing optimization essentially improves your product pages' search visibility, click-through-rate and conversion rate.
If you want to compete against AmazonBasics, you should not compare every aspect of the listing and sales head to head. For instance, don’t try to offer low-priced products to compete against AmazonBasics. In doing so, you may end up thinning your margins even without succeeding in undercutting AmazonBasics products.
Similarly, don’t try to stack your sales volume up against what AmazonBasics would sell. Instead, look at it in absolute terms where it should just be reasonably profitable for your venture.
AmazonBasics is one of the biggest private labels operating on Amazon. However, it doesn’t pose an existential threat to third-party private label sellers. Offering quality products, keeping prices reasonable, dispensing the best customer service, and choosing the right product niches are some ways to ensure you do well in highly competitive Amazon marketplaces.
Choosing the right niche and products plays an integral role in directly or indirectly defeating AmazonBasics. ZonGuru’s seller suite can help with that through a list of its tools. For instance, if you are struggling to settle on the product category you want to operate in, use our product and niche research tools. Moreover, you can get one-year of insightful sales data for the ASINs you want using our seller toolkit.
Want to peek into your target consumers' minds to offer them the right product with the right set of features? ZonGuru can also help with that by curating and returning a lot of meaningful data from customer reviews.
You can try and assess all these ZonGuru seller toolkit features for FREE!
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