The e-commerce giant will end almost all of its clothing brands, in particular to avoid accusations of abuse of dominant position.
Amazon executives defend this decision as a necessity, taken after listening to feedback from their customers. But this one seems crude and hasty, and comes especially just after the announcement of lawsuits by the American regulator. It seems unlikely that this will be enough to avoid a lawsuit, because for many competitors the damage is done.
Dozens of Amazon brands will disappear
So many changes at Amazon. After the ever-accelerating deliveries, it is now the house brands that are about to disappear. The most affected by this decision are the clothing brands: of the 30 owned by Amazon, no less than 27 will thus cease production. This includes brands that clearly display Amazon branding, but most do not. Solimo, Wag, or even Mama Bear are thus concerned.
Most of the pieces sold by these brands benefited from the almost essential status of the parent company’s sales platform. It is accused of recovering the data of the most popular products from third-party sellers before copying them, and sometimes even of delisting the originals to promote sales of its own.
Other brands, including furniture, are also expected to close, but their products will remain on sale on Amazon while supplies last. In 2020, Amazon sold 243,000 different products, divided into 45 different house brands. But all that, or almost, will soon be over.
Reduce costs… and above all, avoid a lawsuit
According to Matt Taddy, an executive in charge of the brands of Amazon, this decision is explained as follows: We always make our decisions based on what customers want, and we’ve learned that they prefer our biggest brands. It must be said that despite the significant investments made by Amazon, these house brands have never had the expected success, representing barely 1% of sales made on its platform. By getting rid of these, Amazon therefore reduces its operating costs.
But above all, it is difficult not to note the coincidence with the new trial for abuse of dominant position that the FTC, the American competition regulator, is about to bring. Indeed, this administration is due to meet with Amazon executives one last time next week before finalizing the terms of the indictment. Not sure that a disappearance at the last moment of the incriminated brands really changes the situation.
Sources: The Verge, wall street journal
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