Prime Day is rigged in Amazon’s favor

One year after the Whole Foods acquisition, and in the second year of its major private-label push that has spawned about 80 in-house brands, Amazon’s biggest shopping holiday has become, first-and-foremost, a place to promote – and legitimize – its own brands.

“This is the biggest year for Amazon’s private labels on Prime Day, and they’ll continue to play an increasing role,” said Matt Sargent, the svp of retail at business strategy and research company Magid.

“It’s all about driving the most eyeballs as possible to these brands, and the implications of that are huge.”

As usual, this is bad news for brands selling and spending to advertise on Amazon. This isn’t a new fear, but as private-label becomes an increasingly important business for the company, particularly in the apparel, consumer electronics and grocery categories, it’s an increasingly heightened concern. According to Sargent, it’s not just that Amazon is working pricing algorithms in its favor and positioning private-label products to receive more traction. Amazon’s tendency to mine the brands it sells for data in order to understand customer demographics and shopping patterns for its own brands is on overdrive on Prime Day, when more people are visiting the site at once and at higher frequency. While Amazon doesn’t share hard figures, close to 90 million people are expected to have visited the site during Prime Day’s day-and-a-half stretch this year.

After all, what separates Amazon’s private-label play from traditional retailers’ predecessors is the data that Amazon has access to and the ability to use.

“Amazon looks to its Prime membership as the Petri dish for private label, because it’s concentrated, repetitive user behavior,” said Michael Yanez, an e-commerce consultant who works with brands as they navigate selling on Amazon. “To that end, Prime Day is the most important time of year.”

It’s also a legitimacy play for Amazon’s existing brands, especially in fashion apparel where customers are more discerning about the brands they’re buying into, and association with the Amazon name isn’t an advantage like the name AmazonBasics may be for batteries. On Prime Day, Amazon boosted these brands, like women’s apparel label Lark & Ro, by featuring them as many times as possible, so that Prime customers would familiarize themselves with them.

“The strategy is that Prime Day allows Amazon to get exposure to its private label brands. Usually, private label brands get validity simply be being on a store shelf next to other name brands. There’s a sense of trust – customers can pick it up, compare them, and decide its worth knocking a few dollars off,” said Sargent.

“Amazon has no physical extension, and its difficulty is that unknown brands can be a harder sell, especially in apparel. Such a high velocity event like Prime Day is a chance to push these brands alongside the best in every category.”

The plan was foolproof – well, until the site crashed.

See more on Prime Day by DIGIDAY.

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