Amazon Is so Powerful That Big Companies Are Producing Exclusive Brands Just for the Site
Amazon Accelerator allows the ecommerce company to offer exclusive products to customers, while outsourcing all the costs.
Search for "sugar" on Amazon and the top results will show cane sugar from 365, the in-house brand of the Amazon-owned Whole Foods, followed by a zero-calorie sweetener from Sugarly Sweet. Both are tagged "Our Brand," but the latter is the product of Equal.
"Amazon Accelerator creates new opportunities for suppliers and offers a way for them to launch brands directly to (and exclusively for) Amazon customers," according to a statement from Amazon. "Participating suppliers develop and produce brands and products of their choice, and Amazon then makes those brands and products available to customers."
The advantages of partnering with Amazon are clear: top billing on the biggest store on the internet, as well as enhanced insights about the products. Meanwhile, Amazon outsources the costs of developing and manufacturing the products as well as shipping them, while holding exclusivity to sell them.
Amazon said that dozens of brands, ranging from health and personal care items to furniture to apparel, have created products for Accelerator. An Amazon spokesperson pointed to the Basic Care brand, as well as mattress brand Nod, from Tuft & Needle, as holding customer ratings above four stars. According to an estimate by TJI Research, Amazon currently stocks 373 exclusive brands (along with 136 private label brands).
For Merisant, makers of Equal, launching Sugarly Sweet was a way to expand its business.
"[Ecommerce is] an area that is ripe for significant growth and opportunity over time," said Brian Huff, president of Merisant in North America. "For us, it was more of, what are the opportunities for us to be able to expand our portfolio and product line."
The new product line allowed Equal to expand into sweeteners made with sucralose, saccharin and stevia. Instead of taking up more pricey retail shelf space, the products occupy a digital space where companies have more room to explain the products' benefits to customers, as opposed to fitting information on the back of a box that a customer never picks up.
"Online you have a lot better venue to be able to educate consumers than you do in brick and mortar," Huff said. "People are looking for more customized and personalized offerings. Exclusive and unique offerings by retailers at least in the short term will continue to increase."
An Amazon spokesperson would not say whether these exclusive brands will eventually be sold in Whole Foods.
Editor's note: This story was updated on Feb. 14, 2019, with an estimate from TJI Research.
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