SimpliNET, a New Amazon “Our Brand” Home Mesh Wifi Router, Launches

As Amazon’s “Our Brand” efforts continue to expand into new categories, we’re seeing a new Amazon Exclusive home mesh wifi router system live on the site now called SimpliNET.

SimpliNET routers will broadly compete with those from Eero, Google WiFi, Netgear, Ubiquiti, Linksys, AmpliFi, TP-Link, and others.

The SimpliNET system can be purchased in 3 different packages:

  • Whole Home Mesh WiFi System: This 3-piece set with one Mesh WiFi Router and two Mesh WiFi Range Extenders includes everything you need for covering larger homes of up to 3000–5000 square feet.
  • Mesh WiFi Router: Great for smaller homes, apartments, or condos, the single Mesh WiFi Router provides up to 1500–2000 square feet of coverage when centrally placed.
  • Mesh WiFi Range Extender: When you need to stretch your WiFi signal, you can add one or multiple WiFi Range Extenders to the Mesh WiFi Router, widening coverage up to an additional 1500–2000 square feet when strategically placed).

The router is priced at $89, while individual extenders are priced at $79.

SimpliNET is one of the first Amazon Exclusive “Our Brands” we’ve seen in the US home electronics category. Tenten, another Amazon “Our Brand,” recently launched with a pair of smart plug products. iMW is an Amazon “Our Brand” gaming accessories brand. Last fall, Walmart launched an exclusive brand of home wifi routers called Jetstream.

Based on trademark records, SimpliNET is owned by IoT Defense, Inc. of Falls Church, Virginia, which also makes home firewall products under the RATtrap brand.

On the whole, Amazon continues to ramp up its private label and exclusive brand selection across retail categories.  As part of its Amazon Accelerator program to grow its portfolio of exclusive brands, Amazon is offering marketing services, such as special promotional placements in search results, to help give Amazon Exclusive brands a boost.

Amazon Exclusive brands “receive a suite of marketing support executed by our Amazon merchandising team. Products with high ratings and reviews can receive additional placements across,” Amazon says.

Aurohealth Launches Primary Health, An Amazon-Exclusive OTC Pharmaceuticals Brand

Aurohealth, a maker of generic store brand pharmaceuticals, has quietly launched a new Amazon Exclusive OTC pharmaceuticals brand called Primary Health, we have found. It’s the latest in a series of new health care brands to be created exclusively for Amazon as the company seeks to further expand its pharmaceutical efforts.

Aurohealth is a division of Hyderabad-based Aurobindo Pharma, which reported revenues of USD $2.6 billion last year.

Primary Health becomes the fourth Amazon Exclusive OTC medicines brand we have found, joining Basic Care (Perrigo), SoundHealth (Bestco), and Wellness Basics (PL Developments). Last week, a new Amazon Exclusive brand of home blood monitors called Choice launched. Just a few weeks ago, Amazon closed its acquisition of online pharmacy Pillpack, for which it said it paid $753 million net of cash. Amazon is also ramping up its B2B healthcare sales efforts, which it says is seeing “rocket ship” growth.

We are seeing 4 Primary Health products that have launched thus far:

  1. Primary Health Maximum Strength Mucus Relief DM (guaifenesin and dextromethorphan tablets, generic version of Maximum Strength Mucinex DM)
  2. Primary Health Mucus Relief DM (guaifenesin and dextromethorphan tablets, generic version of Mucinex DM)
  3. Primary Health Acid Reducer (esomeprazole magnesium capsules, generic version of Nexium 24 HR)
  4. Primary Health Acid Reducer (omeprazole magnesium tablets, generic version of Prilosec OTC)

These have all launched with Vine reviews rating the products 4 to 4.5 stars.

Given Amazon’s rapidly expanding healthcare efforts, there is much speculation about where the company might go next.

Amazon has formed a Boston-based health care “non-profit-seeking” joint venture with Berkshire Hathaway and JP Morgan and hired a CEO, surgeon and public health leader Atul Gawande. Gawande has yet to announce more details on the initiative’s direction or strategy, other than that he wants it to, “Take some of the middlemen out of the system.”

Amazon is in the process of rolling out Amazon Go automated grocery and convenience stores in urban areas. Were Amazon to start using those stores to distribute pharmaceutical products, it could affect current leading retail pharmacies like CVS, Walgreens, Walmart, grocery pharmacies, and others. (Aurohealth also appears to make products for CVS, as some CVS brand products share customer service phone numbers with Primary Health brand products.)

Amazon has also begun the process of applying to sell health and life insurance in India. It is also rumored to be exploring the insurance markets in the USUK, and other countries as well. While Amazon does not offer consumer insurance directly as of now, it has consumer data that could theoretically help it to assess risk and lower fraud rates.

As for Primary Health, we would generally expect Aurohealth and Amazon to roll out additional products over the coming weeks and months. We have reached out to Aurohealth for comment about the company’s plans for its Primary Health brand and will update this if we receive a response. Aurohealth shares an address with AuroMedics Pharma, which is listed as the owner of the Primary Health trademark filing.

Like other Amazon Exclusive brands, Primary Health products are now being promoted in Amazon search results as “Top Rated from Our Brands”. As part of its Amazon Accelerator program to grow its portfolio of private brands, Amazon is offering marketing services like these promotional placements to help give Amazon Exclusive brands a boost. Amazon Exclusive brands “receive a suite of marketing support executed by our Amazon merchandising team. Products with high ratings and reviews can receive additional placements across,” Amazon says.

Choice, A New Amazon Exclusive Brand of Blood Monitors, Launches

Choice, a new Amazon Exclusive brand of blood monitoring devices and related accessories, has just launched. It’s the creation of Arcadia Group out of Atlanta, which previously created the ReliOn brand for Walmart.

The move is a sign of Amazon’s desires to increase its private brand coverage of health care supplies and consumer medical devices, and in general to become more pharmacy-like. A number of Amazon Exclusive brands providing OTC medicines have launched recently on Amazon, along with the growth of Amazon’s private label and exclusive brand efforts in general.

“The new Choice brand will start with a range of blood glucose monitors and blood pressure monitors both with supporting mobile apps which offer measurement tracking, data mobility and reminders,” Arcadia said in its announcement. “The brand is positioned to offer exceptional value versus what is available at traditional retail pharmacy outlets.”

“I approached Amazon because they are obviously expanding their healthcare footprint and people with diabetes could benefit by having Amazon make products and devices easier to access and more affordable. We have been in development for over a year now and plan to aggressively expand our offering the better serve people with chronic disease such as diabetes (30 million US) and hypertension (130 million US),” Arcadia CEO Bob Guest tells us.

Guest also says the Choice brand will expand into related product areas over the course of the coming year.

Amazon currently sells glucose blood monitors and testing kits from O’Well, CareTouch, Contour NEXT, KETO-MOJO, iHealth, Bayer, PTS Diagnostics, FreeStyle, Precision Xtra, and others. O’Well, Contour NEXT, KETO-MOJO, and iHealth are currently advertising with sponsored product listings within Amazon searches.

Amazon is considering a number of health care initiatives, and seems quite interested in the space more broadly. Amazon has been ramping up its B2B healthcare sales efforts, has patented Alexa technology to determine when someone has certain sicknesses based on their voice, and is part of a joint health care venture with Berkshire Hathaway and JP Morgan. Amazon closed its Pillpack acquisition in September.

As Amazon’s health care initiatives evolve, continue to follow TJI for the latest.

Amazon’s Great Indian Festival Deal Event Kicks Off with Many Discounts and Offers

While Amazon’s Prime Day deals event in July is watched closely by analysts and customers alike, Amazon also runs other deal events throughout the year in various parts of the world.

A few hours ago, Amazon kicked off its Great Indian Festival deal event in India. Timed with the start of the festival season, Amazon is offering steep discounts on electronics, appliances, fashion, and more, as well as special financing and rebates. The event opened for Prime members at 12:00 on 9 October, and everyone at midnight on 10 October. It runs through 15 October.

For example, Amazon is offering up to 40% off on select LG OLED TVs, up to 50% off on printers, and 40-90% off on select clothing items, in addition to substantial discounts on mobile phones.

As extra incentives, Amazon is offering 10% cash back up to INR 1000 on products above INR 6,000 as Amazon Pay balance. Customers can also choose no cost EMI on purchases above INR 3000 for SBI Card and INR 5000 for Bajaj Finserv. SBI Card customers receive an additional 10% instant discount on orders above INR 3000.

Amazon is offering some of the biggest incentives on fashion. Amazon is offering an extra 15% cash back on fashion purchases above INR 2000. It is also offering free delivery on the first order for some items to spur new customer signups.

Here’s the full list of Amazon Fashion offers during the event:

Like it has done during Prime Day, Amazon is making certain deals available only to Prime members, and it is offering deep discounts on its own hardware like Echo and Fire devices.

Amazon is also featuring deals on “Amazon Brands” — though in general we are not seeing Great Indian Festival deals featuring Amazon private label and exclusive brands as heavily as we did on Prime Day.

Amazon has created several private label and exclusive brands just for the Indian market like Vedaka and Myx. It also offers a large number of products under some of its global private label brands like AmazonBasics and Solimo.

Amazon is also driving significant media coverage of the event in India.

India is a strategic priority for Amazon, with intense competition from Walmart (Flipkart) and others. It launched Amazon Pay EMI  in India few weeks ago, and is also reportedly looking to sell life and health insurance in India. Amazon and Samara Capital teamed up to buy the More chain of retail grocery stores in India three weeks ago as well.

Follow TJI to track the latest on Amazon’s efforts in India and around the world.

The Strategy Behind Amazon’s Private Label Push: Customer Loyalty, Supplier Leverage, and Long Term Margins

Amazon created its first private label brands about a decade ago. But lately, something’s changed — Amazon is ramping up its private label brand portfolio in a massive way. What’s going on? Big picture, we think there are three vectors to Amazon’s private label efforts: customer loyalty, supplier leverage, and long term margins.

A Customer Loyalty Strategy

Consumer products companies have spent billions of dollars over decades to build brand loyalty. Why? Because building brands works: customers with a brand affinity stay loyal over time.

Along those lines, we believe Amazon has decided it is a strategic priority to build customer loyalty and preference through the development of private label and exclusive brand products. In a world with an ever-increasing number of “microbrands” and DNVBs, Amazon is betting that customers who find quality products on Amazon that they can’t get anywhere else will become more loyal to Amazon and spend more on Amazon over time because of their loyalty to those private brands.

From this perspective, Amazon is incentivized to build private brand products in as many categories as possible. This is generally good news for private label manufacturers who have built their businesses serving large retailers like Walmart and Target (and who are now increasingly shifting their efforts to serving Amazon) — though they are more easily replaceable than owners of established consumer brands.

In our view, there’s no reason why Amazon shouldn’t offer a private brand option (if not multiple private brand options) for most product categories it sells. Some will succeed, and others won’t. In addition to creating loyalty to private brands, the overall effect of increased selection and value should strengthen Amazon’s position as a first-stop destination in consumer shopping habits, driving traffic and sales for all Amazon vendors and sellers.

A Supplier Leverage Strategy

Amazon Prime has built significant loyalty and habit in consumer purchase behavior since it launched in 2005 — not through retail brand loyalty, but through the sunk cost psychology of pre-paid shipping. It’s one of the amazing business accomplishments of our time.

But Prime is not without its vulnerabilities. Chief amongst them: most of the brands that Amazon sells are owned by other companies. The probability that some companies that own the brands that Amazon’s customers have built loyalty to over time might at some point have sufficiently different incentives than Amazon is non-zero.

For example, one fundamental strategy conflict: brands might increasingly feel like Amazon is not offering the differentiation they want for their products on its marketplace.

Amazon aggregating everyone else’s value chain into their channel, while diluting external Brand value in general, is sort of scary… Just wonder when this starts to rub off on already established brands. Amazon wants a Brand-Free future where they hold the keys to the consumer’s purchase point, on their terms. (Jordan Rice, via Twitter)

The question of whether Amazon and other technology platforms have the potential to change the fundamental nature of brand psychology and create a “brandless” future is an interesting one. The increasingly sophisticated private label efforts from Amazon and others will affect some product categories more than others: categories that are more easily commoditized will see faster and greater disruption, while customers will always have enduring affinity for truly differentiated products.

Big picture, there appears to be a sense of urgency at Amazon to build out its private label portfolio as quickly and broadly as it can to accelerate the process of introducing its customers to its own brands so that, in the long run, if some brand owners decide their incentives aren’t sufficiently aligned with Amazon’s, Amazon will be able to fulfill (ideally large portions of) that demand with (ideally very comparable) private brand products to satisfy as many customers as possible. The better private brand alternatives Amazon can create, the more leverage it will have with suppliers.

A Long Term Margin Strategy

Jeff Bezos is reputed as saying, “Your margin is my opportunity.” Given Bezos’ and Amazon’s long term perspective, margins that look terrible to many other businesses can look attractive to Amazon. That steely view has led Amazon to make investments others haven’t.

Once Amazon establishes more of its own brands and builds loyalty to them over time, it should be able to extract attractive gross margins from the sale of those items, especially compared to the low margins it and most retailers usually earn when selling third party brands.

Could Amazon someday even create luxury brands? (And if so, could Amazon even only offer some brands through certain types of its own physical retail stores one day?) Maybe, but first it must prove that it can move beyond low-emotion private label brands like “AmazonBasics” that primarily compete on price and create a portfolio of brands that have sustaining appeal to different customer segments.

If it can, then private label could be a significant source of margin for Amazon over time — that Amazon can then use to invest in its next “low-margin” business.

Amazon Raises Minimum Wage for all US Employees to $15/Hour, UK as Well

In a move that will affect over 350,000 employees, Amazon announced today that it is increasing its minimum wage to $15 per hour for all US employees, effective November 1. The new rate applies to full-time, part-time, temporary, and seasonal employees.

Amazon says the change “will benefit more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who will be hired at Amazon sites across the country this holiday.” It will also apply to Whole Foods employees.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon Founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”

Amazon also said it would also, “Begin advocating for an increase in the federal minimum wage.”

“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, SVP of Amazon Global Corporate Affairs and former press secretary for President Obama.

Amazon said in its most recent annual report that its median employee compensation was $28,446 in 2017. Walmart announced in January that it was raising its minimum wage for US employees to $11 per hour.

Amazon also said it will phase out Restricted Stock Unit (RSU) compensation for hourly fulfillment and customer service employees. “They prefer the predictability and immediacy of cash to RSUs,” Amazon says. “The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.”

Amazon has come under increased criticism for its pay disparity this year. Last month, Senator Bernie Sanders of Vermont introduced legislation called the Stop BEZOS Act that would tax corporations commensurate to the amount of government benefits low-wage employees receive in government benefits. Today, Sanders commended Amazon on their move.

“What Mr. Bezos has done today is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be a shot heard around the world. I urge corporate leaders around the country to follow Mr. Bezos’ lead,” Sanders tweeted.

President Trump has also criticized Amazon on a number of fronts this year. In March, he accused Amazon of “putting many thousands of retailers out of business” and of receiving unfair tax treatment. In July 2017, he called Amazon a “monopoly.” However, Trump’s Amazon criticisms have not included commentary on the company’s hourly wages.

Amazon also announced today that it is increasing minimum wages paid to its UK employees. Starting November 1, minimum wages will increase to £10.50 ($13.59) per hour for all employees in the London area and £9.50/hour for staff in all other parts of the country.

Amazon has over 17,000 employees in Britain and plans to hire more than 20,000 seasonal employees for the holiday.

Amazon said the impact of the higher compensation on its financial reports will be reflected in its quarterly guidance.

What if Amazon Put Pharmacies in 3,000 Go Stores Across America?

Yesterday’s rumor that Amazon is considering opening 3,000 Go stores in the next three years sent shockwaves through the grocery and retail markets. Certainly, were Amazon to invest the billions of dollars needed to build out such a physical footprint needed to reach that scale, it would likely pose significant challenges for incumbent retailers, quick-serve restaurants, convenience stores as well.

However, given that Amazon is scheduled to close on its acquisition of PillPack by the end of the year — a story which itself sent its own respective shockwaves through the healthcare markets — another interesting angle on the “thousands of new Amazon stores” story is that of pharmacies and healthcare. With PillPack, Amazon will get pharmaceutical licenses in almost every state.  What would that mean for CVS, Walgreens, Walmart, Rite-Aid, grocery pharmacies, and the rest?

While Amazon has made several high-profile healthcare-related hires lately, we haven’t seen specific evidence that Amazon intends to provide physical healthcare services, a la Minute Clinics. But over time we think this is an area to keep an eye on given the potential revenue growth opportunity for Amazon.

Amazon, Samara Acquire “More” Retail Grocery Chain in India

Further its investment in India, Amazon and Indian private equity firm Samara Capital have acquired the More chain of retail grocery stores in India from Aditya Birla Group.

Samara will buy 51% and Amazon will buy 49%, to avoid regulatory restrictions that apply in situations of foreign majority-ownership. The total price was about USD $580 million. Per,

The deal will take care of ABRL’s debt that stood at Rs 4,000 crore as of March 2018. Once the process is complete Samara Capital and Amazon plan to rapidly expand the chain which was put on hold due to its burgeoning debt. They plan to set up 100-150 stores every year including neighbourhood supermarkets and hypermarkets. The plan for the current fiscal is to set up 90 stores.

Our take:

Amazon is continuing to heavily invest in India. India is a strategic growth market for Amazon, with intense competition from Walmart’s Flipkart and others. Owning (almost a majority of) a retail grocery chain will give Amazon a physical footprint through which it can accelerate the deployment of other services in the country.

Amazon Continuing to Invest in Japanese Grocery Efforts

Last year, Amazon launched Fresh, its grocery delivery service, in Japan. Since then, Walmart and Rakuten partnered to take on Amazon in grocery delivery, though the service hasn’t launched that we’ve seen. (Walmart also owns Seiyu, a top supermarket chain in Japan, but is reportedly interested in selling it due to slow growth.)

Amazon Fresh Japan’s coverage area has been growing since launch. Initially, it covered a half dozen districts in Tokyo. Now, Amazon Fresh Japan delivers to “18 districts and 2 cities in Tokyo, 17 districts within 2 cities in neighboring Kanagawa Prefecture, and 2 cities in Chiba Prefecture.” Amazon says it delivers over 10,000 foods and daily necessities.

And Amazon is continuing to grow its Amazon Fresh Japan staff as well. Per, we are seeing several Amazon Fresh Japan listings:

  1. Senior Product Manager, Customer & Delivery Experience
  2. Vendor Manager, Grocery
  3. Brand Specialist, Grocery
  4. Buyer, Grocery
  5. In-Stock Manager, Amazon Fresh
  6. Area Manager, Fresh

Grocery is an extremely tough nut to crack, with low food prices, low delivery prices, and highly perishable inventory. We’ll be tracking Amazon’s Japanese grocery efforts as they continue to invest in this market.

Amazon Wants to Sell Life and Health Insurance in India

Amazon is in the process of registering with Indian regulatory authorities to sell life, health, and other insurance to consumers there. Per Bloomberg Quint:

Amazon India wants to start by selling life, health and general insurance, according to its filings with the Registrar of Companies. The Seattle-based giant said it aims to carry out the business of soliciting, procuring and servicing insurance as a corporate agent…

Amazon has yet to seek an approval from the Insurance Regulatory and Development Authority, a person in the know told BloombergQuint requesting anonymity. A company spokesperson, in an emailed response, however, confirmed the plan, saying Amazon Pay is looking to “serve the needs of customers around insurance. Stay tuned”.

Our take:

India is a strategic growth market for Amazon, with intense competition from Walmart’s Flipkart and others (Flipkart is in the process of seeking approval to sell insurance as well). Like with its new Amazon Pay EMI service, Amazon has consumer data that should help it to assess risk and lower fraud rates. Amazon is also rumored to be exploring the insurance markets in the US, UK, and other countries as well.