16 Amazon Exclusive Brands Added to TJI Amazon Brand Database

We’ve added 16 Amazon Exclusive “Our Brands” to the TJI Amazon Brand Database. The new brands we’re seeing are across furniture, health, beauty, grocery, and apparel.

The new brands are:

  1. 360Feel – bath soaps
  2. 5th & Company – oils and powders
  3. Albapelle – women’s leather jackets
  4. Evowell – coffee and supplements
  5. Fancy Pantry – baking mixes
  6. Fast Beauty Co. – skin care
  7. GenMed – OTC pharmaceuticals
  8. HealthCareAisle – OTC pharmaceuticals
  9. Jenny (UK) – women’s shoes
  10. Jivi – skin care
  11. Necessity Skincare – skin care
  12. Premium Body Nutrition (UK) – nutritional supplements
  13. Sonja B – women’s tops, pants, and dresses
  14. True+Real – shampoos
  15. trueOrganics – snack foods
  16. Venta – candles

To track Amazon’s ongoing private label and exclusive brand efforts, Subscribe to the TJI Amazon Briefing.

Amazon’s New Head of Real Estate Joined from Discount Grocery Chain Save-A-Lot

In what could be another signal that Amazon is planning to develop a new chain of physical grocery stores, we have learned that Amazon recently hired a discount supermarket veteran as its new Head of Real Estate.

Patrick Waldron joined Amazon in September according to his LinkedIn profile, though Amazon has not officially announced his hiring that we have seen. Previously, Waldron was Vice President of Real Estate and Business Development at Save-A-Lot Food Stores, a discount grocery store chain with over 1,300 locations in the United States, primarily east of the Mississippi. Prior to Save-A-Lot, Waldron was Vice President of Real Estate at discount supermarket chain Lidl (US), where he worked for several years, moving to Save-A-Lot shortly after Lidl opened its first US stores. Today, Lidl operates about 65 stores in the US, also mainly in the eastern states (and thousands more in Europe).

Save-A-Lot stores are typically smaller format than major US supermarkets. While Save-A-Lot stores carry national brands, they also carry many of the company’s own private label products across a variety of categories. Save-A-Lot has also grown through a licensing model in which it acts effectively as a wholesaler to its local licensees. In 2016, the company was sold by Supervalu to current private equity owner Onex for $1.37 billion.

In addition to competing with traditional grocery stores, discount grocery chains in the US like Save-A-Lot are also increasingly competing with general merchandise dollar stores like Dollar General, Dollar Tree, and Family Dollar. While these stores typically do not carry fresh food, they are increasingly allocating square footage to frozen food in addition to non-perishables — and are also often located in the same or nearby shopping centers.

“Smaller formats are driving retail success. It’s the perfect storm for retail and private label,” Waldron said in an interview with Chain Store Age last year (while still at Save-A-Lot). “The physical experience has to be convenient, which is why Lidl, Aldi, and Dollar General are doing well.”

Above: A Save-A-Lot store in Amherst, OH. Source: Save-A-Lot (undated), via Google Images.

Last week, the Wall Street Journal’s Esther Fung and Heather Haddon reported that Amazon is planning to open “dozens of grocery stores in several major U.S. cities” that likely won’t compete with Whole Foods and may or may not incorporate the Amazon brand. Amazon’s hiring of Waldron could be seen as evidence that Amazon is interested in developing a new type of grocery store chain.

Those we spoke with in the grocery industry said they are generally expecting Amazon to proceed with a new type of chain distinct from its current physical retail grocery stores.

While Amazon has largely kept prices at Whole Foods in check since its acquisition a year and a half ago, the idea of adding a new brand of stores with more selection and lower prices would enable Amazon to eat into a larger share of the US grocery market, which has overall proven a tough nut to crack for Amazon over time. Whole Foods stores are generally located in higher-income areas, and Whole Foods’ standards prohibit it from carrying items that contain anything on its “Unacceptable Ingredients For Food” list.

Eliminating that restriction would allow a new brand of Amazon-owned grocery stores to carry a wider selection of products and brands. Of course, Amazon would still face the challenges of the traditional grocery market. Nevertheless, more grocery stores would also enable Amazon to expand its Prime Now footprint for fast delivery of fresh items, and expand its network of pickup locations. We would also expect such a chain to carry a high portion of Amazon “Our Brand” items.

Another potential angle here is pharmacy. Whole Foods stores don’t have pharmacies, but many of the larger grocery stores in America do. We believe Amazon is investing substantially in its online/mail-order pharmacy distribution infrastructure, and having a network of local pharmacies would both complement its online pharmacy and offer a network of local mini fulfillment centers for quick delivery.

Regardless, Amazon could potentially apply technology currently deployed in its Amazon Go stores to a new, larger format environment. Compared to traditional grocery stores, such a store could lead to higher customer satisfaction through automated checkout while also potentially delivering higher revenue per square foot for Amazon.

Between its Whole Foods Markets, Go, Books, 4-star, (for now) pop-ups, and more, we are tracking over 600 Amazon physical retail venues today. It is looking increasingly likely that that number will grow in the coming times.

Haven Added to the TJI Amazon Healthcare Overview

Today, Atul Gawande, the CEO of the previously-unnamed healthcare joint venture between Amazon, Berkshire Hathaway, and JP Morgan Chase, announced that the entity will be named Haven.

“Haven’s focus is the 1.2 million employees and families affiliated with Amazon, Berkshire Hathaway, and JPMorgan Chase across the United States and over time it intends to share what it learns to help others,” Gawande says.

Haven has been added to the TJI Amazon Healthcare Overview.

Third Amazon Go Automated Grocery Store Opening Soon in San Francisco

Three months after it opened its second Amazon Go store in San Francisco, Amazon says it is planning to open its third automated grocery store in the city soon.

This one will be located at 575 Market St, as reported by the SF Chronicle. That’s an extremely busy thoroughfare and very close to the Montgomery St BART station. This one is said to also be near the “standard” store format about about 1,750 square feet.

The TJI Amazon Physical Retail Map has been updated. We are tracking over 600 Amazon physical retail venues overall.

Tuft & Needle Co-Founder JT Marino Says Its Amazon Exclusive “Nod” Brand Is “Taking Off”

We’ve been closely tracking the growth of Amazon’s “Our Brands” program here at TJI, which includes both Amazon’s private label and Amazon Exclusive brands. While many Amazon Exclusive brands are made by relatively unknown entities, a few, like “Nod by Tuft & Needle,” are produced by established brands experimenting with the opportunities afforded by Amazon’s “Our Brands” program.

This morning at the Shoptalk 2019 conference, JT Marino, co-founder of Tuft & Needle, and now chief strategy officer at Serta Simmons Bedding, which merged with T&N last year, offered some comments on how the Nod brand is doing since it launched last November. Here are our notes from what JT shared:

  • Amazon has been an important growth driver for T&N since it launched on Amazon in 2013. T&N has majority of the market share in mattresses that sell for over $500 on Amazon. However, over time a lot of cheap imported brands have been coming in.
  • T&N wanted to experiment with a lower price point, but didn’t want to cannibalize its main brand, and it wasn’t even sure if it could reach a low enough price point to compete with those in that category.
  • The creation of “Nod by Tuft & Needle,” an Amazon Exclusive brand, was T&N’s strategy to attack the lower price point. Thus far, it has exceeded expectations and is “taking off.” Because it’s isolated to Amazon, it’s easier to test and iterate.
  • As for concerns that Amazon would make its own private label mattresses, they did, but Marino said, “We can take a slice of customer needs and really knock it out of the park maybe better than Amazon can.”
  • Marino added, “We are really grateful for our relationship with Amazon. It’s been really critical. Our customers are happy, their customers are happy. We want to be where our customers are. There are always issues [with Amazon] but for the most part it’s been a big success for Tuft & Needle.”

Other notes from discussion of private label brands at Shoptalk this morning:

  • Gil Phipps, VP Branding, Marketing, & Our Brands for Kroger, shared that 92% of Kroger customers by “our brand” items, 1.25 million “our brand” items are sold per hour, and that “our brand” buyers have significantly higher loyalty.
  • Chris Phillips, GM of Stitch Fix Men, Kids & Exclusive Brands at Stitch Fix, added that Stitch Fix has had success tweaking the sizing specs of various exclusive brand items to achieve positive results for customers.

Amazon Making New Push to Shift Vendors to Its Marketplace

Based on reports we are receiving, Amazon appears to be making a new wave of changes to how it is purchasing inventory from vendors.

We’re hearing that Amazon is doing three things.

First, starting last week, Amazon reportedly sent out Direct Fulfillment suspension notices to many vendors. “Direct Fulfillment” is an Amazon program that allows vendors to drop-shop goods directly to buyers. For instance, some vendors will set up full pallets this way for B2B selling to other businesses.

Second, this week, some vendors are reporting that Amazon’s regular bulk purchase order volume is down significantly — some by over 50%. Our understanding is that these vendors have not yet received explanations from Amazon as to why their purchase order volume has substantially decreased.

Third, some vendors are reporting receiving the following message from Amazon:

I would like to inform you that our internal team have reviewed your business with Amazon and strongly believes that Amazon customers would be better served if your products were made available through Seller Central. As we are constantly looking for ways to improve the customer experience we recommend you to setup Seller account to continue your business with Amazon.

Based on what we are hearing, it appears that larger vendors (i.e. those doing several million in annual sales on Amazon) are not affected by these changes thus far. However, smaller vendors are being pushed to become marketplace sellers on Seller Central.

“This is a big deal, because the vendor platform is invitation-only in the first place,” says Blair Anderson of Anderson & Associates, which provides manufacturers with full-service Amazon management and advice. “Vendors were a slightly protected side of the business.”

Big picture, it sounds as though Amazon is deprioritizing smaller vendors on the whole, though this could be a signal that Amazon will increasingly push vendors of all sizes to shift part or all of their operations to its marketplace. We’ll continue to track developments.

TJI Research Media Citations This Week

Here’s a roundup of selected TJI Research citations from across the media world for the week ending March 1, 2019: