Bengaluru: Even as a significant number of active merchants have returned to ecommerce marketplace Amazon over the last three weeks after restrictions on shipping non-essential goods were relaxed, the number of unique products available on its platform is lower than what it was prior to the nationwide lockdown.This has led to improved visibility for Amazon’s own private labels, including Amazon Basics, Solimo, Presto, Symbol and others, and in some instances have also translated into higher sales for the private brands.According to data sourced from US-based analyst Marketplace Pulse, 85% of the 200,000 sellers that were active on Amazon on March 20 -- five days before the lockdown to stop the spread of the Covid-19 virus outbreak was imposed -- have once again become active.However, the total number of unique products, or stock keeping units (SKUs) in retail parlance, that are available on Amazon stands at 30% or 15 million SKUs, compared to 50 million SKUs before the lockdown.This steep reduction in product selection, combined with steady availability of its in-house brands have led to higher sales for the company’s private labels, analysts said.“Sales (of private labels) is certainly up, but growing this business is part of a broader plan at Amazon. So, the groundwork was already laid, but you could say we reaped the benefits of that during this tough period,” said a senior executive at Amazon who pleaded anonymity as he is not authorised to speak to the media.An Amazon spokesperson told ET that it was witnessing a 15-20% week-on-week increase in the number of sellers returning to its platform.“We are confident that sellers will continue to increase selection as they overcome their operating challenges,” the spokesperson said, without commenting on its private label business.Analysts and industry executives pointed out that it has been far easier for ecommerce companies to maintain supply of private label products since they control manufacturing and procurement, as opposed to having to work with third-party sellers and manufacturers who are currently facing working capital, raw material and labour shortages.“The supply of certain items has been impacted as production and manufacturing have been affected due to the lockdown, among other reasons,” a Flipkart spokesperson told ET, adding that the company had seen a 9X increase in the number of active sellers on its platform, compared to during the first week of the lockdown.A Flipkart insider told ET that although its private label product sales have seen good growth over the last few weeks, it still accounted for under 5% of overall sales.Having been part of internal discussions on competitor analysis, the executive pointed out that private brands were a far larger business for Amazon.Amazon has been steadily growing its portfolio of private brands in India over the last few years. Starting with smartphone cables under its Amazon Basics brand, the company has diversified into everything from toilet cleaners to recliner sofas. Amazon, like competitors, ramps up its private labels ahead of the festive season sales.Earlier this year, the company expanded its portfolio to include more furniture, gym equipment and some large appliances, competing in the mass premium segment in each of these categories. It has also grown its selection of packaged food, which it sells through Amazon Retail, its fully owned subsidiary.“Just like how we’re seeing an increase in sales of products from local brands in offline stores because supply from national FMCG players has been hit, a similar trend is being seen with private labels on e-commerce platforms,” said Satish Meena, forecast analyst at Forrester Research.A reduction in choice of products and value conscious buying among consumers are causing an uptick in sales of private label products on e-commerce marketplaces, Meena added.A similar trend was seen in the online grocery segment when the lockdown was announced.“Every disaster brings an opportunity. For Amazon, it’s their private label business which they are aggressively advertising at a time when there’s dearth of competition. They are specifically targeting all the categories that are in high demand right now - utensils and kitchen appliances, workout equipment, summer appliances, home furnishings and basic furniture,” said an analyst who did not want to be named as he works with Amazon.Amazon’s growing private label business has, however, been at the centre of many controversies globally. In India, groups such as the All India Online Vendors’ Association have alleged that it uses private labels to undercut prices of popular products, in turn forcing sellers to offer discounts to remain competitive.Earlier this month, the US Congress called on Amazon CEO Jeff Bezos to testify in an ongoing antitrust probe into the company and other technology enterprises. The move followed a Wall Street Journal report that alleged that Amazon employees had accessed information, such as sales of third-party vendors, to build competing in-house brands, which the company has denied.
from Economic Times https://ift.tt/3erhsrP
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